Gwen and Hunt are partners in Investment Associates. Hunt takes advantage of a partnership opportunity for personal gain that causes the firm's business to suffer. A court orders Hunt to hold the profits in trust for the partnership. This is
A) a constructive trust.
B) an living trust.
C) a resulting trust.
D) a testamentary trust.

Question

Gwen and Hunt are partners in Investment Associates. Hunt takes advantage of a partnership opportunity for personal gain that causes the firm's business to suffer. A court orders Hunt to hold the profits in trust for the partnership. This is​
A) ​a constructive trust.
B) ​an living trust.
C) ​a resulting trust.
D) ​a testamentary trust.

Quizplus · Accepted Answer

A constructive trust is imposed by a court to prevent a person from being unjustly enriched. In this case, Hunt was ordered to hold the profits in trust for the partnership, which is a typical remedy for a constructive trust. A living trust is created by a person during their lifetime to manage and distribute their assets. A resulting trust arises when property is given to someone but it's clear that it was not intended as a gift. A testamentary trust is created in a will and takes effect upon the death of the testator.

Gwen and Hunt Are Partners in Investment Associates