Implied trusts and trusts of the family home - Presumption o...

Learning Outcomes

This article examines the equitable presumption of advancement within the context of implied trusts, particularly concerning contributions to property. It outlines the historical application of the presumption, the modern approach influenced by equality principles, and the methods required to rebut it. For the SQE1 assessments, you will need to understand when the presumption applies, the evidence needed to challenge it, and its relationship with resulting trusts. This knowledge will enable you to analyse scenarios involving property transfers between family members and apply the relevant legal principles to SQE1-style questions.

In addition, you should be able to differentiate clearly between the presumption of advancement and the (countervailing) presumption of resulting trust, identify the precise categories of relationship in which advancement has traditionally operated, evaluate the evidential weight of contemporaneous vs subsequent statements and conduct, and appreciate the impact of the public‑policy approach to illegality adopted in Patel v Mirza.

SQE1 Syllabus

For SQE1, you are required to understand the principles governing implied trusts, including resulting trusts and the presumptions that arise in equity concerning property transfers. This includes the presumption of advancement and how it may be rebutted, with a focus on the following syllabus points:

• The nature and effect of the presumption of advancement.
• The specific relationships where the presumption traditionally applies (eg, father to child, husband to wife).
• The requirements and methods for rebutting the presumption of advancement, focusing on evidence of contrary intention.
• The consequences of successfully rebutting the presumption, often leading to a resulting trust.
• The modern judicial approach and the impact of equality legislation on the application of the presumption.
• The evidential timing rule for acts and declarations (contemporaneous evidence is admissible for or against, while later statements are generally admissible only against the maker).
• How purchase‑money cases, voluntary transfers, and bank/joint account arrangements interact with the presumptions.
• How public policy and illegality affect reliance on (or rebuttal of) the presumption after Patel v Mirza.
• The relationship between the presumption of advancement, the presumption of resulting trust, and common intention constructive trusts in family‑home disputes.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. In which of the following relationships does the presumption of advancement traditionally NOT apply?
   1. Father to child
   2. Husband to wife
   3. Mother to child
   4. Person in loco parentis to child
2. What is the primary effect of successfully rebutting the presumption of advancement?
   1. The property automatically reverts to the transferor's estate.
   2. A constructive trust arises in favour of the recipient.
   3. The transfer is deemed void ab initio.
   4. A resulting trust is often presumed in favour of the transferor.
3. Which of the following is essential for rebutting the presumption of advancement?
   1. Proof of the transferor's insolvency.
   2. Evidence demonstrating the transferor's intention not to make a gift at the time of the transfer.
   3. Evidence that the recipient acknowledged the transfer as a loan after receiving it.
   4. Proof that the relationship giving rise to the presumption has broken down.

Introduction

When property is transferred from one person to another without consideration, equity may impose a trust. One key factor influencing this is the relationship between the transferor and transferee. In certain relationships, equity presumes the transfer was intended as a gift, displacing the usual presumption of a resulting trust. This is known as the presumption of advancement. This article explores this presumption, its traditional scope, and importantly for the SQE1 exam, how it can be rebutted with evidence.

The presumption of advancement does not create a substantive right; it provides a starting point in the absence of evidence. It may apply both to outright voluntary transfers of property and to “purchase‑money” situations where A funds the acquisition but title is placed in B’s name. In the latter, advancement (if it applies) answers what would otherwise be a purchase‑money resulting trust by presuming a gift.

Key Term: Presumption of Advancement
An equitable presumption that, in certain relationships (historically father to child, husband to wife), a transfer of property without consideration is intended as an outright gift (an 'advancement'), rather than creating a resulting trust.

The presumption arises from the historical societal view of certain relationships carrying an obligation to provide support. Consequently, the law presumed that a transfer in these contexts was intended to fulfil that obligation by way of a gift.

The Presumption of Advancement

Equity presumes bargains, not gifts. Therefore, if property is transferred voluntarily (ie, without payment), or if money is provided to purchase property placed in another's name, the starting point is often that the recipient holds the property on a resulting trust for the provider. However, this presumption is reversed in specific relationships where the provider is deemed to have a natural obligation to provide for the recipient.

