This is an extract of our Resulting Trusts document, which we sell as part of our GDL Equity and Trusts Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.
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Topic 8 8 - Resulting Trusts??
Express Trusts = Where settlor has expressly transferred property to hold on declared trusts or where holder of property declares themselves trustee of it on terms declared. (CF) Implied trusts = ones which arise by operation of law and which are imposed by the courts in response to the circumstances of the case rather than as a result of deliberate creation by the settlor.
= Underhill and Hayton - Divide trusts into Express Trusts and those 'imposed by implication of a court of equity': o = (Implied Trust) where LT to property in 1 person and ET to beneficial enjoyment in another. Further subdivided into Resulting and Constructive Trusts. Resulting trusts = are implied by the courts in certain circumstances where the property is deemed to return to the would-be settlor. The name 'resulting' therefore describes the effect of the trust (returning or resulting to the settlor) but not the circumstances in which such a trust will arise. In fact, there are many different situations in which a court will find a resulting trust and it is difficult to provide an exhaustive list. o No express declaration of trust - so no formalities apply o Arise in many ways when equity treats a person as holding property on trust for Settlor:
? 1. Transfer to another to hold on trust, but transferor failed to create equitable interests that dispose of whole of beneficial interest.
? 2. Voluntary (gratuitous) transfer into another's name
? 3. Purchaser has property conveyed into name of another, where no gift was intended (Lavelle v Lavelle)?NB - Transferor = legal beneficial owner of property that they transfer, but NO equitable interest unless/until they acquire an interest under expressly created trust or resulting trust (Westdeutsche Landesbank v Islington LBC).
Classification = not without its critics, but it is generally accepted as describing the sort of circumstances in which a resulting trust will arise classification has formed one of the most interesting academic debates: Megarry J in Re Vandervell's Trusts (No2): o Automatic Resulting Trusts = where resulting trust is automatic consequence of a failure to dispose of all beneficial interest o (Do NOT depend on intention)
o = arise where the settlor has failed to effectively dispose of his entire equitable interest in the property, for example where he has failed to make a valid declaration of trust in the first place. o Example:
? A transferred shares to B to hold on trust for persons A nominates, then clear:
? 1. B does not take absolutely since B is directed to hold on trust; AND
? 2. B cannot hold on trusts supposedly declared for beneficiaries , as they are unknown.= Only person B can hold for is A, so only viable solution is resulting trust. Court imposes a resulting trust as 'automatic consequence of A's failure' to specify objects/beneficiaries of trust. Bound to be a resulting trust as no alternative
o Presumed Resulting Trusts = where there is a rebuttable presumption of resulting trust because property is put in name of another. o (Depend on presumed intention of the Settlor) o = arise on the basis of the presumed intention of the settlor, in circumstances where equity presumes that the 'settlor' intended to retain his beneficial interest in the property even though he hasn't expressly stated that. For example, where A pays the purchase price for property that is actually transferred into B's sole name, the natural presumption (in the absence of any evidence to the contrary) is that A must have intended to buy himself an interest in the property and therefore a resulting trust will be presumed in his favour, with B holding the property on trust for A. o Example:
? A transfers shares to B then question arises whether B is to hold shares:
? 1. Absolutely for B
[no resulting trust]
? 2. On trusts validly declared; OR
[no resulting trust]
? 3. For A
[presumed resulting trust]*
o = * A has not told B to hold shares for B or anyone else, so court presumes (unless evidence to contrary) that A intended B to hold beneficial interest for A. o = Rebuttable presumption that B holds on resulting trust for A. I.e. a presumption that can be displaced or rebutted by suitable evidence, since the resulting trust is not automatically imposed by
treated as a suitable result unless a better one can be shown. NB - ONLY will be a resulting trust if there is no evidence to suggest a contrary intention
1. Automatic Resulting Trusts
? Presumption of resulting trust, no more than a long stop to provide answer when relevant facts fail to provide solution (i.e. where transfer to B leaves some/all of beneficial interest undisposed of).
? Arises when: o A. No (valid) declaration of trust o B. Valid declaration but the trust fails o C. Beneficial interests not completely disposed of (including surpluses)
? A. No valid declaration of trust o No trust declared (Vandervell v IRC) o Lack of proper formalities (S53(1) LPA 1925)
? Manifested and proved (can be declared orally)
? Signed writing by Settlor o Lack of certainty, particularly certainty of objects and their shares
? Certainty of object (beneficiaries)
? Property to trust (Subject matter)
? Clear trust intended by settlor (Intention) o Breach of rule against perpetuities
? Rule against Inalienability (applies to private purpose trusts)
= = Income from property must not be 'tied up' (i.e. inalienable) for a non-charitable (i.e. private) purpose for longer than the perpetuity period (specified time upto 21yrs. Can extend perpetuity period - nominate 'human life in being' and add
+21years from date of testators death (i.e. can be someone specific or a group). Also use 'royal lives' clause [i.e. last surviving royal family member alive at the time of my death] - cannot have 'last person alive on my death' as no way to tell who that would be. JUST needs to be ascertainable. 'so far as the law allows' (Re Hooper) = court interpreted as 21 years
? Rule against Remoteness of Investing (may impact gifts to unincorporated associations) o Failure to create an intended charitable trust, which will then generally be void as a private 'purpose' trust (Morice v Bishop of Durham); (Chichester Diocesan Fund and Board of Finance (inc) v Simpson)
? B. Valid declaration but the trust fails - arises:
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