Resulting trusts are a fiction of law that arises where the property is acquired or transferred by one party under circumstances and facts which indicate the party holding legal title is not intended to retain a beneficial interest.
Resulting trusts are not created formally as in the categories of irrevocable trusts or the many other categories of trusts presented in these articles but are generally unwritten trusts, when subject to creditor seizure or attachment of the subject property, are raised as in the form of a defense or claim of exemption against such seizure or attachment. The court employs its equitable powers in formulating whether a resulting trust was intended, as a resulting trust does not generally derive from statutory or Constitutional law but exists in the common law or as an equitable right or remedy.
The intent of the parties will properly be either the sole or most important component in determining whether a resulting trust has been formed. As secondary element of this component is that the party or person holding legal title is not only not intended to retain a beneficial interest, but also has not received any beneficial interest, such as income or property benefits arising from the trust property.
A common example of a resulting trust is a bank account which is titled in the name of an elderly parent, and his or her adult child. The monies placed into the bank account are derived solely from the income or property of the elderly parent and the benefits are solely used for the expenditures of the same parent. The adult child receives no monies or distributions from the same bank account.
The intent of the parties in such an instance is for the monies to be used solely for the parent’s benefit, but the adult child is a holder of the bank account solely in order to assist the elderly or disabled parent with the management of his or her finances, or the account operates as a form of estate planning device wherein the intent is the bank account be used for the benefit of the parent while living, and upon decease, be received into legal and equitable ownership by the adult child.
The Uniform Trust Code, which the State of Florida adopted in 2007, establishes numerous circumstances in which a resulting trust may be determined by a court of equity. The Uniform Trust Code finds provisions for resulting trusts that do not possess ascertainable beneficiaries but limit their duration to twenty-one years.
Florida is unique among other States in that a resulting trust is presumed to arise when a person takes legal title to property that was purchased, paid for, or funded by another person.
In such circumstances and facts, the presumption is that the person holding legal title holds the property in trust for the other person.
If the purchaser can provide proof of purchase, then the presumption is leveled upon the person holding legal title to prove that the purchase or monies or property was a gift [Maliski v Maliski of the Fla DCA (1986)].
A resulting trust may also arise when there is a failure to express trust. A failure of an express trust can occur when, for example, the beneficiary dies before the settlor, there is a failure in the designation of beneficiaries (for the benefit of my friends….), or other forms of indefiniteness or confusion as to the meaning or intent of the creator of the trust, or there is a violation of the rule against perpetuities.
The statute of frauds, which governs the enforceability of written and unwritten contracts, has no application to resulting trusts. A resulting trust does not arise by contract but by operation of law, so the statute of frauds does not pertain [Williams v Grogan].
The beneficiary of a resulting trust has no duty to act unless the trustee [title holder] repudiates the trust or holds the property adversely with the knowledge of the beneficiary [Bradbury v Fuller].