3. Resulting Trusts

Question 1

What are the two situations in which a resulting trust will arise?

Answer 1

Trusts arising:

1. Following a voluntary transfer or purchase of property in the name of another
2. On failure to exhaust beneficial interest under an express trust

Question 2

In the case of voluntary transfers, what is the general rule in equity where A transfers the legal title in property to B without consideration, and there is no evidence as to why the transfer was made?

Answer 2

Equity presumes that A did not intend to make a gift and B holds the property on resulting trust for A

Question 3

What is the situation where A provides purchase money for real or personal property, but legal title is held by B?

Answer 3

B holds the property on resulting trust for A in proportion to the amount A provided

Question 4

For the purchase money rules are to apply, what must the would-be beneficiary’s purchase money contribution actually go towards, and when must it be supplied?

Answer 4

Consideration for the purchase of the property. It is not sufficient that the money is used to make improvements, or pay taxes.

It must be supplied before the purchaser takes legal title.

Question 5

For the purchase money rules are to apply, when must the consideration be supplied by the would-be beneficiary?

Answer 5

At or before the title holder takes legal title (rule will not apply if the title holder is reimbursed after the fact)

Question 6

What is the standard of proof and who has the burden?

Answer 6

The would-be beneficiary must prove by clear and convincing evidence that they supplied the consideration

Question 7

If a presumption of resulting trust has arisen generally, what three things can the title holder suggest to rebut it?

Answer 7

Suggest the money used as consideration was:

1. A gift
2. A loan
3. Payment of a debt

Question 8

When is the presumption of resulting trust deemed not to apply, and what are three archaic, yet testable situations in which this may arise?

How is the transfer treated?

Answer 8

The presumption of advancement applies when the provider of the purchase money is treated as being under a moral obligation to make financial provision for the recipient:

1. Husband to wife
2. Father to daughter
3. Loco parentis (assumed parental duties); only one which applies to females

The transfer is treated as a gift.

Question 9

What is the outcome where the presumption of advancement applies?

Answer 9

The provider is deemed to have made a gift

Question 10

How may the provider rebut the presumption of advancement?

Answer 10

Providing evidence of acts and declarations before or at the time of purchase or transfer to show they intended to retain an equitable interest

Question 11

What occurs where the transfer is part of an illegal or fraudulent scheme, e.g. transferring assets to daughter to avoid personal creditors?

Answer 11

The court will decide based on the public interest to allow the claim