A constructive trust is a remedy or solution a court may use to right a wrongful act or situation for which there may not otherwise be a legal remedy, such as money damages, or when the legal remedy would be inadequate. Because a constructive trust is based on a sense of fairness, equity, or what is right, it is known as an equitable remedy and a court that provides such a remedy is sometimes said to be sitting in equity. A constructive trust may also be known as an implied trust or involuntary trust.

The equitable remedy of a constructive trust is often used by courts when a person has possession or title to property that the person holding the property acquired by fraud—or when property obtained by fraud or theft is exchanged for other property or is given as a gift to another. Even though the person in possession of the property (motor vehicle, painting, home, etc.) may have title to it, courts recognize that the rightful owner from whom the property was stolen, embezzled, or fraudulently appropriated (taken) has a superior right and claim to it.

In these situations the court may apply or declare a constructive trust in favor of the rightful owner—giving title (ownership) of the wrongfully held property to the person or entity from whom it was stolen, embezzled, or fraudulently appropriated. The person or entity wrongfully holding the property is known as a constructive trustee and is required to turn the property over to the constructive beneficiary (the rightful owner).

Because a constructive trust is not an actual, written trust it is known as a legal fiction—created by courts to do equity.

In New Jersey, a constructive trust is an equitable remedy that courts may impose to address situations where holding legal title to property would result in unjust enrichment due to wrongful conduct, such as fraud, theft, or embezzlement. This remedy is particularly used when monetary damages are insufficient or inappropriate to correct the injustice. When a court declares a constructive trust, it effectively recognizes that the person in possession of the property, although holding legal title, should not benefit from their wrongdoing. The court then designates this person as a 'constructive trustee,' who is obligated to transfer the property to the rightful owner, known as the 'constructive beneficiary.' This legal mechanism operates as a means to prevent unjust enrichment and to ensure that property is returned to those who are entitled to it by virtue of fairness and justice, rather than by strict legal entitlement. New Jersey courts, when sitting in equity, have the authority to impose such trusts to rectify situations where the legal owner of the property is not the equitable owner.