RESULTING TRUSTS & Constructive Trusts

Question 1

Definition of a Resulting Trust

Answer 1

A resulting trust is an implied in fact trust and is based upon the presumed intent of the parties. If a resulting trust is decreed by the court, the resulting trustee will transfer the property to the settlor if the settlor is alive, and if not, to the settlor’s estate, i.e. to the residuary devisees if any, and if none, to the intestate takers (the heirs).

Question 2

How a Resulting Trust Arises: 7 situations:

Answer 2

1. When a private express trust ends by its own terms, and there is no provision for what happens to the corpus thereafter.
2. When a private express trust fails, because there is
   no beneficiary.
3. When a charitable trust ends because of impossibility or impracticability (see above) and Cy Pres cannot be used.
4. When a private express trust fails because after
   creation, the trust becomes illegal
5. When there is excess corpus in a private express trust.
6. When we have a “purchase money resulting trust”
7. Semi-secret trusts: a semi-secret trust arises when
   the will makes a gift to a person to hold as trustee, but does not name the beneficiary.

Question 3

CONSTRUCTIVE TRUSTS Defined

Answer 3

A constructive trust is really a misnomer because it is not a trust.
[B] Rather, a constructive trust is simply:

a remedy to prevent fraud or unjust enrichment

Question 4

When a court decrees a constructive trust, the wrongdoer will have only one obligation:

Answer 4

to transfer the property to the intended
beneficiary as determined by the court.
[D] A constructive trust, therefore, is a means to disgorge a wrongdoer of his ill-gotten gains.

Question 5

How a Constructive Trust Arises: 4 situations:

Answer 5

1. When a trustee of a private express trust or a charitable trust makes a profit because of self-dealing
2. With respect to the law of wills, when there is fraud
   in the inducement or undue influence:
3. Secret Trusts & The Law of Wills
4. Oral Real Estate Trusts (also known as Breach of
   Promise):

Question 6

When a trustee of a private express trust or a charitable trust makes a profit because of self-dealing

Answer 6

[1] With respect to those ill-gotten profits, the trustee will be a constructive trustee.
[2] As such, the trustee will have to turn those profits over to the intended beneficiaries of the trust, as decreed by the court.

Question 7

Constructive Trust - With respect to the law of wills, when there is fraud in the inducement or undue influence:

Answer 7

Remember that a remedy that the court has for fraud in the inducement or undue influence is that the court can deny the will probate and make the heir a constructive trustee who will have only one obligation: to transfer the property to the intended beneficiary, as determined by the court.

Question 8

Secret trust defined

Answer 8

The will on its face makes a gift outright to A, but the gift is given on the basis of an oral promise by A to use the property for the benefit of B

Question 9

But, there are three situations where the transferee, A,
will not be allowed to invoke the Statute of Frauds to
keep the property. In such case, A will be decreed a
constructive trustee who will have only one obligation: to
transfer the property to the intended beneficiary, B.

Answer 9

1. A fiduciary relationship
2. Fraud in the Inducement
3. Detrimental reliance