Resulting trust

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The law of wills and trusts
Part of the common law series
Inheritance
Intestacy  · Testator  · Probate
Power of appointment
Simultaneous death  · Slayer rule
Disclaimer of interest
Types of will
Holographic will  · Will contract
Living will
Joint wills and mutual wills
Parts of a will
Codicil  · Attestation clause
Incorporation by reference
Residuary clause
Problems of property disposition
Lapse and anti-lapse
Ademption  · Abatement
Acts of independent significance
Elective share  · Pretermitted heir
Contesting a will
Testamentary capacity
Undue influence
Types of Trusts
Express trust  · Asset-protection trust
Accumulation and maintenance trust
Interest in possession trust  · Bare trust
Protective trust  · Spendthrift trust
Life insurance trust  · Remainder trust
Life interest trust  · Reversionary interest trust
Charitable trust  · Honorary trust
Resulting trust  · Constructive trust
Special needs trust: (general)/(U.S.)
Doctrines governing trusts
Pour-over will  · Cy pres doctrine
Other areas of the common law
Contract law  · Tort law  · Property law
Criminal law  · Evidence

A resulting trust is a type of implied trust created through implication of law where the actions of the parties involved and the nature of the transaction implies an intention to create a trust. In many ways a resulting trust is similar to an express trust as there must be intent. However, this intent is presumed upon the parties rather than demonstrated through evidence.

A resulting trust generally occurs in two situations:

• a "failed express trust" situation. Where an express trust either fails for lack of formalities, or it is no longer possible to complete it. Both cases result in a dispositive failure.

• The second situation is in the case of an apparent gift. In this case, in the absence of a presumption of advancement (the presumption that a gift was intended), equity looks suspiciously on the gift and decides that the donor did not really mean to give up his entire interest in the gift.

A resulting trust usually occurs where a person omits to divest his beneficial interest in the trust property. This can be on purpose or completely by accident. See Re Vandervell's Trusts (No.2) [1974] Ch 269.

A great deal of controversy still surrounds the conceptual grounds for resulting trusts - specifically what intention the donor must have:

• Swadling and Lord Browne-Wilkinson in Westdeutsche follow the line that a resulting trust arises due to a "presumed intention to create a trust in favour of the donor" (ie, the A intends to give Redacre to B so that B can hold it for A).

• Birks, Chambers and Potter LJ and Lord Millet suggest that in fact it is the "lack of intention to benefit the recipient" that creates the trust. (ie, A transfers money to B, and does not intent to benefit B, and so in the absence of evidence to the contrary, the trust returns the money to A as he "presumably" did not want to benefit B).

Although in many cases the result will be the same, the difference matters because in many cases it is difficult to prove actual intention - but it may be easy to rebut the presumption. The Birks and Chamber view would create many more resulting trusts. Lord Browne-Wilkinson was clearly afraid that this would create a "floodgates" problem of giving every claimant a proprietary right in bankruptcy - making many more claimants secured creditors, and thus making the position of being a secured creditor much less valuable.

In South Africa however there are no such things as resulting trusts, the main remedy if any of the trust purposes should fail would be through Unjustified Enrichment.