Understanding the concept of a resulting trust is important for business professionals who want to understand legal terms and concepts, as well as relevant legal outcomes that may affect their businesses. A resulting trust is a trust created by a court due to an imbalance between a parties’ respective contributions towards a property or asset.
In short, a resulting trust is a remedy for a situation where one party contributes to the purchase price of an asset but receives an unequal share in the enjoyment of the asset. In a resulting trust situation, the court orders that the asset be held in trust for the contributing party, and not necessarily by the contributing party.
For example, say two siblings, Bob and Alice, jointly purchase a property. Bob contributes $100,000 and Alice contributes $50,000 to the purchase price. In a typical scenario, Bob and Alice would each own half of the property. However, in a resulting trust situation, if Bob was to receive the exclusive enjoyment of the house by way of Alice’s contribution, the court may order that the house be held in trust for Alice with Bob as the trustee.
As a result of such an order, Bob would remain the legal owner of the property and Alice would reap the rewards of her contribution. This type of trust arrangement is common in family law situations when one spouse has contributed to a property, but the other spouse has a greater share in the enjoyment of the asset due to their contribution.
Conclusion
Understanding the meaning of resulting trust is essential for business professionals who may need to evaluate their legal standing in a business or in family law cases. Knowing when and how to assert a resulting trust as a remedy can help to ensure the equitable division of assets or entitlements.