The categories where the presumption operates are narrow and have remained so despite extensive criticism.

Traditional Application

Historically, the presumption of advancement applied primarily where:

• A father transferred property to his child (whether minor or adult).
• A person standing in loco parentis (in the place of a parent) transferred property to a child under their care.
• A husband transferred property to his wife.
• A man transferred property to his fiancée, provided the marriage subsequently took place.

Notably, the presumption did not traditionally apply to transfers from a mother to her child or from a wife to her husband. In these scenarios, the default presumption of a resulting trust would apply unless rebutted.

The in loco parentis category is fact‑sensitive. A person of any gender can fall within it if they have assumed parental responsibilities in substance (for example, a single mother with sole responsibility may be treated as standing in loco parentis). Evidence of the assumption of parental duties and the child’s dependence is central.

The presumption can arise in both voluntary transfer and purchase‑money contexts. Thus:

• If a father pays for a flat but puts legal title into an adult daughter’s sole name, advancement may apply.
• If a husband moves savings into an account in his wife’s sole name, advancement may apply (subject to evidence of contrary intention).
• If a man transfers property to his fiancée but the marriage does not take place, the presumption generally does not arise.

Key Term: In loco parentis
A person who has assumed the responsibilities of a parent and stands in a parental role to a child.

Modern Context and Relevance

The traditional basis for the presumption is widely regarded as outdated and potentially discriminatory, reflecting past social norms rather than contemporary family structures and gender equality principles. While the presumption has not been formally abolished (s 199 of the Equality Act 2010, which would abolish it, is not yet in force), courts now apply it with caution and consider it relatively easy to rebut with evidence of the transferor's actual intention. Its significance has diminished, particularly in disputes concerning the family home where common intention constructive trusts often provide a more flexible approach (see Stack v Dowden [2007] UKHL 17). However, it remains a principle you must understand for SQE1.

Courts also recognise that relationships are diverse. The categories in which advancement applies have not been expanded judicially to all caregiving relationships; they remain rooted in the traditional compartments (father–child; husband–wife; man–fiancée; in loco parentis). The Marriage (Same Sex Couples) Act 2013 does not itself alter the equitable presumptions. In practice, rather than extend advancement, courts rely on evidence of actual intention or the constructive trust framework to reach fair outcomes in modern family arrangements.

Scope of Transfers and Assets

Advancement can apply to:

• Land (subject to evidential rules), shares, chattels, money, and bank accounts.
• Purchase‑money situations where A funds the purchase and title is vested in B alone.
• Transfers into bank or investment accounts in the recipient’s sole name.

In the context of land, note that s 60(3) Law of Property Act 1925 prevents a resulting trust from being implied “merely because” a voluntary conveyance does not state a trust; but where relationships (or facts) indicate otherwise, a resulting trust can still be found, and conversely presumption of advancement can still operate to presume a gift.

Worked Example 1.1

A father purchases shares but registers them in his daughter's name. The daughter is an adult and financially independent. There is no other evidence regarding the father's intention at the time of purchase. What is the likely starting position in equity?

Answer:
The relationship is father to child, one where the presumption of advancement traditionally applies. Therefore, the starting presumption is that the father intended the shares as an outright gift to his daughter. The daughter holds both legal and equitable title unless the father (or his estate) can provide evidence to rebut this presumption.

Worked Example 1.2

A husband transfers £50,000 into a bank account held in the sole name of his wife. He tells her at the time, "This is to keep safe for our future, we'll decide how to invest it later." The wife later claims the money was a gift. Can the husband rebut the presumption of advancement?

Answer:
Yes, likely. The presumption of advancement arises (husband to wife). However, the husband's statement at the time of the transfer indicates a contrary intention – that the money was not an outright gift but was intended for their joint future benefit and subject to a later decision. This contemporaneous declaration serves as evidence to rebut the presumption of advancement. A resulting trust in favour of the husband (or potentially both parties) might be argued.

