In order to understand the resulting trust it's necessary to grasp the basic structure of all trusts. A trust effectively splits the ownership of property into a legal title and an equitable (or beneficial) title. The easiest way to understand this split ownership it is to think of a car loan: you own the legal title to your car, but the finance company has a security interest in your car because of the loan. That security interest is an equitable interest, and gives the holder certain rights over the car (if you default on your repayments the company can repossess your car and sell it).
In a trust though, while the ownership is split it works in a different way. A person (the trustee) holds the legal title to property 'on trust' for another (the beneficiary). That beneficiary holds the equitable interest in the trust property.
The term 'resulting' in resulting trust means 'to come back', and that's exactly what happens. For example a person pays (or partly pays) for property, but it is legally held by another. Absent an intention to make a gift, equity regards the beneficial interest as coming back to them, and the other person now hold their legal interest (or part of it) on resulting trust for the person who paid. Thus the person into who's hands the property moved only possesses the legal title, and holds that legal interest in trust for the beneficial interest holder.
There are a couple of reasons why this would happen. The first is that a person, we'll call him Andrew, transferred some property into express trusts (the kinds of family trust we're all familiar with), held by Bob as trustee, for Cathy as beneficiary. Not all of the property transferred to Bob though, was part of the stated trusts settled for Cathy; there was excess property. So, what happens to it? The answer is it results back to Andrew. In this case, Bob will be trustee for Cathy, and trustee (under a resulting trust) for Andrew with respect to the excess property.
The second reason why a resulting trust would be found is where someone has effectively made what looks like a gift, a very large gift. Say Adam purchases a house from Barbara and directs her convey the property to Chris. Did Adam intend to gift the house to Chris? In this situation the law presumes that Adam did not, and therefore Chris holds his legal title to the house on a resulting trust for Adam. If Chris wants to assert that in fact the property belongs to him, then he would need to present evidence that rebuts the presumption. In other words, the law starts off from the view that no gift was intended, and so evidence would be needed to prove that otherwise.
The same thing occurs where Adam and Chris buy a property together and are registered as 50-50 owners, but in fact Adam paid 70% of the purchase price. The law presumes that Adam did not intend to give Chris 20% of the property, and so Chris will hold part of his share on a resulting trust for Adam.
This is simple enough, but then things start to become a little more complex. If Chris was Adam's son, then the law presumes that Adam did intend to make a gift of the house. This is called the presumption of advancement. It applies wherever fathers and/or mothers, gift property to their children (or people they're in a similar relationship to), even if they're adults. It also applies to property moving from husbands to wives, but not the other way around.
There are various bases for why the presumption of advancement exists, but the most obvious is that a father was (historically) under a moral obligation to provide for his children and his spouse. It's the kind of archaic justification which meant the presumption of advancement did not apply to mothers giving property to their children until much more recently. Indeed, the presumption does not even apply as between de facto spouses.
The effect of the presumption of advancement is that it rebuts the presumption of a resulting trust, which in effect places the onus on the other person to present evidence rebutting the presumption of advancement.
So, be secure in the knowledge that whatever your parents bought for you, even though you did nothing to earn it, is your because... legal reasons.
Wednesday 21 January 2015
Thursday 15 January 2015
Law: it's just rules
A recent "survey" by Lawyers Weekly (I use the term in inverted comas as it was run through their Facebook page) found that law students are way more stressed than other uni students. Shocking!
The reasons were down to:
In Science, you have to do all your readings and understand what they mean, but the assessments and nature of the subject is far kinder to you than a law exam. For example, in my Science exams I had a large number of multiple choice questions, and even the problem questions had definite, or "Science-y" answers.
The reason law is so overwhelming is it's like all the hard parts of Arts and Science got put together, and all the easy bits were left out. In law, you have to do the all the readings like in Science, but then also mount an argument as you would in Arts, but you usually have to do it in a two hour exam, and it's likely worth 60%-70% plus of your mark...
To use a sport analogy, law is like being expected to run a marathon in the time it takes to run a 100m sprint.
As stressful as this sounds though, take a step back and realise that I'm saying the assessment is hard, not the content, because law itself is really just a collection of rules.
To return to sport, or games, think about any that you like, they all have a collection of rules governing the participants. That's all laws are. They are not difficult to understand. There's merely a lot of them to remember, and they are often poorly communicated. Both of these problems are due to the fact that the law has been made by a lot of individual people, and groups of people (judges, parliaments, etc) talking about the same things in different ways over long periods of time. It would be like, instead of having one rule book for Monopoly, you had 100 and each was written by a different person, but all of them were right. That's how people would get into fights about rules. That's why laws need courts.
Real life is, of course, far more complex than a board game or a sport (some might disagree). Therefore, the rules are more numerous. The rules however, are still just rules, and they are not difficult to understand once they have been communicated in a coherent way. Fortunately law students have access to such coherent communication: they are called textbooks, and there are enough of them out there that if you find one or two incoherent, there's always another.
