Monday, 27 August, 2018
Resulting, implied, or presumed trusts, whatever the label, the nature of the trust instrument remains the same (for the purposes of efficacy, this piece will settle on the term ‘resulting’ trusts).
All trust instruments have certain features and resulting trusts are no different. Therefore, how does a resulting trust arise? Great question and this piece will explore the nature of resulting trusts.
How does a resulting trust arise?
Resulting trusts arise when a settlor confers title to property to another person. However, there is a presumption that the settlor holds the intention to retain beneficial ownership of the property either wholly or partially. Broadly speaking, resulting trusts arise where a person has created an express trust, but has not disposed of the beneficial interest in the trust property, or the person has transferred titled to another party, while not completely holding the intention of disposing the beneficial interest in the property.
Are resulting trusts dependent on a court order?
Due to the fact that a resulting trust arises at the moment of transaction, the general presumption that will be made is that all parties hold the intention of entering into such a transaction. As a consequence, there is no requirement for the court to issue an order, but rather, the court enforces the pre-existing trust which signifies that it is a resulting trust and a property institution.
There are a number of implications in relation to a resulting trust, such as; at the time of creation, there must be certainty of a beneficial interest under a resulting trust, and evidence of actual intention that is subsequent to the date of creation cannot be used to rebut the presumed intention that gave rise to the trust initially. Furthermore, from the date that the trust is established, beneficiaries have an equitable property interest in the trust property that is enforceable against any other subsequent holder of the property outside of the bona fide purchaser for value of the legal estate without notice. Additionally, such interests may support caveats.
However, a resulting trust cannot arise during instances where the settlor has undoubtedly outlined an alternative destination for the beneficial interest.