Define: Resulting Trust

A resulting trust is a legal doctrine that arises when property is transferred to someone else, but the intended beneficiary of the property is not specified or the intended purpose of the transfer fails. In such cases, the law presumes that the recipient holds the property in trust for the benefit of the transferor or another party. Resulting trusts are typically implied by law to prevent unjust enrichment and ensure that the true owner of the property retains their interest in it. This type of trust arises automatically, based on the circumstances surrounding the transfer of the property, and does not require the explicit creation of a trust instrument. Resulting trusts are often invoked in situations where there is no evidence of a gift or trust intention, or when the intended purpose of the transfer cannot be fulfilled.

A resulting trust is one that arises by action of law in circumstances in which the benefit of the trust ‘results” back to the settlor.

Typically, a resulting trust will arise because an attempt to create an express trust fails, and the trust ‘rebounds’ to the settlor. For example, if the settlor fails to specify the trust property properly (see certainty of subject matter), the beneficiaries cannot be identified (see certainty of objects), or the trust is unworkable, then the trustee will hold the legal title to the resulting trust for the settlor.

However, there is no hard-and-fast definition of a resulting trust, and, in fact, the very term ‘resulting trust’ is one that has been applied by academic authorities on the basis of decided cases. The courts hardly ever used it, at least not until quite recently. In RE v. Andervell no. 21974, Megarry J identified two types of situations in which beneficial interest would result for the settlor:

1. The settlor tries but fails to dispose properly of his beneficial interest, so it results back to the settlor to fill the ‘beneficial vacuum’ that would otherwise be created (see automatic resulting trust).
2. The ‘settlor’ intends to retain the beneficial interest but does not use the correct legal formality. The courts, therefore, assume the existence of a trust to give effect to the settlor’s intention (see presumed intention resulting trust).

There are problems with this simple categorization. First, a number of constructs that are recognised as resulting trusts (or, at least, cannot be classified better than anything else) don’t fit neatly into either category. For example, the Quistclose Trust, a resulting trust that comes into action if money advanced to pay a debt does not get used for that purpose, does not arise ‘automatically’, but on a particular contingency. Second, it can be quite difficult to distinguish between a presumed intention-resulting trust and a constructive trust of the meta recognised in Lloyds Bank v. Rosset (1991). Where a trust is imposed on a person who receives legal title in order to prevent the recipient’s unjust enrichment, this could be interpreted either as a resulting trust or a constructive trust. Indeed, in Gissing v. Gissing (1970), a case that concerned whether a wife was entitled to a beneficial interest in a house to which legal title was held by her husband, Lord Diplock stated that it was unnecessary to determine whether the court was considering a result, implied trust, or constructive trust.

The difficulty of deciding whether a resulting trust should be found on the facts of a particular case results in part from the fact that there is no general agreement on the theoretical or doctrinal basis for resulting trusts. While all resulting trusts have in common that beneficial interest results to the settlor, this cannot be the determinative factor. See the theoretical basis for the resulting trusts for a discussion of this point.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 10th April, 2024.