What is a Resulting Trust?

A resulting trust is created by operation of law, usually when an express trust fails.  For instance, if a settler, or the person who creates a trust, sets up a trust for a specific beneficiary, but that beneficiary has died without the settler’s knowledge, then the express trust would fail, because there would be no living beneficiary.  Therefore, the trustee simply holds the assets in trust for the settler’s benefit, which is a resulting trust.  In this situation, the trust assets “jump back” or “result back” to the settler. 

Examples of a Resulting Trust

Another common scenario that may create a resulting trust is when a settler grants a specific amount of money to a trust, to be paid out to the beneficiary in equal monthly installments.  If the beneficiary dies only two years later, there are still excess assets in the trust that are held for the benefit of the settler.  Again, this is a resulting trust.  The typical outcome of a resulting trust is to attempt to follow what the settler’s wishes as to the assets would have been if he or she had been aware of the situation.  The final situation where a resulting trust occurs is when a person purchases something, such as real estate, but places title to the real estate in a third person’s name. 

While the third person has legal title to the real estate, it is implied that the third person is holding the real estate in trust for the person who actually purchased the property.  In this sense, the third person holding legal title to the real estate has no beneficial interest in the real estate; rather, he or she is simply the trustee of the resulting trust, held for the benefit of the purchaser. 

Do You Need a Lawyer?

As noted above, there are a variety of situations in which a resulting trust might arise.  If you find yourself involved with a resulting trust, you should immediately contact an attorney for advice in remedying the situation, and for assistance in effectuating the settler’s original intentions.