Trusts Arising as a Matter of Law

Question 1

Resulting trust

Answer 1

Resulting trusts arise by implication from the settlor’s conduct. There are three types of resulting trusts:
1. purchase money resulting trusts
2. resulting trusts arising on failure of an express trust
3. resulting trusts arising from an incomplete disposition of trust assets (excess corpus)

Question 2

Who is the beneficiary of a resulting trust?

Answer 2

The settlor; if the settlor is deceased, the settlor’s successors in interest are the beneficiaries.

Question 3

What is the purpose of a resulting trust?

Answer 3

To do what the settlor would have done had the settlor put their intent into words.

Question 4

Circumstances giving rise to a resulting trust

Answer 4

1. the failure of an express trust
2. implied from excess corpus
3. purchase money resulting trust

Question 5

Failure of an express trust

Answer 5

A resulting trust arises where a settlor has conveyed property to a trustee under an express trust and:
1. the trust is void or unenforceable
2. the beneficiary is dead or cannot be located

Can also apply in the context of charitable trusts where **cy pres is inapplicable **

Question 6

When is a resulting trust not implied?

Answer 6

1. where the trust instrument specifically or implicitly provides for disposition of trust property when the trust has failed
2. the settlor was given consideration for their original transfer in trust
3. the settlor created the trust for an illegal purpose
4. cy pres is applicable

Question 7

Resulting trust from excess corpus

Answer 7

Trust purpose is satisfied and some trust property remains

Question 8

Purchase money resulting trust

Answer 8

purchase money resulting trust is presumed whenever the beneficiary furnishes the consideration for the acquisition of real or personal property but, with the beneficiary’s consent, title is taken in the name of the trustee.

Consideration must be supplied at or before the time the trustee takes possession.

Burden is on beneficiary to prove they provided consideration.

Question 9

Constructive trust

basic principles

Answer 9

A constructive trust is not really a trust but rather is a flexible equitable remedy to prevent unjust enrichment resulting from wrongful conduct, such as fraud, undue influence, or breach of a fiduciary duty.

The constructive trustee’s only duty is to convey the property to the person who would have owned it but for the wrongful conduct.

A constructive trust must be requested as a remedy in a court action; it is not automatic. The facts establishing a constructive trust must be made by clear and convincing evidence.

Question 10

When do constructive trusts arise?

Answer 10

1. theft or conversion
2. fraud or duress
3. breach of fiducairy duty
4. homicide
5. fraudulent promise*
6. breach of promise by one in a confidential relationship*

*minus these exceptions, breaches of promises generally do not lead to constructive trusts

Question 11

What is the trustee’s duty in a constructive trust?

Answer 11

The trustee’s sole duty is to convey legal title to the beneficiary