Implied Trusts Flashcards
Effect of a Constructive or Resulting Trust
- Whenever a resulting or constructive trust arises, the “trust” will end because not only are there no named beneficiaries, there is a trustee with no named duties except to transfer legal title to those who should hold it.
- What will happen is that a trustee will transfer legal title to those with equitable rights, the rights will merge, and a single party or parties will own the property free of trust.
Resulting Trust
When an express trust makes an incomplete disposition of assets (does not give full equitable title) or fails to satisfy all of the elements (e.g. named beneficiary, active duty requirement). The only person left holding the equitable interest is the settlor.
Purchase Money Resulting Trusts
If a party pays the original purchase price of property, but directs that title to the asset be placed in another’s name, then there is a rebuttable presumption that the grantee holds the property in a resulting trust for the payor.
Distinguishing a Gift Between a Purchase Money Resulting Trust
- A gift is presumed when title goes to a close relative
- A gift is not presumed and it is a purchase money resulting trust when title goes to a stranger
Constructive Trust
An equitable remedy whereby a trust is erected on the holder of specific property to redress wrongdoing or prevent unjust enrichment. Is typically imposed when property has been wrongfully obtained (e.g. when title has transferred to a slayer who should have been barred from the taking, or to a frauder).
Purpose of the Constructive Trust
To oblige the holder of the title to the property to divest himself of it and transfer it to the person entitled to that asset.
Example of Incomplete Disposition of Assets
O to T as trustee to pay income to A for life. In such a case there is a valid trust where A is the income beneficiary. But upon A’s death the property would revert back to O as a resulting trust.
