Resulting Trusts

Question 1

Resulting Trust Def

Answer 1

Implied in fact trust and is based upon the presumed intent of the parties

If decreed by the court, resulting trustee will transfer the property to the settlor if alive, and if not, settlor’s estate

Question 2

Private Express Trust and Resulting Trust

Answer 2

(1) When a private express trust ends by its own terms, and there is no provision for what happens to the corpus after, resulting trust is created
(2) when a private express trust fails because there is NO BENEFICIARY
(3) private express trust fails because of illegality after creation
(4) when there is excess corpus in a private express trust, excess corpus is a resulting trust

Presume settlor wants the property back

Question 3

Charitable trusts and resulting trusts

Answer 3

when a charitable trust ends because of impossibility or impracticability and CY PRES CANNOT BE USED because lack of general charitable intent

Question 4

Purchase Money Resulting Trust

Answer 4

When X pays consideration for real or personal property but title is taken in Y

PRESUMPTION of a resulting trust. Burden on X to prove by clear and convincing evidence that he supplied consideration. If shown, burden shifts to Y to show that no trust was intended and instead was a gift, loan, or satisfaction of a prior debt.

NOTE: exception. If X and Y are CLOSELY RELATED, then a gift is PRESUMED, but rebuttable

Question 5

Semi-Secret Trusts

Answer 5

When a will makes a gift to a person to hold as trustee, but does not name the beneficiary (I devise $100 to W as trustee)

NOTE: ALWAYS IN A WILL

Courts imply a resulting trust

NOTE: different from secret trusts, when it becomes a constructive trust

Question 6

Constructive Trust

Answer 6

Misnomer b/c not a trust, rather it is a REMEDY to prevent fraud or unjust enrichment to a wrongdoer

Wrongdoer must transfer the property to the intended beneficiary as determined by the court

Question 7

Trustee Self-dealing

Answer 7

When a trustee makes a profit due to self-dealing, constructive trust is imposed

Trustee will be a constructive trustee who will have to turn those profits over to the intended beneficiaries of the trust, as determined by the court

Question 8

Fraud or undue influence in wills

Answer 8

Court may deny the probate and make the heir a constructive trustee who must transfer the property to the intended beneficiary, as determined by the court

Question 9

Secret Trusts

Answer 9

When a will on its face makes an outright gift, but the gift was given on the basis of the beneficiary’s oral promise to hold the property in trust for another. NO TRUST IS MENTIONED IN WILL

Parol evidence admissible to show intended beneficiary. Must be clear and convincing evidence. If shown, constructive trust imposed and must transfer property tot he intended beneficiary

NOTE: semi-secret trusts only create a resulting trust back to testator

Question 10

Oral Real estate trusts (AKA Breach of Promise)

Answer 10

Arises when testator orally gives property to A to hold for the benefit of B. Thereafter, testator executes a deed in favor of A.

A can always raise SoF as an affirmative defense, but situations where A cannot invoke SoF and becomes constructive trustee who must transfer to B:

(1) fiduciary relationship between testator and A – can’t invoke SoF and becomes constructive trustee
(2) fraud in the inducement on the part of A (fraudulently promising to hold property for B) – constructive trustee
(3) detrimental reliance by B, the intended beneficiary – look for B taking possession and making improvements (possession alone is not enough)