Resulting Trusts, Constructive Trusts

Question 1

When is a Resulting Trust created?

Answer 1

1. Purchase Money resulting trust (Where one party obtains LEGAL TITLE to property by UNJUST ENRICHMENT)
2. Failure of Express Trust
3. Excess Corpus

It is implied by law to prevent UNJUST ENRICHMENT.

Question 2

What is a Purchase Money Resulting Trust?

Answer 2

Where one party obtains LEGAL TITLE to property by UNJUST ENRICHMENT.

IT is presumed when one party (“beneficiary”) furnishes the CONSIDERATION for the acquisition of property by another person (“trustee”).

Question 3

What are the requirements for a Purchase Money Resulting Trust?

Answer 3

1. Consideration furnished AT OR BEFORE acquisition of title.
2. Beneficiary must show by C+C EVIDENCE that he supplied consideration.
3. No defenses

Question 4

Defenses to a Purchase Money Resulting Trust?

Answer 4

1. No trust was intended– it was a GIFT, LOAN, or SATISFACTION OF A DEBT;
2. Parties are CLOSELY RELATED
3. if Beneficiary had UNLAWFUL PURPOSE for taking title
   
   • *tho some courts say Bene may get trust still if misconduct was slight compared to the unjust enrichment the Trustee would get.

Question 5

What is a Pro Rata Resulting Trust

Answer 5

Where the Beneficiary supplies only PART of the consideration, the resulting trust in his favor is only a pro rata portion of the property.

Question 6

What are the types of situations that give rise to a Resulting Trust on Failure of an Express Trust?

Answer 6

1) Trust is VOID or UNENFORCEABLE
2) Beneficiary is DEAD or CAN’T BE FOUND
3) Charitable Trust when CY PRES is INAPPLICABLE.

Question 7

What happens when a Resulting Trust is created on Failure of an Express Trust? (Who gets Res?)

Answer 7

The Setllor becomes the Beneficiary of the Resulting Trust.

Question 8

When will a Resulting Trust for Failure of an Express Trust NOT be implied?

Answer 8

1) Settlor was given CONSIDERATION for his original transfer in trust
2)

Question 9

Where will a Constructive Trust be imposed (generally)?

Answer 9

Where the retention of property by D would result in unjust enrichment.
(D obtained property by WRONGFUL CONDUCT)

–> proof of necessary facts by C+C EVIDENCE

Question 10

When will a Constructive Trust arise?

Answer 10

When property acquired by…

1. Theft/Conversion
2. Fraud, Duress, Mistake of fact
3. Breach of Fiduciary Duty
4. Homicide
5. Breach of Promise – NO, unless exception. (see next card)

Question 11

When WILL a Constructive Trust be granted for property that’s acuqired by Breach of a Promise?

Answer 11

a. Fraudulent promise
b. Confidential relationship
c. Secret Trust (devisee/heir promised to hold property for beneficiary)
d. Promise by Decedent to devise property to person Rendering Services in reliance thereon
e. Promise by buyer at foreclosure sale to hold property for debtor

Question 12

What are the duties of a Trustee in a Resulting Trust or a Constructive Trust?

Answer 12

SOLE DUTY: To convey legal title to the Beneficiary.

And must account for profits taken or fair rental value of his use.