Trust 2: Resulting Trusts

Question 1

What is a voluntary transfer and does it result in a trust?

Answer 1

• Where party A transfers legal title in property to party B without consideration; and
• There is no evidence before or at time of transfer of reason why it was made
• Equity presumes that A did not intend to make gift and B holds the property on a resulting trust for A
• There are no management duties for B in such as case

Question 2

When does a purchase money case result in a trust and what are the requirements (related to consideration)?

Answer 2

Where X provides (some or all) of the purchase money for property but legal title is transferred to Y.
- General presumption that Y holds legal title on resulting trust for X (if provided all money) or (X and Y in proportion of contribution)

Requirements
- consideration provided must be for purchase of property
- consideration (or obligation to pay) must be at or before party takes title
- is subject to exception

Question 3

Who has the burden of proof in purchase money cases for resulting trusts?

Answer 3

• Burdon of proof is initially on party claiming to be beneficiary of resulting trust
• Must provide clear and convincing evidence that they supplied the consideration

Once presumption has arisen
- Party holding title (alleged trustee) must rebut presumption by submitting evidence that no trust was intended; and
- Money used as consideration was either a gift, loan or payment of debt

Question 4

What are the exceptions to purchase money cases (when will there be not presumption) and can this be rebutted?

Answer 4

Presumption does not apply to contributions from:
- Husband to wife/finance
- Father to child
- Loco parentis to child they have taken parental duties in relation to (including mother only if single parent)

Rebutting
- Transferor may rebut presumption if they show evidence that they did not intend to make gift

Question 5

What evidence can be used to rebuttable presumption of resulting trusts (voluntary transfer and purchase money cases)?

Answer 5

Surrounding Circumstances
- Evidence of the surrounding circumstances at the time of the transfer is admissible

Acts and Declarations
- Only evidence of acts and declarations made by an individual before or at time of purchase or transfer will be admissible in support of their claim

Evidence of Illegal or Fraudulent motive
- If property transfer was made for illegal or fraudulent purposes (eg. To hide assets from creditor)
- Courts can admit this as evidence but will consider if it is in public interest to allow claim

Question 6

Which failures of an express trust will create a resulting trust? Who is the trustee and beneficiary?

Answer 6

• Failure of contingent interest
• Failure of trust due to lack of certainty of objects
• Failure of half secret trust for lack of communication

Effect
The trustee hold property on trust for donor or donors’ estate
- Trustee has no management duty
- Only duty is to convey title back to donor