Resulting Trusts

A resulting trust occurs when an express trust either fails or has fulfilled its purpose, leading to the return of the property to the original owner or their estate. Additionally, if someone pays for property but the title is held by someone else who is not a relative, a purchase-money resulting trust may be established.

Alice sets up a trust for her friend Bob to manage a property for a specific purpose, but that purpose is never fulfilled. Since the trust failed, a resulting trust is created, and the property goes back to Alice. In another scenario, Charlie pays for a house but puts the title in his friend Dave's name, leading to a purchase-money resulting trust in favor of Charlie. Ultimately, Charlie is entitled to the house.

When a trust fails, the property returns home!

Exams may confuse students by presenting scenarios where the trust's purpose is ambiguous or partially fulfilled, leading to uncertainty about whether a resulting trust applies. Students should carefully analyze the trust's intentions and outcomes.

Questions often present fact patterns involving failed trusts or ambiguous ownership situations, requiring candidates to identify the existence of a resulting trust and its implications for property ownership.