South-Western Legal Studies in Business

Court Uses Constructive Trust to Allow Intent of Donor to Be Fulfilled
Description Appeals court held that since members of a family delivered deeds to property after the death of their mother, the delivery of the deeds were void. However, since the parties had agreed to deliver the deeds to assist in preparation of their mother's will, the court would impose a constructive trust to achieve the desire of the mother.
Topic Wills, Estates, and Trusts
Key Words Deed, Conveyance, Life Estate; Constructive Trust; Unjust Enrichment
C A S E   S U M M A R Y
Facts Savich and her husband owned a 500 acre farm. After her husband died, Savich decided to deed acreage to her children, reserving a life estate for herself. The property was divided among the children, but two shares were deeded to grandchildren. There was a discussion at the time that the grandchildren were to hold the property for the benefit of all grandchildren, not just the two who received deeds. This intent was not recorded in writing. Later, Savich decided the farm should be kept as one piece of property, so she asked the family members to deed the property back to her so it could be put in a limited liability corporation. Family members agreed and a new will for Savich was written. Before all of the deeds could be completed, Savich died. The heirs then began to argue, and the matter ended up in court. The trial court held the deeds were void because Savich had died before delivery and the two grandchildren did not understand what they were signing. The matter was appealed.
Decision

Affirmed in part; reversed in part. The deeds were void because they were conveyed to Savich after her death. For title to transfer, a deed must be delivered, which did not happen in time. However, in this case there was a constructive trust. It is an equitable remedy imposed to prevent unjust enrichment. There was convincing testimony that the children had agreed to return the property to Savich and that she made her final will under the presumption that the return of property would be made. The two grandchildren who had property deeded to them that was to have been for the benefit of others should not be unjustly enriched by the failure of the deeds to be completed before Savich’s death.

Citation In re the Estate of Savich, --- N.W.2d --- (2003 WL 22782656, Ct. App., Minn., 2003)

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