Resulting Trust

A resulting trust is a type of trust that arises when one person (the trustee) holds property that was originally intended for someone else (the beneficiary), but for some reason the formalities of creating a trust were not followed. In such a case, a resulting trust is said to "result" by operation of law, and the trustee is considered to hold the property for the benefit of the intended beneficiary. There are two types of resulting trusts as follows:

A presumed resulting trust arises when it can be presumed that the trustee was not intended to be the true owner of the property. For example, if a person pays for a property but puts the title in someone else's name, a presumed resulting trust may arise in favour of the person who paid for the property. Therefore, if you buy a property for your girlfriend in her name but she later dumps you and dates another man, the property will be held in a presumed resulting trust for your benefit.

An automatic resulting trust arises when the transfer of property to the trustee was made subject to a condition or purpose that has not been fulfilled, and as a result, the property reverts back to the original owner. For example, if a person transfers property to a trustee with the condition that the trustee must use the property to build a community centre, but the centre is never built, an automatic resulting trust may arise in favour of the person who originally owned the property. Therefore, if you buy a property for your girlfriend in her name but she later dies suddenly, the property can revert back to you if you don't want anyone to inherit the property.

Once a resulting trust has been established, the trustee is required to hold the property for the benefit of the intended beneficiary, and may be required to take steps to transfer the property to the beneficiary or to pay the beneficiary the value of the property.