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Resulting Trusts Notes

GDL Law Notes > GDL Equity and Trusts Notes

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E&T: Resulting Trusts Introduction

- Express vs. implied trusts. express trust: settlor expressly transfers property to hold on declared trust, or declares self trustee. implied trust: arise by operation of law.
[Underhill and Hayton]: imposed by implication of a court of equity where the legal title to property is in one person, and the equitable right to the beneficial enjoyment thereof is in another. encompasses: resulting trusts + constructive trusts.

- Resulting trusts: property deemed to return ('result') to settlor. no express declaration, so different rules: e.g. s53(2) LPA 1925: s53(1) LPA 1925 (writing requirements) does not apply. arise in many + miscellaneous set of circumstances: a. transferor has not parted with whole of beneficial interest. b. voluntary conveyance into another's name. c. purchaser conveys property into name of another.

Types of Resulting Trusts

- Automatic vs. presumed resulting trusts: division by [Megarry J] in Re Vandervell's Trusts (No. 2) [1974]. automatic resulting trusts: RT automatic consequence of failure to dispose of all the beneficial interest - e.g. Vandervell v IRC.
[Megarry J]: do not depend on intention - but: [Ld Browne-Wilkinson] in Westdeutsche Landesbank Girozentrale v Islington LBC [1996]: they are. where no alternative: e.g. A tells B to hold on trust, but does not nominate beneficiaries. presumed resulting trusts: rebuttable presumption of RT because property put in name of another. where settlor's intention unclear: could have intended transferee to hold absolutely, on trusts validly declared, or for settlor. rebuttable presumption: need evidence to suggest a contrary intention.

Automatic

Presumed

Trust fails

Voluntary transfer:
... Personalty
... Land

Quistclose trusts

Purchase money RTs:
... In another's name
... In joint names
... In one name only

Unused surpluses

No valid declaration

Automatic Resulting Trusts

- Introduction. e.g. Vandervell v IRC [1967]: documentation did not state beneficiaries of option held on trust ? RT. need careful drafting: failure to declare all beneficial interests ? tax charge because of RT. 3 reasons automatic RT arise:

1. no (valid) declaration of trust

2. valid declaration but trust fails

3. beneficial interests not completely disposed of (inc. surpluses).

- No (valid) declaration of trust: possible reasons...

1. no trusts declared - e.g Vandervell v IRC. (N.B. trust interests tenacious: RT despite desire of settlor).

2. lack of proper formalities - s53(1) LPA 1925.

3. lack of certainty: esp. certainty of objects + their shares.

4. perpetuities rule breach.

5. failure to create intended charitable trust ? void as private purpose trust. e.g. Morice v Bishop of Durham [1804]; Chichester Diocesan Fund and Board of Finance (Inc) v Simpson [1944].

- Valid declaration but trust fails: possible reasons...

1. trust becomes impossible: e.g. intended beneficiary dies; body intended to benefit ceases to exist (e.g. Re Recher's WT
[1972]: anti-vivisection society); trust/purpose becomes impossible.

2. pre-condition not met: often re marriage settlements. e.g. Essery v Cowlard [1884]: marriage never took place ? RT.

- Incomplete disposal of beneficial interests: possible reasons...

1. failure to provide for a situation: e.g. gift for life, with no gift over.

2. failure to foresee possible situation: Re Cochrane's ST [1955]: life interest to wife for as long as she lives with her husband, then life interest to husband, then gift over to children appointed by survivor (or equally at age of 21) - but: wife ceased living with husband + husband died first ?
both life interests ended during life of survivor - 'gap': RT of income to settlor until wife's death.

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