Trusts arising by operation of law Flashcards
What is a statutory trust?
A trust that arises as a result of a legislative provision
Example: Trusts of Land arising under TLATA whenever land is acquired by legal co-owners.
Under what circumstances do resulting trusts arise?
When a legal owner transfers ownership of their property to a third party but equity recognizes they should retain or regain the beneficial interest.
What is an automatic resulting trust?
A trust where the trustee holds legal title on trust for the beneficiary/settlor who has beneficial interest
It is a default trust when a transfer on trust fails either wholly or partly.
What can cause a trust to fail and become an automatic resulting trust?
- Failure of beneficiaries
- Being partially expressed
- Going against public policy
- Surplus funds after trust is performed
What happens if a trust has failed from the outset?
The settlor can attempt to correct that problem.
Do all failed attempts to create an express trust produce a resulting trust?
No, not all failed attempts will produce a resulting trust.
if a trust has failed due to lack of consitutiont, there is nothing to result back to the settlor as they already have the property - this would therefore result in a constructive trust
What is a presumed resulting trust?
A trust that arises from a voluntary transfer of property to another for no consideration or a purchase in the name of another
What presumption is made when a person makes a gratuitous transfer of property?
It is presumed that the transferor does not intend to lose their beneficial interest in the property.
How can a presumed resulting trust be rebutted?
- Providing consideration, making the transfer a sale
- Showing evidence that the transfer was intended to be a sale
Can a presumed resulting trust arise from a transfer for an illegal purpose?
No.
What occurs when a person pays the entire purchase price for a new asset?
A presumed resulting trust is created where the person holds the beneficial interests.
What happens when a person pays part of the purchase price for a new asset?
Equitable interest is divided based on respective contributions to the purchase price.
What are constructive trusts imposed to correct?
Constructive trusts are imposed to correct unconscionability.
What are institutional constructive trusts?
Institutional constructive trusts arise because the conscience of a legal owner is affected in some way.
What are some examples of constructive trusts?
- Constructive trusts to prevent fraud
- Constructive trusts imposed to perfect an imperfect gift or trust
- Constructive trusts imposed to compel parties to perform a specifically-enforceable contract
- Constructive trusts imposed over profits made in breach of fiduciary duty
What is the role of constructive trusts as a remedy?
Constructive trusts are awarded by the court following a misapplication of property in which the claimant can establish an equitable proprietary interest.
What are common intention constructive trusts?
Common intention constructive trusts resolve disputes as to beneficial ownership of land where there is no express trust declared over the property.
When do common intention constructive trusts apply?
They apply when land is registered in one occupier’s name but the other is seeking to establish a beneficial interest in the land or there are disputes about shares of beneficial interest.
