Implied Trusts: Resulting trusts Flashcards Preview

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Flashcards in Implied Trusts: Resulting trusts Deck (19)
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What happens in a resulting trust?


Property is held on trust for the person who transferred it/contributed to its acquisition; equitable interest ‘results’ back to the transferor/contributor


In what 3 situations will resulting trusts conventionally arise? And will they be automatic or presumed?

  1. Transfer on trust wholly/partially fails but property has been transferred to T (automatic)
  2. Person gratuitously transfers property to another person (presumed) AKA gratuitous transfer resulting trusts
  3. Person pays all/part of purchase price for an asset (presumed) purchase money resulting trusts

When will an automatic resulting trust arise and what is their effect?

  • Arises where there has been some sort of failure in creation of transfer/trust
  • Effect is that they return the beneficial interest to S and give them SvV rights that they can collapse the trust and retain property or re-attempt intended express trust

* A transfers to B intending B to hold on trust but fails to properly identify intended Bs = fails for uncertainty of objects = automatic resulting trust
* A transfers to B intending B to hold for non-charitable purpose trust which does not fall within recognised exemption to beneficiary principle = fails for non-compliance with beneficiary principle = automatic resulting trust


Will all failed attempts to create an express trust produce a resulting trust?


* Iff trust fails due to lack of constitution, there is nothing to result back to S as they already have property
* Same with self-declaration where S remains ful legal owner of property)


In what 2 scenarios can a trust be validly created but fail subsequently?

  • Runs full 125 year perpetuiry period and some trust property still not vested in B and no gift-over
  • Purpose of non-charitable trust can no longer be carried out but there are funds remaining and no gift-over
    Both cases - property held on RT for S’s estate

What happens where a testamentary trust fails for uncertainty of objects or subject matter?


It will be treated as part of testator’s estate


What happens if property is left to an individual by will and there is insufficient certainty re whether they are intended to be a T?


Will be a straightforward gift to that individual


What happens if legal owner of property transfers it to a TP during lifetime but there is no intention to create an express trust?

  • Evidence that transferor intended a gift = transfer is a gift
  • No evidence that transferor intended gift = will be a presumed RT

What are the two presumed resulting trusts?

  1. Gratuitous transfer resulting trusts
  2. Purchase money resulting trusts

How will a gratuitous transfer resulting trust arise and what does it create?

  • Arise where a transfer is gratuitous + there is no evidence that transferor intended recipient to receive property as a gift
  • Creates a (rebuttable) presumption that transferor/contributor intended to create a trust

Gratuitous = done without good reason/free of charge


How is the presumption in a gratuitous transfer resulting trust rebutted and what is the effect?


With evidence that transferor/contributor’s actual intention is inconsistent with the creation of a trust, e.g. A transfers legal title of an asset to B and…
* B provides consideration = sale and no presumption
* B does not provide consideration = presumption of RT but evidence that A intend to make a gift means presumption easily rebutted and B will become full legal owner of property
* B does not provide consideration and there is no evidence A intended to make a gift = resulting trust for A

Rebutted = no trust (as there is a presumption there is a trust)


How will a purchase money resulting trust arise and what does the effect depend on?

  • Arises where a person pays all/part of purchase price for an asset (rather than transferring asset to someone else)
  • Effect depends on whether person pays the full purchase price or is only one person to provide it

What is the effect re a purchase money resulting trust where a person pays the full purchase price?


Analysis similar to gratuitous transfer - if A purchases shares and registers them in B’s name = B will hold shares on RT for A unless it can be shown that this was not A’s intention because B provided consideration or A intended to make a gift

I.e. presumption can be rebutted the same


What is the effect re a purchase money resulting trust where the purchase price for an asset is provided by more than one person?


In absence of evidence to contrary, a presumed RT will determine A and B’s respective equitable interests reflecting their contributions to the purchase price

(Does not apply to cohabitees; see next deck)


What is the relevance of legal title re the purchasers’ equitable interests in the following situations:
1. A and B both contribute towards purchase price but B becomes sole legal owner
2. A and B both contribute towards purchase price of an asset but A contributes more than B and they both become joint legal owners of the asset


Legal title doesn’t matter; they will still both have equitable interests reflecting their respective contributions to purchase price


How do purchased money resulting trusts tie in with joint ownership of land?

Recall: Legal title can only be held by a sole legal owner or up to four legal owners as joint tenants


Because legal ownership might not reflect intended beneficial ownership, joint legal owners often hold land on trust for themselves with their equitable interests reflecting the true beneficial ownership of the land, for example…

  • A and B each contribute 1/2 of purchase price of land and B registered as sole owner, no express trust is declared = B holds land on trust for A and B as tenants in common in equal shares
  • A contributes 70% and B 30% of purchase price and both registered as joint legal owners, they do not discuss how property should be shared and no express trust declared = A nd B hol land as joint tenants on trust for A and B as equitable tenants in common; A has 70% equitable share and B has 30% equitable share

What should be done to make the beneficial entitlement clear?


Declare an express trust over the land which makes beneficial entitlement clear - in absence, implied trust may arise to determine equitable ownership of the land

NB implied trust not automatically there, is just a possibility


What is the presumption of advancement and when does it occur?


A presumption that the transfer was intended as a gift due to the relationship between the transferor and transferee and therefore the presumption of resulting trust does not arise

NB this is outdated and provision was made for abolition in EA2010

Only including cos it’s in the workbook


What relationships will give rise to presumption of advancement?

  • Husband to wife (but not wife to husband nor fiance to fiance)
  • From parent (unclear whether it can be mother) to (adult) child
  • From person in ‘loco parentis’ to a minor child (where a person who has taken financial responsibility for a child)