Resulting trusts and constructive trusts

Question 1

Resulting trusts

Answer 1

1. an implied in fact trust based upon the presumed intent of the parties
2. if decreed by court, resulting trustee transfers property to settlor or settlor’s estate (residuary devisees, or if none, to intestate takers)
3. arises in seven situations
   i. private trust terminates on its own terms with no provision for subsequent disposition
   ii. private express trust fails because there is no beneficiary
   iii. semi-secret trust (testamentary transfer to trustee, but with no named beneficiary)
   iv. charitable trust ends because of impossibility or impracticability, and cy pres unavailable
   v. private express trust fails because its purpose becomes illegal
   vi. excess corpus in a private express trust
   a. the excess amount is a resulting trust where there is more than enough corpus available to accomplish the trust purpose

vii. when there is a purchase money resulting trust
a. arises when someone buys (at least part of) property, but tells the seller to transfer title to someone else.
b. purchase money resulting trust is presumed whenever the X furnishes the consideration, but title is taken in the name of Y.
Y can rebut the presumption of the resulting trust by showing that no trust was intended (that it was just a gift, loan or satisfaction of debt).
Gift is presumed if theres a close relationship bw the parties.

Question 2

Constructive trusts

Answer 2

1. not a trust, it is a remedy for disgorgement, to prevent fraud or unjust enrichment
2. the wrongdoer has only one obligation: to transfer the property to the intended beneficiary
3. ways a constructive trust can arise:
   i. trustee of a private or charitable trust makes a profit at the expense of beneficiaries because of self-dealing
   a. trustee is a constructive trustee wrt the illicit profits

ii. for wills, where there is fraud in the inducement or undue influence

iii. secret trusts where the intended (secret) beneficiary shows the promise by clear and convincing evidence
a. the constructive trust is created in the favor of the secret beneficiary

iv. oral real estate trusts (breach of promise)
a. in an oral secret trust for real property where the secret trustee fails to transfer to the secret intended beneficiary, a constructive trust is created in favor of the intended beneficiary if: (i.e. no SoF defense if any:)
i) fiduciary relationship exists between donor and trustee,
ii) there was fraud in the inducement on the trustee’s part (i.e. false pretenses, originally had no intent to transfer to the beneficiary),
iii) there was detrimental reliance by the intended beneficiary, or
a) detrimental reliance if taking possession and making improvements