Worked Example 1.3

A man transfers £10,000 to his fiancée “as a wedding present” one month before the planned wedding, which is then called off. She keeps the money. He claims a resulting trust.

Answer:
The presumption of advancement to a fiancée is historically contingent on marriage taking place. If the marriage does not occur, the presumption typically does not arise. In the absence of advancement, a resulting trust in favour of the man is likely to be presumed (subject to any evidence showing a genuine, unconditional gift irrespective of marriage).

Worked Example 1.4

A mother pays the full price for a car registered in her 19‑year‑old son’s name. She has been his sole caregiver for years, paying all expenses. There is no contemporaneous statement of intention. What is presumed?

Answer:
There is no general presumption of advancement for mother–child. However, the mother’s assumed parental role can, on appropriate facts, amount to in loco parentis. If so, advancement may be argued. Otherwise, a purchase‑money resulting trust would ordinarily be presumed in the mother’s favour unless evidence demonstrates an intended gift.

Worked Example 1.5

A father funds the deposit for a flat but takes no role in the mortgage; legal title is placed solely in his adult son’s name. After completion, the father collects rent and tells friends “the flat is my investment.” He brings a claim years later.

Answer:
Advancement applies father–child, so the starting point is gift. The father’s later statements are “subsequent declarations” and cannot be used by him in his favour to rebut advancement. His continued receipt of rent could be consistent with help or informal arrangements and is less probative than contemporaneous statements. Without admissible contemporaneous evidence of contrary intention, the presumption of advancement is unlikely to be displaced.

Rebutting the Presumption of Advancement

The presumption of advancement, like the presumption of a resulting trust, is merely a starting point and can be rebutted by evidence showing that the transferor did not intend to make a gift at the time of the transfer.

Key Term: Contrary Intention
An intention held by the transferor at the time of the property transfer that is inconsistent with the intention presumed by law (ie, inconsistent with making a gift where the presumption of advancement applies, or inconsistent with retaining a beneficial interest where a resulting trust is presumed).

The burden of proof lies on the person seeking to rebut the presumption (usually the transferor or someone claiming through their estate) to demonstrate, on the balance of probabilities, that a gift was not intended.

Rebuttal requires careful attention to timing and admissibility. Equity attaches significant weight to what was said and done at the time of the transaction (or immediately thereafter as part of the same transaction) and treats later self‑serving statements with suspicion.

Evidence for Rebuttal

Evidence admissible to rebut the presumption must relate to the intention of the transferor at the time of the transaction or immediately thereafter as part of the same transaction. Subsequent declarations or acts by the transferor suggesting they did not intend a gift are generally inadmissible in their own favour but may be admissible against them.

Relevant evidence includes:

• Express agreements and declarations at the time: Written or clear oral evidence that the transfer was a loan, that it was made for safekeeping, or that the property was to be held on trust, is powerful. A contemporaneous statement such as “this is to be held for both of us” or “this is to be repaid” tends to rebut advancement.
• Conduct at or immediately after transfer: Steps inconsistent with an outright gift (eg, transferor retaining title deeds for land, recording the “gift” as a loan in personal records, or putting protective restrictions on the register) can be probative. Control exercised long after the event is usually less persuasive, especially if self‑serving.
• Purpose and context of the transaction: Where the purpose was practical convenience (eg, opening an account in one name to facilitate payments) rather than bounty, that purpose can rebut advancement. Similarly, where the transfer was part of a larger arrangement (eg, safeguarding funds pending investment decisions), that may be inconsistent with a gift.
• Financial arrangements evidencing non‑gift character: Agreements for interest, repayment schedules, or evidence of rights and obligations pointing to a loan.

The admissibility rule serves two objectives: it prioritises reliable contemporaneous material over recollection years later, and it prevents a transferor “improving” their case by later self‑serving assertions.

Worked Example 1.6

A husband pays cash into an investment account in his wife’s sole name to take advantage of her lower tax rate. At the time, he emails the broker: “Please open in my wife’s name, funds are mine; we will instruct the portfolio together.” Years later, the wife claims the fund as a gift.

