Trusts - Resulting Trusts

Question 1

Implied Trusts

Answer 1

• Arise where no intention to create a trust has been expressly stated an equity steps in

Question 2

Resulting trusts

Answer 2

• Implied by law on the basis of the presumed intention of the settlor
• Equitable interest created in trust property that goes back to settlor if they are still alive (or the estate if they have died)

Question 3

When resulting trusts can arise

Answer 3

• Voluntary transfer or purchase in name of another
• Failure to exhaust beneficial interest under an express trust

Question 4

Voluntary Transfer Cases

Answer 4

• Unexplained gifts of property from X to Y without consideration
• Equity would presume that settlor did not intend to give the gift and a resulting trust is created (i.e. Y held the property on resulting trust for X)

Question 5

Purchase Money Cases

Answer 5

X provides the purchase money but Y holds the legal title (Y holds the legal title on resulting trust for X)

If X and Y both contribute to the purchase price but the property is in Y’s name it is presumed that Y holds the property on trust for himself and X in proportion to their respective contributions

Criteria that must be fulfiled for resulting trust to arise:

• Money must be used to purchase property (money to make improvements does not give rise to a resulting trust)
• Money must be provided at or before time title vests in trustee
• Claimant has burden of proving they paid towards purchase price (by providing clear and convincing evidence)

If criteria met there is generally a presumption of a resulting trust - this can be rebutted by the title holder and alleged trustee by submitting evidence that no trust was intended and the money was a gift, a loan or payment of a debt owed to them

Question 6

Presumption of Advancement

Answer 6

If this presumption of advancement applies a presumption arises that the person making the voluntary transfer / providing the purchase money intended to make a gift to the other party

Relationships that trigger this presumption:

• Husband/fiance to wife/fiancee (no authority to suggest that this applies to reverse)
• Father to child (no authority to indicate that this applies to transfers from mother to child)
• Person in loco parentis (taken on parental duties) to recipient (has been found to apply to transfers from a mother to child when she has sole responsibility for her child as a single parent)

Presumption can be rebutted by the transferor/provider of purchase money providing clear evidence that they did not intend to make a gift and show that they intended to retain an equitable interest in property as a beneficiary

Question 7

Evidence to Rebut Presumptions

Answer 7

• Surrounding circumstances at time of transfer or purchase
• Only evidence of acts or declarations made before or at the time of transfer / purchase will be admissible
• If property transfer made as part of an illegal or fraudulent transaction the court must decide if it is in the public interest to allow the claim

Question 8

Failure of Express Trust

Answer 8

Settlor aims to create express trust but express trust fails leading to a resulting trust arising (trustee conveys property back to settlor or their estate)

Situations where express trust may fail:

• Lack of three certainties
• Failure of contingent interest
• Failure of half-secret trust due to lack of communication