Resulting trust

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The Law of Wills, Trusts and Inheritance

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

A resulting trust is a situation where property "results" back to the transferor. In this instance, the word 'result' means "in the result, remains with", or something similar to "revert" except that in the result the settlor never effectively parted with his beneficial interest.

A resulting trust generally occurs in two situations when legal property is transferred:

The settlor tries to set up a trust for a third party, but fails to transfer the beneficial interest (for example, by naming a non-existent beneficiary).
The settlor intends to retain the beneficial interest in the property, but transfers the legal title to someone else (for example, to let an active child manage the assets). The trust is implied by the settlor's lack of intention to transfer any beneficial interest ^[1]

The beneficial interest results in the settlor, or if the settlor has died the property forms part of the settlor's estate

[edit] The Settlor's intention

In relation to the second type of resulting trust, there is some difference in expressing the nature of the settlor's intention:

In Westdeutsche Lord Browne-Wilkinson stated that a resulting trust arises due to a legal "presumed intention to create a trust in favour of the donor"
It has also been suggested that it is the fact of a "lack of intention to benefit the recipient" that creates the trust.^[2]

Although in many cases the outcome would be the same, the difference is significant. It is often difficult to prove intention, but easier to prove the circumstances when a legal presumption will arise. It may be more or less easy to rebut a presumption than to disprove an intention.

Lord Browne-Wilkinson was afraid that this would create a "floodgates" problem, by giving every claimant a proprietary right in bankruptcy - making many more claimants secured creditors, and thus making the position of a secured creditor much less valuable. (citation needed)

[edit] Notes

In South Africa there is no doctrine of resulting trusts. The main remedy if any of the trust purposes should fail would be through Unjust enrichment. (citation needed)