Resulting Trusts Flashcards
(13 cards)
What is the defining feature of a resulting trust?
A. The trustee has absolute discretion over distributions
B. The equitable interest “results back” to the transferor or contributor when there is no effective disposition of the beneficial interest
C. Beneficiaries must be capable of enforcing the trust by statute
D. The trust purpose must be charitable
B. The equitable interest “results back” to the transferor or contributor when there is no effective disposition of the beneficial interest.
Explanation: Resulting trusts arise because the beneficial interest “results” back to the settlor where the equitable interest has not been validly disposed of
Which of these is an “automatic” resulting trust?
A. A gift-on-death trust that fails for uncertainty of objects
B. A gratuitous transfer with no evidence of gift intention
C. A purchase-money contribution by A to buy shares in B’s name
D. A trust for a non-charitable purpose outside recognised exceptions
D. A trust for a non-charitable purpose outside recognised exceptions.
Explanation: When an express trust fails (e.g. non-charitable purpose) but legal title is vested in the trustee, an automatic resulting trust returns the beneficial interest to the settlor
Which situation will NOT give rise to a resulting trust?
A. An express trust that has run past the 125-year perpetuity period with no gift-over
B. A trust failing for uncertainty of subject matter where legal title has vested in the trustee
C. A self-declaration of trust that fails for uncertainty of objects when legal title never passed to any trustee
D. A non-charitable trust whose purpose has become impossible and no gift-over exists
C. A self-declaration of trust that fails for uncertainty of objects when legal title never passed to any trustee.
Explanation: If legal title never passed, there is no trust property “to result back,” so no resulting trust arises
Which principle applies when someone pays part of the purchase price but title is in another’s name?
A. A common intention constructive trust automatically applies
B. A presumed resulting trust arises reflecting each contributor’s share
C. The beneficiary must enforce by Saunders v Vautier
D. The Rule Against Alienability prevents any trust arising
B. A presumed resulting trust arises reflecting each contributor’s share.
Explanation: Where A and B contribute to purchase but title is held in B’s name, a presumed resulting trust gives equitable interests proportionate to their contributions
A transfers £50,000 to B to hold on trust for C and D but fails to specify shares. The result is:
A. Automatic resulting trust for A
B. Presumed resulting trust for B
C. Valid express trust for C and D in equal shares
D. Void trust with property passing by resulting gift to C only
A. Automatic resulting trust for A.
Explanation: Failure to specify beneficial entitlements causes the express trust to fail, and the beneficial interest results back to A
X gratuitously transfers land to Y with no declaration and no consideration. Later X claims back. What arises?
A. Presumed resulting trust in favour of X
B. Express trust for Y
C. Common intention constructive trust for X
D. Charitable trust for public benefit
A. Presumed resulting trust in favour of X.
Explanation: Gratuitous (no-consideration) transfers raise a presumption the transferor did not intend a gift, so Y holds on resulting trust for X
A pays the full deposit on a property but title is registered in B’s name. No evidence of gift. On a resulting trust analysis, B’s share is:
A. 0%; B holds solely for A
B. 50%; B and A are tenants in common
C. 100%; presumption of advancement applies
D. 70%; standard trust proportion
A. 0%; B holds solely for A.
Explanation: Full purchase-price contribution by A with no evidence of gift means B holds entire equitable interest on resulting trust for A
A and B contribute 40% and 60% of purchase price; title in joint names. No express trust. Equitable shares are:
A. A 50%, B 50% as joint tenants
B. A 100%, B 0% as sole beneficial owner
C. A 0%, B 100% as presumption of advancement
D. A 40%, B 60% as tenants in common
D. A 40%, B 60% as tenants in common.
Explanation: Joint legal owners hold implied resulting trust reflecting actual contributions absent contrary intention
Which of these will rebut the presumption of a presumed resulting trust?
A. No consideration paid for the transfer
B. Legal title registered in joint names
C. Failure of trust for non-charitable purpose
D. Evidence the transferor intended an outright gift
D. Evidence the transferor intended an outright gift.
Explanation: The presumption of resulting trust is rebutted if there is any evidence the transferor intended the recipient to take as a gift
Why are presumed resulting trusts not used to determine family-home shares?
A. Family homes use common intention constructive trusts instead
B. Presumed resulting trusts require charitable purposes
C. Purchase-money resulting trusts are mandatory for homes
D. Resulting trusts cannot apply to land
A. Family homes use common intention constructive trusts instead.
Explanation: Cohabitee disputes over homes require common intention constructive trusts; resulting trusts have no role in family-home allocations
Which relationship gives rise to the “presumption of advancement,” displacing a presumed resulting trust?
A. Father to child
B. Fiancée to fiancé
C. Wife to husband
D. Executor to beneficiary
A. Father to child.
Explanation: Transfers from father to child carry a limited presumption of advancement, displacing a resulting trust; most other familial transfers do not
A trust created by will fails for uncertainty of subject-matter. What happens to the gift?
A. Resulting trust for the testator’s estate
B. Charitable Cy-près scheme applies
C. Gift lapses and forms part of residuary estate
D. Presumed resulting trust for named next-of-kin
C. Gift lapses and forms part of residuary estate.
Explanation: A failed testamentary trust for uncertainty yields no resulting trust; the gift lapses into the residue
In a Quistclose trust, why does the lender have priority over general creditors if the borrower becomes insolvent?
A. Because the borrower must repay by statute in priority to other debts
B. Because the presumption of advancement applies to lender–borrower relationships
C. Because the money is held on trust for the lender until the specific purpose is fulfilled
D. Because the lender registers a charge over the borrower’s assets
C. Because the money is held on trust for the lender until the specific purpose is fulfilled.
Explanation: In a Quistclose arrangement (Barclays Bank Ltd v Quistclose Investments Ltd), the loaned funds are held by the borrower on a trust for the lender until used for the expressly stipulated purpose. If the purpose fails or the borrower becomes insolvent, the beneficial interest “results back” to the lender, giving them priority over unsecured creditors
