Duhaime's Law Dictionary


Resulting Trust Definition:

A trust that is presumed by the court from certain situations.

Related Terms: Trust, Constructive Trust

Similar to a constructive trust except that for resulting trusts, the court presumes an intention to create a trust; the law assumes that the property is not held by the right person and that the possessor is only holding the property "in trust" for the rightful owner.

In Re EVTR:

"... resulting or constructive trust normally arises by implication of law when circumstances happen to which the parties have not addressed their minds...."

Also, in Seward:

"A resulting trust arises where a common intention respecting an interest in property can either be implied by operation of law, or is established on the basis of evidence."

The Canadian legal series Canadian Encyclopedic Digest (2010) summarized the law as regards to resulting trusts as follows:

"A resulting trust occurs when a party holds legal title to property where de facto title is shared by others.

"In an express trust one follows the wording of the trust or will; in an implied trust one follows extrinsic evidence of the settlor's or testator's intention; in a constructive trust one follows the contributions of the claimants with respect to property; but in a resulting trust one follows title. Generally there are two circumstances which give rise to a resulting trust. The first circumstance is any variant of a situation where A and B purchase property but the property is held in the name of B. B becomes a resulting trustee with respect to A's interest in the property.

"The second circumstance arises where an express trust has failed; the trustees then hold the undisposed property as resulting trustees for the benefit of the settlor or his or her estate."

In the 2007 decision of Pecore v Pecore, Justice Rothstein of Canada's Supreme Court wrote:

"A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner. While the trustee almost always has the legal title, in exceptional circumstances it is also possible that the trustee has equitable title."

In constructive trusts, the courts do not even bother with presuming an intention; they simply impose or imply a trust from the facts.

As was succinctly stated in Lewin on Trusts, 17th Edition (2000):

"A general distinction might be drawn between express, resulting and constructive trusts on the basis that express trusts ... are founded on the express or inferred intention of the settlor, resulting trusts are founded on the presumed (but rebuttable) intention of the transferor or purchaser of the property, and constructive trusts are imposed on a person who holds title to property against his intention."

A trust that is implied from certain facts, thus stated to be a form of implied trust (constructive trusts being the other type of implied trusts). In Osborn's A Concise Law Dictionary, he defined a resulting trust as:

"An implied trust where the beneficial interest in property comes back, or results, to the person (or his representative) who transferred the property to the trustee or provided the means of obtaining it."

Resulting TrustIt seems that equity creates a resulting trust to solve those rare dilemmas for which the law has no other fair solution.

In Re Vanderville's Trusts, the English court found a resulting trust springs to the benefit of the settlor where an express trust fails to fully distribute the trust property to the beneficiary. The resulting trust is that the trustee then holds the undisposed of property in trust for the settlor; to revert it back to the settlor.

Two other situations that have attracted a determination of a resulting trust have been where, in limited situations, title to property is gratuitously transferred to another person, a resulting trust may be imposed to the effect that the nominal owner holds the property in trust for the giving party.

Similarly, where two persons pay for property but only one goes on title, the law, through equitable principles, can find that the person on title holds the other's share in trust in proportion to their respective contributions, as a resulting trust, even though no express trust exists.

References or Further Reading

  • Duhaime Lloyd, Introduction to Trust Law
  • Mowbray, John and others, Lewin on Trusts, 17th Edition (London: Sweet & Maxwell, 2000), page 181.
  • Pecore v Pecore 2007 SCC 17
  • Re Vanderville's Trusts 1971 AC 912
  • Seward v Seward Estate, 194 A.R. 348 (1996)

 

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