Resulting Trusts

Question 1

Implied trusts

Answer 1

Trusts that have been created through the operation of law

Question 2

Presumptions of resulting trust and advancement

Answer 2

Different presumptions apply in different circumstances. We will consider, in turn:
(a) situations that might give rise to a presumption of resulting trust;
(b) situations that might give rise to the countervailing presumption of advancement (or gift); and
(c) what kind of evidence might be needed to rebut these underlying presumptions.

Question 3

Presumption of resulting trust: Voluntary transfer of personalty

Answer 3

Personalty is any kind of property other than land.

Suppose Sam gives Mary 100 pounds for no consideration this could be a resulting trust. But the factor to determine this would be Sam’s intention.

Question 4

Presumption of resulting trust: Voluntary transfer of land

Answer 4

This presumption of resulting trust is less likely to apply if the property being transferred is land (or ‘realty’)

It is still possible for a resulting trust to arise out of a voluntary transfer of land, but the court would need some evidence or additional factor (eg that the transferor and transferee are strangers) to arrive at that conclusion. It cannot simply be presumed in the absence of evidence.

Question 5

Purchase money cases

Answer 5

The presumption of a resulting trust in favour of a contributor of the purchase price of property applies to both personalty and realty. However, for a contribution to give rise to a presumption of resulting trust, that contribution must be:
(a) contemporaneous with the purchase – it does not count if someone tries to make a ‘contribution’ after the event; and
(b) directed towards the actual purchase price itself – if X pays the price tag and Y pays the lawyers’ fees in relation to their advice on the purchase, only X’s contribution counts.

Question 6

Presumption of advancement

Answer 6

When the presumption of advancement applies, there is no resulting trust and the transferor is presumed to be gifting property to the transferee.

The presumption of advancement applies when equity regards the transferor as being under a moral obligation to provide for the transferee

It applies in cases of voluntary transfers and provision of purchase money:
(a) from father to child (the child here can be either a minor or an adult);
(b) from person in loco parentis to child. A person in loco parentis is effectively a guardian who has taken on the responsibility to provide financially for a child. This responsibility generally finishes when the child reaches the age of 18 years;
(c) by husband to wife; and
(d) by fiancé (male) to fiancée (female), so long as the couple subsequently marry.

Does not apply if the roles are reversed

Question 7

Rebutting the presumptions

Answer 7

If there is evidence that something else was intended, these presumptions are readily rebutted.
However, the evidence to rebut an underlying presumption must be of the transferor’s intention before or at the time of transfer. Any evidence of your intention after the transfer can only be used against you – you cannot rely on evidence of your own acts or declarations occurring after the transfer that help your case because that would mean you could win your case by making up evidence after the event.

Question 8

Resulting trust when the beneficial interest is not completely disposed

Answer 8

An automatic resulting trust therefore arises where:
(a) the settlor transfers property to trustees on trust; but
(b) the anticipated trust does not dispose of all or part of the equitable interest, because the declared trust is void or does not exhaust the trust fund.
An attempted trust might not dispose of the equitable interest where:
(a) there is a gap in the beneficial ownership because there is no beneficiary who attains a vested interest;
(b) the attempted trust lacks certainty of objects (such as a trust for ‘my best friends’);
(c) the attempted trust does not define the beneficial interests with sufficient certainty;
(d) the attempted trust offends the rules against perpetuity;
(e) the attempted trust offends the beneficiary principle.

Question 9

Any formalities required?

Answer 9

Whilst you need written evidence of an express trust over land in order to comply with s 53(1) (b) of the LPA 1925, the same is not true of an implied trust (such as a resulting trust). Section 53(2) of the LPA 1925 makes it clear that an implied trust can be created without any formality.