So, all we are left with is the fact that the law = a large number of rules. Law students don't have to learn that many of them though. Indeed, law firms wouldn't be constantly complaining their grads didn't know anything if those grads weren't taught so little in law school. In my experience, most law students can explain and apply the law quite well to 99% of the situations that occur in real life. The problem is law exams are either written in such a way that: a) assume students are sitting on the High Court bench; or b) are phrased in such obscure ways that are designed to make it difficult to figure out the issues or the solution to the problem. The sad truth about both a) and b) type questions is they both are asking students to do the same thing: discuss the relevant law.
The problem with the "problem question" is that students think there is a solution. There isn't. There is no right or wrong answer. All the marker wants you to do is discuss how the relevant law taught in the course (and that will only be a paragraph) works, and then apply it to the facts. What most students don't realise is that if they just focus on getting the discussion right, the analysis will only be, maybe, three sentences long and will have pretty much written itself. This is because the analysis must rest on the law, and by explaining the law, they've already pretty much done the analysis.
Unfortunately, the way questions are phrased and the time in which they have to be answered, combined with how much of a student's assessment they're worth, makes an unreasonably difficult examination situation all the more so. By now though, you see my point. Law itself, the rules, are not difficult. Every time you drive a car, or pay for goods you are following the rules; obeying the law. You understand these quite clearly, and if you had to work in a situation that involved contract law, or trusts, or banking you would come to understand it very quickly too. If I were to ask you to walk into a law exam though...
So, let's stop pretending law is difficult because we enjoy that look in peoples' eyes when we say we're lawyers. The studying of law is hard because it's "designed" to be (the same way a hurricane going through a junkyard and successfully rebuilding a car would have "designed it"), and if you can get through it then you've proven... something, but let's stop pretending that anyone has proven they're smarter. They might very well be, but a law degree doesn't prove it.
The reasons were down to:
- A heavy reading load;
- The fact that many were the best students in their high school, but so was everyone else they're now studying law with; and,
- That law is an intellectually demanding subject (of course, the last opinion is somewhat coloured by the second).
In Science, you have to do all your readings and understand what they mean, but the assessments and nature of the subject is far kinder to you than a law exam. For example, in my Science exams I had a large number of multiple choice questions, and even the problem questions had definite, or "Science-y" answers.
The reason law is so overwhelming is it's like all the hard parts of Arts and Science got put together, and all the easy bits were left out. In law, you have to do the all the readings like in Science, but then also mount an argument as you would in Arts, but you usually have to do it in a two hour exam, and it's likely worth 60%-70% plus of your mark...
To use a sport analogy, law is like being expected to run a marathon in the time it takes to run a 100m sprint.
As stressful as this sounds though, take a step back and realise that I'm saying the assessment is hard, not the content, because law itself is really just a collection of rules.
To return to sport, or games, think about any that you like, they all have a collection of rules governing the participants. That's all laws are. They are not difficult to understand. There's merely a lot of them to remember, and they are often poorly communicated. Both of these problems are due to the fact that the law has been made by a lot of individual people, and groups of people (judges, parliaments, etc) talking about the same things in different ways over long periods of time. It would be like, instead of having one rule book for Monopoly, you had 100 and each was written by a different person, but all of them were right. That's how people would get into fights about rules. That's why laws need courts.
Real life is, of course, far more complex than a board game or a sport (some might disagree). Therefore, the rules are more numerous. The rules however, are still just rules, and they are not difficult to understand once they have been communicated in a coherent way. Fortunately law students have access to such coherent communication: they are called textbooks, and there are enough of them out there that if you find one or two incoherent, there's always another.
So, all we are left with is the fact that the law = a large number of rules. Law students don't have to learn that many of them though. Indeed, law firms wouldn't be constantly complaining their grads didn't know anything if those grads weren't taught so little in law school. In my experience, most law students can explain and apply the law quite well to 99% of the situations that occur in real life. The problem is law exams are either written in such a way that: a) assume students are sitting on the High Court bench; or b) are phrased in such obscure ways that are designed to make it difficult to figure out the issues or the solution to the problem. The sad truth about both a) and b) type questions is they both are asking students to do the same thing: discuss the relevant law.
The problem with the "problem question" is that students think there is a solution. There isn't. There is no right or wrong answer. All the marker wants you to do is discuss how the relevant law taught in the course (and that will only be a paragraph) works, and then apply it to the facts. What most students don't realise is that if they just focus on getting the discussion right, the analysis will only be, maybe, three sentences long and will have pretty much written itself. This is because the analysis must rest on the law, and by explaining the law, they've already pretty much done the analysis.
Unfortunately, the way questions are phrased and the time in which they have to be answered, combined with how much of a student's assessment they're worth, makes an unreasonably difficult examination situation all the more so. By now though, you see my point. Law itself, the rules, are not difficult. Every time you drive a car, or pay for goods you are following the rules; obeying the law. You understand these quite clearly, and if you had to work in a situation that involved contract law, or trusts, or banking you would come to understand it very quickly too. If I were to ask you to walk into a law exam though...
So, let's stop pretending law is difficult because we enjoy that look in peoples' eyes when we say we're lawyers. The studying of law is hard because it's "designed" to be (the same way a hurricane going through a junkyard and successfully rebuilding a car would have "designed it"), and if you can get through it then you've proven... something, but let's stop pretending that anyone has proven they're smarter. They might very well be, but a law degree doesn't prove it.
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