A resulting trust is a trust created by a judge. Resulting trusts are created because the intended beneficiaries are no longer available. In such instances, a resulting trust is created to return the property from the trustee back to the settlor.
Under What Circumstances Are Resulting Trusts created?
Judges may enforce resulting trusts in the following situations:
- Failed Express Trust: A valid trust that no longer has beneficiaries because they are missing or deceased. Having no beneficiaries will usually void a trust. Settlors become the beneficiary and the assets are returned to them
- Semi-Secret Trusts: Semi-secret trusts are trusts that contain unknown beneficiaries. A court will prescribe a resulting trust, which will distribute the assets either to the settlor or to the settlor’s heirs
- Purchase Money Resulting Trust: The beneficiary in the trust provides money for the purchase of the trust property. The property title is in the settlor's name and not the beneficiary's name. The settlor will be the legal owner of the property
If the settlor dies, then the court will typically issue a resulting trust. The resulting trust will likely make distributions to the settlor’s estate or heirs. The trust property becomes part of the deceased settlor’s estate, and the resulting trust operates like a will.
Are There Any Defenses Available If a Judge Has Ordered a Resulting Trust?
Resulting trusts prevent trustees or beneficiaries from illegally holding property for the settlor. Settlors may request that the property be returned, but trustees or beneficiaries are entitled to continue holding the property. In some cases, a defense may be available for the trustee and the resulting trust will not be issued.
Some equitable defenses to a resulting trust order include:
- Laches: Settlors are not entitled to a resulting trust if they fail to file a lawsuit in a reasonable timeframe
- Unclean Hands: Settlor are not entitled to a resulting trust if they have acted wrongfully or in bad faith
Settlors can also waive their right to a resulting trust if they act illegally:
- The court will deny a resulting trust if the settlor has unlawfully transferred property and benefitted from the transaction.
- Due to their illegal intentions, settlors are deemed to have waived their right to a resulting trust.
- The settlor will not be allowed to retrieve their property.
Should I Get a Lawyer for a Resulting Trust dispute?
Yes. Resulting trusts are powerful remedies that are enforceable according to the trust laws of your state. It would be to your benefit to contact an estate planning lawyer for advice if you are involved in a dispute over a resulting trust. Laws governing trusts vary by state, and an experienced estate lawyer can help you in your course of action.