Implied trusts and trusts of the family home - Resulting tru...

Learning Outcomes

This article explains presumed and automatic resulting trusts within the framework of implied trusts and their application to property ownership scenarios relevant to SQE1, including:

• Distinctions between presumed resulting trusts, automatic resulting trusts, and constructive trusts used in family-home disputes
• Transactions triggering a presumption of resulting trust: voluntary transfers without consideration and purchases in the name of another
• Quantification rules: proportional beneficial interests by reference to contributions to purchase price
• Operation of section 60(3) Law of Property Act 1925 for voluntary transfers of land and judicial approaches to evidence in that context
• The presumption of advancement (father–child, husband–wife, fiancé–fiancée), its limits, and the fact that Equality Act 2010, s.199 is not in force
• What counts as a purchase-money contribution (deposit, contemporaneous mortgage payments, statutory discounts) and what does not (post-completion expenses)
• The evidential burden and the type and timing of evidence needed to rebut presumptions, including the rule on post-transfer declarations
• Illegality and the Patel v Mirza proportionality approach to transfers made for unlawful purposes
• Application to co-ownership and beneficial interests in SQE1 assessment scenarios

SQE1 Syllabus

For SQE1, you are required to understand the principles governing implied trusts, specifically focusing on resulting trusts within the context of land law and trusts, and ensure you can identify and apply the rules relating to how resulting trusts are presumed and established, with a focus on the following syllabus points:

• The distinction between express and implied trusts, particularly resulting trusts.
• The circumstances giving rise to a presumed resulting trust (voluntary conveyance and purchase money contributions).
• The operation and effect of the presumption of resulting trust.
• The operation, effect, and rebuttal of the presumption of advancement.
• The type of evidence required to rebut these presumptions.
• The special position for voluntary conveyances of land under LPA 1925, s.60(3).
• The evidential burden (on the balance of probabilities) and the rule that subsequent declarations generally cannot be used by the transferor to support a resulting trust.
• The role of illegality and the Patel v Mirza approach in determining whether a resulting trust claim should be allowed.

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 situation does a resulting trust typically arise?
   1. Where a settlor expressly declares their intention in writing.
   2. Where property is transferred to another without consideration, and no gift is presumed.
   3. Where a trustee breaches their fiduciary duty.
   4. Where a valid contract for sale of land is created.
2. What is the 'presumption of advancement'?
   1. A presumption that any property advance must be repaid.
   2. A presumption in certain relationships that a transfer of property is intended as a gift.
   3. A presumption that trustees have the power to advance capital to beneficiaries.
   4. A presumption that the first person to contribute acquires the largest share.
3. Which of the following relationships traditionally gives rise to the presumption of advancement?
   1. Mother to child.
   2. Aunt to nephew.
   3. Father to child.
   4. Siblings.

4. True or False: The presumption of a resulting trust applies equally to voluntary transfers of land and personalty.

Introduction

Unlike express trusts, which are created by the clear intention of a settlor, implied trusts arise by operation of law. Resulting trusts are a key category of implied trust. They typically arise in situations where property is transferred to someone who pays nothing for it, or where someone contributes to the purchase price of property but their contribution is not reflected in the legal title. Equity presumes intentions based on these actions, leading to the 'resulting' back of the beneficial interest to the person who provided the property or funds, unless evidence indicates a different intention, such as an outright gift. Understanding these trusts requires familiarity with certain legal presumptions and how they operate.

Resulting trusts are often divided into two types. A presumed resulting trust arises from a transfer or contribution where the law presumes that the transferor did not intend to pass the whole beneficial interest. An automatic resulting trust arises when an express trust fails to dispose of the entire beneficial interest, so the equitable interest “springs back” to the settlor because equity abhors a vacuum. This article concentrates on presumed resulting trusts, but keeping the automatic category in view helps explain the overall structure of implied trusts and why equitable title cannot be left ownerless.

Key Term: Resulting trust
A trust implied by law where the beneficial interest in property returns (results back) to the original transferor or contributor, based on presumed intention or the failure of an express trust.

Presumed Resulting Trusts

A presumed resulting trust arises where the law presumes, based on the circumstances of a transaction, that the transferor of property intended to retain the beneficial interest, despite transferring the legal title to another. This presumption is rebuttable with evidence of a contrary intention. There are two main scenarios where this presumption typically applies.

