Introduction to resulting trustsThe key characteristic of a resulting trust is that the property returns, i.e. results back, to the settlor/transferor. Automatic resulting trusts:-Megarry J suggested that these arise automatically when an express trust fails.-When an express trust fails for uncertainty of objects, the trust property results back tothe settlor. Presumed resulting trusts:-Sometimes called a presumption against a gift.-Megarry J suggested that these resulting trusts are based on the presumed intention of a transferor of property to a transferee that a gift is not intended, i.e. the transferee holds the property on resulting trust for the transferor.Automatic resulting trustsThese trusts come about when an express trust fails. This failure may occur for a variety of reasons.Examples of the failure of an express trust – with an automatic resulting trust arisingFailure to identify the beneficiary of an express trust-In Vandervell v IRC we saw that Mr Vandervell asked Vandervell Trustee Co to hold the option to repurchase the shares but he did not identify the beneficiary.-Therefore, Vandervell Trustee Co held the option on automatic resulting trust for Mr Vandervell.Failure to dispose of the entire beneficial interest -Sam, the settlor, transfers £100,000 to his trustees to hold on trust for his son, Alan, for life but does not state what is to happen when Alan dies. -As Sam has failed to dispose of the entire beneficial interest, when Alan dies the fund will result back to Sam (or his estate if he is dead).UP FOR DEBATEDoubt was cast on the above classification by Lord Browne-Wilkinson in Westbeutsche Landesbank v Islington LBC who considered that both types of resulting trust are based on presumed intention. Referring to automatic resulting trusts, he suggested that it would be the presumed intention of a settlor (where the express trust he had attempted to set up failed) that the property should return to him.This presumption could be rebutted by evidence that the settlor had abandoned any beneficial interest in the property, in which case the property would pass to the Crown as bona vacantia(ownerless property).
Trust fails, e.g. for uncertainty of subject matter-Boyce v Boyce  the express trust of two houses failed for uncertainty of beneficial interest.-The property resulted back to the settlor’s estate. -The same would apply where a trust fails for uncertainty of objects.Failure of a specific purpose -In Re Ames’s Settlement , the bridegroom’s father created a marriage settlement.-The marriage was later declared void and the trust fund was returned to the father under an automatic resulting trust.Surplus funds and automatic resulting trustsPopular examination topic and can arise in two situations.
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