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06_Resulting_trusts - Equity and Trusts 06 Resulting Trusts...

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Equity and Trusts 06 – Resulting Trusts © Jaani Riordan 2006 Page 1 of 24 http://www.jaani.net/ P ART VI R ESULTING T RUSTS I Introduction A Definition A resulting trust arises where there has been a transfer of property and the transferor does not intend (or is presumed not to have intended) to confer a beneficial interest upon the transferee. For example, if A transfers legal title in property to B, not intending B to have any equitable interest in the property, then B is said to hold the property on resulting trust for A, such that A retains an equitable interest in same. The word ‘result’ in ‘resulting trust’ derives from the Latin resaltire , meaning ‘to jump backwards’. It describes the movement of the equitable interest, which ‘jumps backwards’ to the transferor from the transferee. An etymological analysis is thus particularly apt to describe the nature of the modern resulting trust. Equity recognises a resulting trust as arising in three circumstances: 1 Voluntary transfer of property If A voluntarily (ie, for no consideration) transfers property to B, B will be presumed to hold that property on resulting trust for A (‘presumption of resulting trust’). This presumption may be rebutted by evidence of a contrary intention: for example, an intention to make a gift; 2 Purchase in the name of another If A makes contributions to the purchase price of property, which is held in the name of B, B will be presumed to hold that property on resulting trust for A to the extent of A’s contribution (‘purchase money resulting trust’). This presumption is also rebutted by evidence of contrary intention, such as an intention to make a gift, or by a presumption of advancement (that, having regard to the type of relationship between A and B, A intended to advance himself — or herself: Nelson v Nelson — by making a gift); and 3 Failure of an express trust If an express trust fails for any reason, the property will result back to the original owner automatically and irrespective of the settlor or beneficiary’s intention. The presumptions are only that: presumptions. They can be rebutted by even slight evidence of a party’s actual intention that is inconsistent with the presumption. This effect was described in prosaic terms by Lamm J in Mackowick v Kansas City (1906) US: The equitable presumptions of resulting trust may be viewed as the bats of the law — flitting in the twilight, but disappearing in the sunshine of actual facts. The presumptions can also be rebutted by other presumptions, such as the presumption of advancement.
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Equity and Trusts 06 – Resulting Trusts © Jaani Riordan 2006 Page 2 of 24 http://www.jaani.net/ B Rationale and Relevance Resulting trusts exist for primarily historical reasons. In the middle ages, English knights and landowners would commonly transfer their estates to a family friend prior to going abroad or to war, in the expectation that their friend would look after their land for the duration of their absence.
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