In an estates and trusts practice, we often see the term “resulting trust” thrown around. Sometimes, in court materials, relief is sought in the form of a “resulting trust and/or constructive trust” just to make sure that we have all of our bases covered. In my next two blogs, as we continue to revisit basic elements of trust law, we will explore the key differences between resulting trusts and constructive trusts as straightforwardly as we can.

Resulting trusts are said to fall into two main categories:

1. Those that arise on the failure of a classic (express) trust

• The trust could fail, for example, for lack of the three certainties, lack of mental capacity, on the basis that the purported trust was procured by undue influence for fraud, or its objects could be fully satisfied, leaving a surplus in the trustee’s hands; and
• Ordinarily, the result would be the return of the assets to the (intended) settlor, unless the evidence establishes that they intended to benefit the (intended) trustee with the assets.

2. Those that operate as the result of a presumption of resulting trust

• For example, there is a presumption of resulting trust with respect to gratuitous transfers from a parent to an adult child; and
• The resulting trust will be imposed absent evidence rebutting the presumption of resulting trust, which can establish that a gift was instead intended.

While earlier Canadian case law also recognized “common intention” resulting trusts, the Supreme Court of Canada has since suggested that this category has no further role (see, for example, Kerr v Baranow, 2011 SCC 10).

Because rebuttable presumptions are so closely interrelated with intention, whether or not a resulting trust can be imposed is often a question of intention at the time of the transfer of an asset.  In fact, as the established categories of resulting trusts reflect, the matter of intention is key in determining whether a resulting trust may be imposed. We see assets impressed with a resulting trust on the basis of the original asset-holder’s (presumed) intentions.  As other estates and trusts litigators know well, from a practical perspective, identifying evidence capable of corroborating a party’s personal evidence that a gift was intended (thereby rebutting the presumption of resulting trust), is a hurdle that we often face.

Thank you for reading,

Nick Esterbauer