Answer:
Advancement arises husband–wife. The husband’s contemporaneous email is strong evidence of contrary intention (convenience/tax efficiency rather than bounty). On balance, the presumption is likely rebutted; a resulting trust arises in favour of the husband.

Worked Example 1.7

A father pays the purchase price of a house placed in his adult son’s name, saying at completion, “You can live here rent‑free but it’s still my property.” The son later claims ownership.

Answer:
Advancement applies, but the father’s statement at completion is a clear, contemporaneous declaration of contrary intention. The presumption should be rebutted; a resulting trust is likely, with the father as beneficiary and the son holding as trustee.

Evidential Timing Principle

Acts and declarations:

• Before or at the time of the transfer (or immediately after, as part of the same transaction): admissible for or against the transferor.
• Subsequent to the transfer: generally inadmissible in the transferor’s favour, but admissible against them.

This distinction explains why a transferor’s later claim that they “never meant it as a gift” carries little weight if uncorroborated by contemporaneous material, whereas their later admissions of gift can be used by the transferee.

Burden and Standard

The party seeking to rebut advancement must do so on the balance of probabilities. Courts look at the totality of evidence, giving most weight to reliable contemporaneous documents and the overall plausibility of the parties’ conduct.

Interaction with Family‑Home Doctrines

Where cohabiting partners or spouses dispute beneficial ownership of the family home, common intention constructive trust (CICT) principles often supersede mechanical reliance on presumptions. However:

• In sole name cases, the absence of proven common intention and detrimental reliance may leave the court reverting to resulting trust/advancement presumptions.
• In purchase‑money contexts between father and child or husband and wife, advancement can still be decisive where CICT is unavailable or unproven.

Illegality and Rebuttal

Difficulties arise if the reason for the transfer rebutting the presumption involves an illegal purpose (e.g., transferring property to avoid creditors). Historically, the courts were reluctant to allow a party to rely on their own illegal conduct to rebut a presumption (Tinsley v Milligan [1994] 1 AC 340 focused on whether the claimant needed to plead the illegality).

However, the Supreme Court in Patel v Mirza [2016] UKSC 42 established a new approach based on public policy. The court will consider:

1. The fundamental purpose of the prohibition transgressed.
2. Any other relevant public policies which may be affected by denial of the claim.
3. Whether denial of the claim would be a proportionate response to the illegality.

This allows a more flexible, discretionary assessment based on the specific facts, rather than a strict rule based on reliance.

In the context of advancement/resulting trust disputes, Patel v Mirza means that a transferor who arranged a transfer to achieve an unlawful or improper aim (eg, to mislead creditors or public authorities) is not automatically barred from relief. The court assesses whether awarding or denying a resulting trust would better serve public policy, including not permitting unjust enrichment.

Relevant factors include:

• How serious the illegality was and how central it was to the transaction.
• The culpability of each party.
• Whether the illegal purpose was carried out.
• The proportionality of denying proprietary relief in favour of leaving the property with the other party.

Worked Example 1.8

A father transfers title to his house into his son’s name, intending to keep it beyond the reach of potential creditors. The son later refuses to re‑transfer. The father sues for a declaration of resulting trust.

Answer:
Advancement applies father–child as a starting point. The father’s case to rebut advancement relies on an illegal purpose (defrauding creditors). Under Patel v Mirza, the court evaluates public policy: the seriousness of the proposed fraud, whether it was carried into effect, and whether denying relief would be proportionate. If denial would unjustly enrich the son, and granting relief would not undermine the policy against creditor fraud (for example, because the father’s creditors can still pursue him), the court may still declare a resulting trust. Equally, if granting relief would condone or encourage evasion, denial may be proportionate.

Worked Example 1.9

Husband transfers a portfolio of shares into wife’s name to enable her to claim means‑tested state benefits. Years later they separate; he claims the shares on resulting trust.

