Constructive and Resulting Trusts; Definition & Distinctions

Constructive Trust:

A constructive trust is a trust imposed by the courts to remedy a breach of fiduciary duty or to protect against unjust enrichment. Constructive trusts are not based on an express intention to create a trust; instead, they are imposed by the courts as a matter of equity to remedy a breach of trust or confidence. In a constructive trust, the person who holds the property (the trustee) has it for the benefit of another person (the beneficiary). The trustee must transfer the property to the beneficiary once the trust is terminated.

Resulting Trust:

A resulting trust is a trust that is created to give effect to the presumed intentions of the parties. Resulting trusts are based on the express or implied intention of the parties to create a trust, and they are often used to reverse or "result" a transfer of property that has been made without any intention to create a trust.

In a resulting trust, the person who holds the property (the trustee) holds it for the benefit of the person who provided the consideration for the property (the "settlor") and is required to transfer the property to the settlor once the trust is terminated. The formation of a resulting trust requires proof of the certain intention of the parties to create trust.

Resulting trusts can be either fully resulting trusts or partially resulting trusts. A fully resulting trust is one in which the entire beneficial interest in the trust property is held for the settlor. A partially resulting trust is one in which only part of the beneficial interest in the trust property is held for the settlor.

Differences between Constructive and Resulting Trust:

Constructive and resulting trusts are both types of trusts created by the courts rather than by the express intention of the parties. However, there are some key differences between the two types of trusts:

1)      Purpose: The courts impose a constructive trust to remedy a breach of fiduciary duty or protect against unjust enrichment. A resulting trust, on the other hand, is created to give effect to the presumed intentions of the parties.

2)      Formation: Constructive trusts are not based on an express intention to create a trust, but rather they are imposed by the courts as a matter of equity. Resulting trusts, on the other hand, are based on the express or implied intention of the parties to create a trust.

3)      Property rights: In a constructive trust, the trustee holds the property for the benefit of the beneficiary and is required to transfer the property to the beneficiary once the trust is terminated. In a resulting trust, the trustee holds the property for the benefit of the person who provided the consideration for the property (the "settlor") and is required to transfer the property to the settlor once the trust is terminated.

4)      Certainty of intention: The formation of a constructive trust does not require proof of the certain intention of the parties to create trust. A resulting trust, on the other hand, requires proof of the certain intention of the parties to create a trust.

You Can Read Also:- 1) Executed and Executory Trust

                                    2) Trust and Its Classification