TrustsPart of a well-crafted estate plan.

There are two types of trust: express and implied. Express trusts require you intend to create a trust, so you would know. Implied trusts are imposed by the court, and often you would not know that it existed until someone talked to a lawyer and brought a claim.

A trustee is the person who holds the legal title for the benefit of someone else. They have responsibilities and obligations.

A beneficiary is the person who benefits from the trust. They do not have legal title, but they are supposed to enjoy the benefit of the trust.

The law presumes a bargain. If one person gives another person property without getting anything in return a resulting trust may form. What that means is the first person can request the property back.  The question is, what did the first person intend when they gave the property to the second person? If they intended the transfer to be a gift then it is a gift. If they did not intend the transfer to be a gift then the asset may be subject to a resulting trust.

1. 1. The classic example of this is: a child is buying a home. A parent gives the child 20% of the purchase price. The parent could intend the transfer to be a gift, loan, or investment.  If the parent intended the transfer to be a gift then it’s a gift. If the parent intended the transfer to be an investment or loan a resulting trust may form and the parents may have a 20% beneficial interest in the home.

That is the hard part. The question is, what evidence is there of the transferor’s intention?

If a person transferred property without receiving anything in return there is a presumption of resulting trust. What that means is that it is up to the recipient to prove the transfer was a gift. If they fail to prove it was a gift then the court will recognize the resulting trust.

A Constructive trust is a trust that can be imposed by a court when a party has been wrongfully denied its rights. Often a constructive trust arises to cure unjust enrichment. For example,

1. 1. Harry and Llyod are friends. Harry intends to transfer money to Shay but accidentally transfers it to Lloyd. If Llyod keeps the money he has been unjustly enriched. Harry has a constructive trust claim against the money received by Lloyd.
   2. Jane lives next door to Katherine. Jane helps Katherine with her garden for 9 years.  Katherine shares all the tomatoes from the garden with Jane. In the 10^th year Jane does the work, but Katherine keeps the tomatoes. Jane has a constructive trust claim against the tomatoes. She did the work expecting the reward but was unjustly denied.

An express trust is formed when you intended to create a trust. For these trusts to form there must be certainty of intention, subject matter, and object. It is best described with an example:

1. 1. If Henry tells Lloyd he holds the house at 1234 Fake street on trust for the benefit of Lloyd: the house at 1234 Fake street is the subject matter, Lloyd is the object, and it is clear from the use of the word “trust” that Harry intended to create a trust.