Resulting Trusts Flashcards
What are resulting trusts and what are the two broad occasions when they arise?
They are implied in situations where it is presumed that settlor wanted to create a trust
Arise on presumptions
Arise where an express trust fails
What happens when A transfers property other than land to B?
It is presumed that A intended to retain an interest in the property, so B holds it on resulting trust
B holds the legal title and A has an equitable interest
What happens when A transfers land to B?
No presumption of resulting trust and A would need further evidence to show there is a resulting trust
There is a presumption of resulting trust when A pays towards the house that B becomes the legal owner of (purchase money case)
What is the presumption of advancement?
When one of the following relationships exists and a transfer occurs, the transfer is presumed to be a gift
- Father to child
- Husband to wife
- Fiancé (male) to fiancée (female)
Does the presumption of advancement apply if the roles are reversed?
If:
* A child transferred property to father - presumption of resulting trust
* A wife transfers property to husband - presumption of resulting trust
* Mother transfers shares to son - presumption of resulting trust
* Husband transfers land to wife - no presumptions at all, as it is land
What happens where A buys something from C and puts in B’s name?
Presumption of resulting trust, so B holds legal title and A holds beneficial interest
What happens when A contributes to the purchase price of a property bought by B?
Presumption of resulting trust will apply, unless A is a father or husband
The presumption means that B holds the property on trust for both them and A, in proportion to their individual contributions
If A is a father or husband, their contribution is a gift, and B is absolutely entitled to the property + A has no interest
What happens if A contributes to payment of legal fees, stamp duty, gives some money after the property has been purchased or lends B money towards a deposit, rather than contributing directly?
There is no presumption of resulting trust for these contributions
What is an important point in relation to all presumptions (including advancement)?
They can be rebutted by contrary, evidence, contemporaenous with the transfer, which shows A’s actual intentions
Not much evidence is required
Why would a resulting trust exist if an express trust fails?
Neither the trustee, nor the beneficiary can get the beneficial entitlement if it fails, so the law presumes that the beneficial interest should revert/result back to the settlor or the beneficiary of their residuary estate if the settlor is dead
If the settlor is dead and express trust of residuary estate fails, trust money passes under intestacy rules
Overview of the scenarios where an express trust may fail
1) An express trust might fail where the contingency is not satisfied - dying before reaching age of contingency
2) An express trust might fail if there is no certainty of object - money to a class which lacks objective definition (best friends)
3) An express trust might fail if there is uncertainty in the subject matter - £100,000 to my trustees to give some of it to my daughter and the rest to my son; Not clear how much should go to each object
4) An express trust might fail if it offends the beneficiary principle - if a invalid charitable trust is created
5) An express trust might fail if it offends perpetuities - obligation to maintain with a Re Denley trust
