Suppose that S creates a trust, transferring some property to T for life, providing that the income is to be paid to A for life, and there is no provision paid for any remainder. If this transfer were not in the form of a trust, there would be a reversion to the settlor. The same thing as a “reversion” occurs in equity, except we say there is a "resulting trust.”
Resulting Trust
A resulting trust is an equitable reversion that arises by operation of law whenever a person has created an express intentional trust, but the express trust fails or does not completely dispose of the trust property. When the trust fails or does not completely dispose of the trust property, the undisposed property goes back to the settlor in a resulting trust.
Definition from Nolo’s Plain-English Law Dictionary
A trust implied by law, as determined by a court. Under this type of trust, the person who holds title to or has possession of property is considered a trustee for the proper owner, who is considered the beneficiary. The resulting trust is a legal fiction that forces a property holder to honor the beneficiary's property rights. For example, Mahalia leaves $100,000 with her friend, Albert, while she is on a trip to Europe, asking him "to buy the old Barsallo place if it comes on the market." Albert buys the property, but has title put in his own name, which the court will find is held in a resulting trust for Mahalia. A resulting trust differs from a "constructive trust," which comes about when someone gains possession of another's property by accident, misunderstanding, or dishonesty.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:23 pm
