Definition
The term resulting trust refers to the creation of an implied trust as determined through a court of law. Resulting trusts involve trustees that hold title to property on behalf of a donor, or settlor, that will eventually be transferred to another party.
Explanation
A resulting trust is created when a court of law determines one party is holding the title to, or is in possession of, property that rightfully belongs to another party. Resulting trusts can arise when an express trust fails. For example, if a donor didn't know a beneficiary had died before the creation of an express trust, it will fail since there is no beneficiary. The trustee would then have to hold the property in a resulting trust for the donor.
A resulting trust can also arise when an express trust does not exhaust all of the assets held in the trust. This can occur when a trust is established to provide a loved one with a source of lifetime income, and they pass away before all of the assets placed in the trust have been distributed. At that point, the trustee would be holding additional assets in a resulting trust for the original donor.
Resulting trusts are different than constructive trusts, which are also created by a court of law. However, constructive trusts typically involve a party that has been harmed in some way or wrongfully deprived of assets.
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