Trusts - Implied Purpose and resulting trusts

Question 1

Implied trusts of the home
- what are they?
-how can they be formed?

Answer 1

There are three main types of implied trusts of home
1) Express Trust- intentionally set up by settlor - can be private trusts for benefit of beneficiaries, or purpose trusts
2) Implied Trusts - set up by courts or by operation of law
- examples resulting and statutory trusts (Wills
- Implied trust of home = common intention construction trust. Parties don’t set out to form trust but CT impose to cover intentions
and detrimental reliance of parties
** Property can have an express trust**
3) Purchase money resulting trust
- in commercial or family/relative context

Question 2

Common intention constructive trust (CICT)
What is it?
How is it imposed?

Answer 2

CICT=
- implied trust of home
- imposes by court where co habiting couple disputing ownership
- 1 says should have rights or increased property right

• CT grant by imposes CICT allowing them to put at law actual co-habiting couple, or single owner
• at equity ownership shared unequally
• if CT agree with claimant will impose CICT to make it fair, divide equitably
• need intention and detrimental reliance

Question 3

2 scenarios in which CICT formed
Joint ownership =
Single Occupancy =

Answer 3

Joint Ownership
- 50/50 joint ownership
- equitable joint tenants
- fall out and claimant says is entitled to more than 50 %
Single occupancy
- one individual on title deeds
- move in together and fall out, partner says should have equitable ownership trust applied

Need to show common intention and detrimental reliance

Question 4

Joint ownership (JO) CICT

1) Formation=

2) How is common intention detrimental reliance shown

Answer 4

1)
- equitable joint tenants - own 50/50
- CT says equity follows law
- CT views start point presumption 50/50 ownership
- needs rebutted by the claimant to show common intention rights are unequal and claimant suffered detrimental reliance

2)
- ONLY WHERE CO HABITING COUPLE
- own 50/50
- rebuttable by claimant
- claimant has to show evidence that common intention not 50/50 eg by financial contributions, contribution to mortgage, contribution purchase price.
- or that there has been a discussion between the parties that showed an intention shares split unequally, for instance to stop arguments, as they stay home to look after their children
- looked at by court on fact does the claimant deserve a greater share?
- if CT agrees they should they will then rebut the presumption
- CT then impose CICT and look at what the shares should be based on the evidence
- If court doesn’t agree will remain 50/50

DOES NOT APPLY TO MARRIED COUPLES OR CIVIL PARTNERS

Question 5

Single owner (SO) CICT

1) Formation=

2) How is common intention detrimental reliance shown

Answer 5

1)
- co habiting couple where 1 owns 100% property on legal deeds
- CT says equity follows the law, because owns total of property - 1 owner.
- Presumption defendant owns 100% - up to claimant to rebut this
- claimant has to show common intention or detrimental reliance
- in JO CT takes into account numerous factors to assess. BUT with SO can only show:
a) implied/ express intention by financial contributions - paying mortgage, purchase price = implied intention to share ownership.
b) Detrimental reliance - can be as easy as contributing to purchase price, mortgage or house improvements
MUST be in relation to the property, can only be financial

If show CT would impose CICT and share equitable ownership according to what see just.

* DISPUTE OVER HOME IN SO OR JO - APPLY CICT*

Question 6

RESULTING TRUST (RT)
1) What are they?

2) How are they formed?

Answer 6

1)
- BY CT
- Type of implied trust that takes 2 forms -
* automatic RT
* Presumed RT

2)
- settlor tries to transfer/make trust or gift in some way
- equitable ownership jumps back to settlor
- 2 x types
Automatic RT
Presumed RT

Question 7

Automatic RT

Answer 7

AUTOMATIC RT
- where trust fails in some way eg beneficiaries
- No valid declaration of trust ie 3 certainties not complied with
- or haven’t complied with forms in trust of land
- or trust failed - legal title may be transferred, but equitable title isn’t
- gift for purpose - purpose fulfilled so remaining left is held on RT
- QUISTCLOSE TRUST - specific
- ie lender lends money for purpose eg to buy company, can only be used for that purpose not mixed with their own funds. If the borrower uses the money for another purpose, the lender can consider the money to be held on trust for them. Trust ends when borrower has completed intended purpose - then becomes structured loan

Question 8

Presumed RT

Types ? 2 =

Answer 8

PRESUMED RT
- Friends, family, relatives
2 kinds
1) Voluntary transfer of property
2) Purchase money RT

1) Voluntary transfer of property
- Property transferred to another no consideration
- No instruction/intention on whether a gift, loan or other purpose
- voluntary conveyance of property - courts presume didn’t mean to transfer for free
- eg house- no consideration, nothing to say if give or other, then hold on RT
- Presumption can be rebutted where:
*express intention for a gift
* evidence gift - ie given on birthday

2) Purchase Money RT
- contributes to purchase price of home
- buys home for someone
- in both cases presumption RT 100%
- or if contribution to price RT for share contributed
- rebuttal presumption RT - child having equitable share, but back on title deeds. Child holds on trust for parents who also have equitable share
- rebuttal presumption if express evidence gift or on birthday, in family context more likely to give house to child

Question 9

Private purpose trust=

Answer 9

• kind of express trust
• intentionally by settlor
  2 x types
  1) Express Private Trust - benefit beneficiaries
  2) Express Purpose trust - for particular purpose
• General rule is that purpose trust is INVALID
• Private trust MUST be for identifiable beneficiary, it WILL then be enforceable
• A purpose trust that could last forever is not something that Trust law does not like
• Charitable trust are more likely to succeed provided they meet the definition of a charity under the Charities Acts

Question 10

Differences between private purpose trust and Charitable trust =

Answer 10

PRIVATE PURPOSE TRUST
- more difficult to set up
- must be set up for someone’s own purpose eg looking after pet, monument.
- ONLY way it can succeed is if it satisfies 2 criteria: for strict limited no of purposes - maintaining
1) monuments and graves, saying of private masses, maintenance animals (pets)
2) Must only last life in being plus 21 years ie alive plus 21 years or a life - usually random, often young member of royal family

CHARITABLE TRUSTS (CT)
- must satisfy definition of charity
1) for charitable purpose - relief from poverty, advancement of education, advancement of health etc
2) Public benefit - must benefit community and those that can benefit must be sufficiently numerous - not just 5
3) Exclusively charitable
- can last forever, no time frame needed
- known as rule inalienability
- don’t need to say last for…….will last forever.
EXCEPTION IS:
- CT - gift over to individual, private trust, private company or anything private then that must vest within 125 years. Cannot be for more than 125
- If gift over to another charity after a charity, will be valid as remoteness of vesting

Question 11

SUMMARY

Common intention construction trust =

Resulting trust =

Purpose trust =

Answer 11

CICT
- cohabiting couples in dispute
- check if joint ownership or single owner

RT
- Automatic resulting trust - when fails, or Quist close
- Presumed resulting trust - voluntary conveyance or purveyance, or purchase money RT

PT
Private - fail unless comply with exception - life in being + 21 years
Charity - forever, look for remoteness of vesting within 125 years