Resulting Trusts Flashcards
What are resulting trusts?
Trusts implied in situations where it is presumed that the settlor intended to create a trust.
The equitable interest goes to the beneficiary and then reverts back to the settlor
eg. Where property transferred from one person to another but no evidence as to whether intended it as gift, loan, something else
eg. Where express trust intended but something went wrong with its creation
When will there be the presumption of a resulting trust?
If X voluntarily transfers property they own to Y
- Presumption that X intended to retain an interest in the property
- Y holds the property on resulting trust for X
If X purchases property for Y, or contributes to purchase price
- Presumption that X intended Y hold the property on trust for them both (in proportion to their individual contributions)
These are presumptions - can be rebutted by evidence of X’s actual intention
(& don’t apply if husband-wife or father-son)
When will there be a presumption of advancement (rather than a resulting trust)?
If the property is transferred from father to child or husband to wife
Presumed that the father/husband intended to gift the property to the child/wife
(Nb. If mother transfers property to adult son, son presumed to hold the shares on resulting trust for mother)
How can the presumptions of resulting trust and advancement be rebutted?
If there is admissible evidence that indicates what the transferor intended at the time
Must be contemporaneous with (or just before) the transfer
Any words or conduct subsequent to the transfer can only be admitted as evidence of what was intended AGAINST the party who said the words or engaged in that conduct
(ie. not contemporaneous evidence an be used if being used against them, not in their favour)
How are resulting trusts used to ‘plug an equitable vacuum’?
When an express trust fails / doesn’t fully dispose of the trust property
Equitable interest can’t belong to the trustee (they can’t hold equitable title) & can’t go to intended beneficiary
–> Law presumes beneficial interest should revert to settlor (or beneficiary of their residuary estate)
(ie. trustees hold the property on a resulting trust back to the settlor)
‘£100k to my trustees to hold on trust for such of my best friends and in such shares as they see fit’
What will happen to the beneficial interest in this trust?
Discretionary trust which lacks certainty of object (best friends not conceptually certain)
The beneficial interest in the money results back to the settlor (or the beneficiary of their residuary estate)
‘£100k to my Trustees to maintain a sportsground for the employees of SHHS’
Invalid non-charitable purpose trust - because offends perpetuities
The beneficial interest in the money reverts back to the settlor (or the beneficiary of their residuary estate)
When can words or conduct subsequent to the transfer be used to rebut a presumption of resulting trust or presumption of advancement?
If it is being used against (rather than in favour of) the person who said the words / did the conduct
