What is a resulting trust?

• A. A charitable trust
• B. An express trust for a specific purpose
• C. A resulting trust
• D. A spendthrift trust

Answer: (C)

A resulting trust is a trust created by operation of law to carry out the presumed intent of the person who transferred property when there is no explicit trust instrument or when an express trust fails to dispose of all the property. In practical terms, if you pay the full price for a property and have the deed put in someone else’s name, there’s a presumption that you intended to retain beneficial ownership, so the person who holds title holds the property as a trustee for you. Similarly, if an express trust is created but fails or doesn’t exhaust the trust property, the remaining property or the value go back to the person who provided the consideration or to the settlor under a resulting trust. This concept is distinct from a charitable trust, which is for a public benefit, and from an express trust for a specific purpose or a spendthrift trust, which are defined by explicit terms. The resulting trust arises to reflect the implied intent of the parties and prevent unjust enrichment when there isn’t a valid or complete express arrangement.