The Resulting Trust

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.