Resultant trusts are implied trusts where one party transfers ownership to another who pays nothing. The court assumes the intention of the original owner to create a trust for the benefit of themselves or another. Trusts are legal arrangements where an asset is controlled by a trustee for the benefit of another person. Resulting trusts can be created when an express trust fails or when a purchaser gives an asset to a third party. Laws exist to prevent unjust enrichment of an assignee.
With the name derived from the Latin word resultare, meaning “to jump back,” resultant trusts are implied trusts in contexts where one party transfers ownership to a second party, who pays nothing for that property. In such circumstances, the court assumes the intention of the original owner of the property to create a trust, where the owner of the property holds that property for the benefit of the original owner or another person.
A trust is a legal arrangement in which an asset, whether tangible, intangible or real, is controlled and supervised by a trustee for the benefit of another person. There is no intention for the trustee to own or benefit from the asset. The trustee has a fiduciary obligation to the beneficiaries who are the “beneficial” owners of the property. There are many purposes for express trusts, including asset protection, privacy, tax planning, spendthrift protection, and estate planning.
The resulting trusts can be created in various ways. When an express trust fails, such as when the beneficiary dies without the settler’s knowledge, a resulting trust is automatically created. The assets of that trust revert to the settler or the settler’s estate. Another scenario where resulting trusts occur is when a purchaser of an asset, such as real estate, gives or deeds the purchased asset to a third person, with the implication that the third person holds the real estate in trust for the purchaser even if the third party legally holds title.
For transfers of property or money between close relatives, some courts establish rebuttable presumptions of gift, which can be used as a defense against resulting trust claims. The presumption of gift applies to transfers of property from settlers to children, nephews, siblings, aunts and uncles, but does not apply to spouses, for whom there is a fiduciary duty of propriety and good faith. For example, when a married couple converts title in a jointly held marital asset, such as a house or real estate, into single ownership for estate planning purposes, the property remains marital. The conversion of such types of property into marital status can only take place under strict circumstances. The resulting trusts are implied when one person pays another person and the money is not a gift.
Laws relating to resultant trusts exist to prevent unjust enrichment of an assignee. In those circumstances where a person has transferred ownership, the courts may decide that the transferor has waived his right to enforce a resulting trust. Most jurisdictions do not allow a cheater to use the courts to profit from his illegal transaction, known as “unclean hands.” Other courts may choose to ignore the purpose, illegal or not.
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