Answer:
Advancement applies (husband–wife). The husband must rebut it. The arrangement’s purpose was to obtain public benefits improperly. Applying Patel v Mirza, the court weighs public policies (deterring welfare fraud vs preventing unjust enrichment). Depending on the facts (eg, whether the improper claims were made and the scale of wrongdoing), the court may deny relief as a proportionate response or, in a borderline case, still impose a resulting trust while ensuring public authorities can recover any wrongly paid benefits.

Exam Warning

Be mindful that while the presumption of advancement still exists formally, its application is viewed critically by modern courts. In exam scenarios, focus on the evidence presented regarding the transferor's intention at the time of the transfer, as this is usually decisive in rebutting the presumption. The Patel v Mirza approach to illegality is also important if relevant facts arise.

Consequences of Rebuttal

If the presumption of advancement is successfully rebutted, equity reverts to the default position. This usually means that a resulting trust is presumed.

Key Term: Resulting Trust
An implied trust arising where property is transferred to someone who pays nothing for it, and it is implied that the transferor intended to retain the beneficial interest (or a proportionate share if they contributed to the purchase price).

Therefore, if evidence shows the transferor did not intend a gift in a relationship where advancement is presumed, the transferee will typically hold the legal title on resulting trust for the transferor (or for both parties proportionately if it was a contribution to purchase).

Some practical implications:

• Proportionate shares in purchase‑money cases: Where the transferor’s money wholly funded the acquisition, the resulting trust is usually 100% in their favour. Where both contributed, beneficial shares are proportionate to their contributions (absent evidence suggesting a different split).
• Subsequent dealings: If the property has been sold, the resulting trust usually attaches to the sale proceeds, traceable in equity subject to the rights of bona fide purchasers for value without notice.
• Registration and third parties: In registered land, the transferee holds the legal estate on trust for the transferor; appropriate entries (such as a restriction) may be used to protect the equitable interest, although priorities depend on the facts and any later dispositions.
• Family home interplay: Even where advancement is displaced and a resulting trust arises, in family‑home disputes the court may still consider whether a common intention constructive trust better captures the parties’ actual arrangement. Where CICT is unavailable, the resulting trust outcome will typically prevail.

Worked Example 1.10

A father pays 60% of the purchase price of a flat; his daughter pays 40%. Title is taken in the daughter’s sole name. There is no contemporaneous statement of intention.

Answer:
Absent advancement, a purchase‑money resulting trust would arise 60/40. Because advancement applies father–child, the starting point is gift; but the fact of substantial daughter contribution tends to rebut the idea the father intended a full gift of his contribution. A court is likely to find the presumption of advancement rebutted and infer shares proportionate to contributions (60% to father, 40% to daughter), assuming no contrary contemporaneous indication.

Key Point Checklist

This article has covered the following key knowledge points:

• The presumption of advancement operates in specific relationships (historically, father–child, husband–wife, man–fiancée) to presume a transfer of property is a gift.
• It is an exception to the general presumption of a resulting trust in voluntary transfers and purchase‑money cases.
• The presumption is rebuttable by evidence showing the transferor lacked the intention to make a gift at the time of the transfer; contemporaneous declarations and the specific purpose of the transfer are central.
• Acts and declarations made after the transfer are generally inadmissible in favour of the transferor but can be used against them.
• In loco parentis can extend advancement beyond the traditional father–child category where parental responsibilities have in fact been assumed.
• Successful rebuttal usually leads to a resulting trust being presumed; in purchase‑money cases, beneficial shares generally reflect contributions.
• In family‑home disputes, common intention constructive trusts can supersede presumptions where evidence of common intention and detrimental reliance exists.
• The presumption’s relevance is declining; s 199 Equality Act 2010 would abolish it but is not in force as at 2025.
• Illegality affecting the transaction is assessed on public policy grounds under Patel v Mirza, with a focus on proportionality and avoiding unjust enrichment.

Key Terms and Concepts

• Presumption of Advancement
• Contrary Intention
• Resulting Trust
• In loco parentis