Resulting trusts

Question 1

What are resulting trusts and why can they be known as ‘imputed trusts’

Answer 1

• constructed by the courts
• trust are placed by the court onto trustee and settlor
• jumps back to settlor

Question 2

In what circumstances when a resulting trust would arise?

Answer 2

1. X transfers legal title over property to Y, and;
2. Y holds property on trust for X

equitable title returning toX

Question 3

What are the 2 types of resulting trust?

Answer 3

1. presumed
2. automatic

Question 4

What is an automatic resulting trust

Answer 4

automatic as it is from a failure to dispose of a beneficial interest

failure of an express trust -> court imposes resulting trust (e.g. where there is a lack of certainty of objects)

Question 5

What are 4 events in which an automatic resulting trust would arise?

Answer 5

1. no valid declaration of trust
2. Valid declaration of trust but trust fails
3. undisposed ‘surpluses’
4. incomplete disposal of beneficial interest - quistclose trust

Question 6

An automatic resulting trust may arise where “1. no valid declaration of trust”

What does this mean?

Answer 6

• legal title has been transferred but equitable title has not

(usually where settlor failed to set out clear objects or what the subject matter is)

(or failure to comply with formalities)

Question 7

An automatic resulting trust may arise where “2. Valid declaration of trust but trust fails”

When is this likely to arise?

Answer 7

beneficiary dies; body such as a charity disappears

Question 8

An automatic resulting trust may arise where “3. undisposed ‘surpluses’”

What does this mean?

Answer 8

• limited gift which is not absolute -> rest is held on resulting trust for ht the donee
• only applies where the gift is money

e.g. X gives Y money to pass exams -> Y passes exam -> rest of the money is left on trust for X

Question 9

What is a quistclose trust?

Answer 9

• money lent for a specific purpose
• lender must make purpose explicitly clear
• borrower hold money on trust until that purpose is fulfilled
• borrower is the trustee
• lender becomes the beneficiary
• if borrower fails to use the money for that purpose, lender can enforce their trust and get money back
• if borrower goes bankrupt/ insolvent -> lender as a beneficiary is in a better position than creditor
• once purpose comes to an end -> standard creditor-lender relationship and trust comes to an end

Question 10

is a presumed resulting trust a rebuttable presumption?

Answer 10

yes

Question 11

When does a presumed resulting trust arise?

Answer 11

1. X transfers property to Y for no consideration and voluntarily but gives no intention as to whether Y hold it for anyone or if it is an outright gift or loan.

gratuitous property transfer; no consideration; no statement on intention.

2. purchase money not intended to make a gift of the property.

e.g. X and Y buy a property but only X pays and they are not spouses/ civil partners.

Question 12

When can the presumption of a resulting trust be reubutted? (2 scenarios)

Answer 12

1. slight evidence that a voluntary property conveyance was intended as a gift or loan (e.g. bday)
2. slight evidence that purchase money was intended as a gift or a loan (e.g, very close relationship between parties)

successful rebuttal = no resulting trust