Resulting Trusts-FS Flashcards
(33 cards)
What is a resulting trust and how does it differ from an express trust?
A resulting trust arises by operation of law when the beneficial ownership of property is unclear, unlike an express trust, which arises from the settlor’s explicit intention to create a trust.
In what two main circumstances can resulting trusts arise?
Resulting trusts arise either from:
(1) a presumed intention in the context of voluntary transfers or purchase money.
(2) an automatic resulting trust where there has been an incomplete disposal of the beneficial interest.
What is a presumed resulting trust in the context of a voluntary transfer?
When property is transferred to someone without receiving consideration, the law presumes the transferor intended to retain the beneficial interest, unless there is clear evidence of a gift.
Can the presumption of a resulting trust be rebutted?
Yes. If evidence shows that the transfer was intended as a gift—for instance, as part of a birthday or celebratory event—then the presumption is rebutted and no resulting trust arises.
Why might a transfer of funds mistakenly sent to another person result in a resulting trust?
Because no consideration was provided and there was no intent to gift the funds, the recipient will be presumed to hold the funds on resulting trust for the transferor.
What happens when someone receives property under a mistaken belief and gives no consideration?
The law presumes a resulting trust exists, meaning the recipient must hold the property on trust for the transferor unless evidence of a gift exists.
How does the case of mistaken payment illustrate the operation of a resulting trust?
It demonstrates that if a person accidentally transfers money to someone who has no claim or did not provide value, the recipient must hold the funds for the benefit of the sender under a resulting trust.
What distinguishes a resulting trust from a constructive or express trust in a mistaken payment scenario?
A resulting trust is presumed due to the lack of consideration and absence of donative intent, unlike an express trust (which must be declared) or a constructive trust (which often arises from wrongdoing or unconscionability).
When does a resulting trust arise in the context of purchase money and legal title?
A resulting trust arises when someone pays all or part of the purchase price for a property but the legal title is transferred into another person’s name without clear evidence of a gift.
What is the presumption of resulting trust in purchase money cases?
The presumption is that the person who contributed to the purchase did not intend to gift the property to the legal title holder and therefore retains a proportionate beneficial interest.
How is the beneficial interest under a resulting trust calculated when multiple parties contribute to a purchase?
Each party’s beneficial interest is usually proportionate to their financial contribution toward the purchase price.
Why did the court in a case involving a sailboat determine that one party owned 55% despite not holding legal title?
Because that party contributed over half the purchase price, and there was no intention to gift their share, resulting in a presumed resulting trust in their favour.
What condition must be met for a resulting trust to arise from payments related to land?
The contribution must form part of the initial purchase price. Payments made after the purchase, such as mortgage repayments, generally do not give rise to a resulting trust.
How does the nature of the property (investment vs. home) affect the application of resulting trusts?
Resulting trusts are more likely to apply to investment properties where the parties’ contributions are viewed in financial terms, whereas courts often prefer constructive trusts for family homes to reflect shared intentions.
Can someone with no legal title still have an equitable interest under a resulting trust?
Yes. If they contributed to the purchase price and there is no evidence of a gift, they are presumed to have a proportionate beneficial interest, even if not named on the title
Does contributing less to the purchase price disqualify someone from having a beneficial interest under a resulting trust?
No. The size of the contribution affects the proportion of interest, not the existence of the interest. Even a smaller contribution gives rise to a proportional equitable interest under a resulting trust.
What is the presumption of resulting trust?
It is the legal assumption that when property is transferred without consideration, the transferee holds it on trust for the transferor—unless evidence shows it was intended as a gift.
How can the presumption of resulting trust be rebutted?
It can be rebutted with evidence of the transferor’s intention to make a gift or evidence of a close personal relationship, such as affection or dependency.
What is the presumption of advancement?
It is a legal assumption that certain transfers of property are intended as gifts, particularly when made by a husband to his wife, a male fiancé to his female fiancé, or a father to his legitimate child.
In which cases does the presumption of advancement not apply?
It does not apply when a wife transfers property to her husband or when a mother transfers property to her child—unless she can be shown to act in loco parentis.
Can post-transfer evidence be used to rebut a presumption?
No. Only evidence from the time of, or prior to, the transfer is admissible to rebut a presumption. Later statements or actions are not accepted.
How does the law treat voluntary transfers in close relationships, such as from an uncle to a niece?
A presumption of resulting trust arises unless there is clear evidence that the transfer was intended as a gift, such as a personal occasion or reason for generosity.
What happens if someone transfers property to their fiancé before marriage?
The presumption of advancement applies, meaning it is assumed to be a gift—provided they marry later.
Can the presumption of advancement be rebutted?
Yes. It can be rebutted with contemporaneous evidence showing the transferor did not intend the transfer to be a gift but rather a trust.
