Resulting and Constructive Trusts Flashcards
What is the key difference between resulting/constructive trusts and true trusts?
Resulting/constructive trsts are implied
* Beneficiary holds both legal and equitable title and can demand immediate conveyance of the assets
Where does a resulting trust arise?
Where the court implies a trust and declares the settlor or their heris to be the beneficiary
When will a resulting trust arise?
(1) Express trust fails and settlor has not declared their intent
* Beneficial interest in the trust property is in the settlor, or it passess to successors
(2) Where the settlor has made an incomplete disposition the property reverts to the settlor or successors
* Example–“Trustee shall pay all income from trust property to B so long as B is alive”
(3) Purchase Money Resulting Trust
When does a purchase money resulting trust arise?
When one party pays the purchase price for property and causes title to be taken in another party’s name
* Parties not related, presumption is that the person did not intend to give a gift (i.e., presumption in favor of PMRT)
* Parties are related, opposite presumption
What is a constructive trust?
Flexible equitable remedy imposed to prevent unjust enrichment as a resault of fraud, undue influence, breach of fiduciary duty, etc.
* Constructive trustee’s only duty is to convey the property to the person who would have owned it but for the wrongful conduct
What is a “secret” trust in the context of constructive trusts?
Where will makes gift absolute on its face, but alleged that gift was made in reliance on recipient’s promise to hold property for the benefit of another
* Courts will allow intended trust beneficiary to present extrinsic evidence of the agreement
* If proved by clear and convincing evidence, constructive trust imposed
What is a “semi-secret trust?”
Where a will expressly makes a gift in trust but does not name the beneficiary
* VA courts will not imposed a constructive trust
* Resulting trust arises in favor of testator’s heirs
