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Resulting Trusts: Explained

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When a trust is created, a settlor places property in a trust with the management of a trustee in order to benefit a beneficiary. But what happens when the trust fails, the entirety of the trust’s property is not distributed, or another situation arises in which the property is being held by another party? In these cases, the court may determine that the property is held in a resulting trust. Resulting trusts are different than other types of trust instruments, but if you are considering placing your property in a trust, it is crucial to understand when a resulting trust may affect your property. To learn more about resulting trusts, call or contact the knowledgeable attorneys at Wagenseller Law Firm today.

Express and Implied Trusts

All trust instruments can be categorized as either express or implied trusts. An express trust is the most common type of trust, where the trust instrument is created purposefully and not imposed by the court. An express trust is usually created in writing, where the settlor transfers property to the trust for the benefit of beneficiaries. The terms of the trust are explicitly laid out in the trust document, with the intent of the settlor, named trustee, and identified beneficiaries for the trust.  

An implied trust is a trust that occurs by an act of law or through an interpretation of the facts of the case. This type of trust is created by a presumption of the court that the parties intended to create a trust or that a trust was created after reviewing the facts of the case. Implied trusts can be further broken down into two categories — constructive trusts and resulting trusts. A constructive trust is a civil remedy, where a person can recover property or damages from a defendant that would otherwise be unjustly enriched by keeping the contents of the trust. A resulting trust is dictated by the court based on the conduct of the parties.

Resulting Trusts

A resulting trust is created when a trustee holds the legal title of property, but an equitable title remains with the settlor of the trust. This prevents the legal holder of the property from unjustly enriching themselves from the transaction. The presumption of a resulting trust is that the trustee holding legal title to the property was intended to hold possession to hold the property for the intended owner. Courts may declare that property was held in a resulting trust when a person is ordered to enforce the original intent of the agreement for the benefit of the other party.

Common Examples of a Resulting Trust

The most common cause for a resulting trust is when a settlor does not properly create a living trust. If the settlor failed to put the terms of the express trust in writing or failed in some other way to create a living trust, the court will presume that the trustee was simply holding the property for the benefit of the settlor and revert the property back to him or his estate. Another reason that resulting trusts are created is when an express trust does not leave full instructions for the distribution of the trust property. If the trustee cannot fulfill the terms of the trust or the trust instructions come with no backup plan, there may be a remainder of funds or property in the express trust. The court may determine that the remaining funds are part of a resulting trust and then determine who should benefit from the remaining property.

One final example of a resulting trust occurs during the buying and selling of real estate property. If one person buys property and places another person’s name on the title, the court can infer a resulting trust that was intended to benefit the beneficiary of the transaction. Resulting trusts are a complicated legal matter and should only be trusted to the most competent attorneys in the field. If you have legal issues with a resulting trust, talk to the experienced attorneys at Wagenseller Law Firm today.

To Learn More About Resulting Trusts, Contact Our Office

A resulting trust is a complex legal matter, but it could have a substantial impact on your legal case. At Wagenseller Law Firm in Los Angeles, our team of highly qualified legal professionals is here to help answer any questions that you might have about resulting trusts and how they might affect your property or trust interests. To learn more, call the office or contact us today to schedule a free consultation of your case with one of our experienced attorneys now. 

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