Resulting Trusts Flashcards
Resulting Trust Definition:
An implied in fact trust based on presumed intent of the parties. Trustee will transfer property to the settlor or if dead to residuary or to intestate successor
How or resulting trusts created? 1 of 7
First situation: When a private express trust ends by its own terms, and there is no provision for what happens to the corpus thereafter.
example: Trust for daughter to go to law school (what if she never goes to law school?)
How or resulting trusts created? 2-4 of 7
When a private express trust fails, because there is
no beneficiary.
Third situation: When a charitable trust ends because of impossibility or impracticability (see above) and Cy Pres cannot be used.
Fourth situation: When a private express trust fails because after creation, the trust becomes illegal
How or resulting trusts created? 5/6 of 7
Fifth situation: When there is excess corpus in a private express trust (such good investing trust has way more than necessary to achieve purpose)
Sixth situation: When we have a “purchase money resulting trust (A pays B consideration to have title transferred to C. If closely related it’s assumed a gift, if not assumed a purchase money resulting trust).
How or resulting trusts created? 5/6 of 7
When the will makes a gift to a person to hold as trustee, but does not name the beneficiary. DIFFERENT THAN SECRET TRUST WHERE PAROL EVIDENCE CAN BE USED TO ESTABLISH THE BENEFICIARY
Constructive Trust Definition:
A remedy to prevent fraud or unjust enrichment
When a court decrees a constructive trust, the wrongdoer will have only one obligation: to transfer the property to the intended beneficiary as determined by the court
Constructive Trust created by self-dealing
Where a trustee of a private express trust or a charitable trust makes a profit because of self-dealing, he becomes trustee of the ill-gotten gains, must return to the beneficiary of the trust
Constructive Trust Fraud in inducement
creates constructive trust resulting in trustee who has duty to dispurse the trust property as intended by the settlor
Constructive Trust secret trusts:
The will on its face makes a gift outright to A, but the gift is given on the basis of an oral promise by A to use the property for the benefit of B.
“A, I shall devise $100,000 to you, if you promise to use this money for the benefit of B.” A states to testator that he (A) will comply. Thereafter testator executes his will that states, “I devise $100,000 to A.”
Constructive Trust rules:
CAN USE PAROL EVIDENCE TO DETERMINE WHO BENEFICIARY IS, the trustee becomes a ‘constructive trustee’ (for semi-secret trusts they create a Resulting trust NOT constructive Trust)
ON BAR DISCUSS BOTH SEMI-SECRET TRUST AND SECRET TRUST
Semi secret trust vs. secret trust
Semi-secret trust results in a RESULTING TRUST where the property in the truste goes back to the settlor
Secret trust results in a constructive trust using parol evidence to determine the beneficiary
Oral Real estate Trust
Results in Constructive Trust
S goes to A and states, “If I transfer Blackacre to you by deed, will you hold Blackacre for the benefit of B?” A agrees. Thereafter S executes a deed in favor of A and delivers it to A
Oral Real estate trust - when can transferee be prevented from using Statute of Frauds as defense to transfer of property 1of 3 p. 28
1) Fiduciary relationship between S and A
If there was a fiduciary relationship between S and the oral real estate trustee A, A will not be allowed to invoke the Statute of Frauds. A will be decreed a constructive trustee, who will have only one obligation:give property to beneficiary as determined by court
Oral Real estate trust - when can transferee be prevented from using Statute of Frauds as defense to transfer of property 1of 3 p. 28
2) Fraud in the Inducement
S went to A and said, “If I transfer Blackacre to you in fee simple, do you promise to hold Blackacre for the benefit of B,” and A says yes, while he is thinking to himself: “What a fool. I can’t believe this guy is doing this.” This is fraud in the inducement. No S.O.F. defense
Oral Real estate trust - when can transferee be prevented from using Statute of Frauds as defense to transfer of property 1of 3 p. 28
Detrimental reliance by intended beneficiary
(Beneficiary detrimentally relies on promise to get the property.) look for POSSESSION AND IMPROVEMENTS ON PROPERTY