A useful way to frame the doctrine is through the twofold categorisation identified in modern authority: presumed resulting trusts cover voluntary transfers and purchase money cases; automatic resulting trusts deal with failures of express trusts to dispose of the equitable interest. In all presumed cases the evidential presumption allocates the burden: the legal title holder usually must show that a gift was intended or that the money was a loan.

Voluntary Conveyance

Where an individual (A) transfers property they own to another person (B) without receiving any consideration (payment or equivalent value) in return, equity may presume that A did not intend to make a gift of the beneficial interest to B. In such cases, B holds the legal title on a resulting trust for A.

This presumption applies readily to transfers of personal property (personalty), such as shares or money. For example, if A moves £10,000 or share certificates into B’s sole name without clear donative intent, equity starts from the position that B is a trustee for A unless B can prove it was a gift or a loan was intended.

For voluntary transfers of land (realty), the position is modified by section 60(3) of the Law of Property Act 1925 (LPA 1925). This section states that a resulting trust shall not be implied merely because the property is not expressed to be conveyed for the use or benefit of the grantee. While this suggests the presumption may not automatically apply to land, courts often still find a resulting trust if the circumstances indicate no gift was intended, particularly between strangers (Hodgson v Marks [1971] Ch 892).

The effect of section 60(3) is that there is no automatic presumption in voluntary conveyances of land simply from silence in the instrument. However, a resulting trust can still be established on conventional evidential grounds where the facts show that no gift was intended, or where there was an understanding that the transferor retained the beneficial interest. Courts have treated the absence of a gift intention, the relationship between the parties, and contemporaneous statements or arrangements as sufficient additional factors in the case of land. It follows that evidence matters especially in land cases, but the equitable analysis remains: if no gift was intended, a trust is likely to be inferred.

Practical points for voluntary conveyances:

• The presumption is strongest with personalty (cash, securities) absent compelling gift evidence.
• For land, look for “something more” beyond the mere absence of words of trust or use—such as an express understanding or the parties being strangers.
• Retention of control (e.g., keeping title deeds historically, continued payment of outgoings, or continued occupation) may support the inference that the transferor did not intend a gift.

Purchase in the Name of Another

A presumed resulting trust also arises where property is purchased using money provided by one person (A), but the legal title is put into the name of another person (B). Equity presumes that A intended to retain the beneficial interest, and therefore B holds the property on resulting trust for A.

Key Term: Purchase money resulting trust
A resulting trust presumed to arise when one person provides the funds to purchase property, but the legal title is taken in the name of another person. The person providing the funds is presumed to retain the beneficial interest.

If multiple people contribute to the purchase price, but legal title is only in the name(s) of some contributors, a resulting trust may be presumed where the contributors hold the beneficial interest in proportion to their contributions.

Important qualifiers for purchase money cases:

• The contribution must be directed to the acquisition cost (for example, the deposit or mortgage capital repayments assumed and paid as part of the purchase finance). Routine household expenses or improvements after completion do not constitute purchase-money contributions for resulting trust purposes, though they may be relevant to constructive trusts or proprietary estoppel in family-home cases.
• The contribution should be contemporaneous with the acquisition, or at least part of the financial arrangements by which title was obtained. Payments made well after completion that were not part of the purchase finance are less likely to count for a purchase-money resulting trust.
• A statutory “right-to-buy” or sitting-tenant discount can count as a contribution to the purchase price, generating a beneficial share in proportion to the discount’s value.

Worked Example 1.1

Fatima provides the entire £300,000 purchase price for a house, but the legal title is registered solely in the name of her friend, George. There is no written agreement about ownership. What is the likely initial position regarding beneficial ownership?

Answer:
Equity will likely presume a resulting trust. George holds the legal title, but Fatima, having provided the entire purchase price, is presumed to hold the entire beneficial interest. George holds the house on a resulting trust for Fatima.

Worked Example 1.2

Alex contributes £50,000 and Ben contributes £150,000 towards the purchase of an investment property costing £200,000. The legal title is registered in Ben's sole name. How is the beneficial ownership likely to be divided?

Answer:
A purchase money resulting trust is presumed. Ben holds the legal title on trust for both himself and Alex. Their beneficial interests are presumed to be in proportion to their contributions: Alex (25%) and Ben (75%).

To apply these principles confidently, keep in view the timing and nature of contributions, and whether the payments were genuinely applied to the price or acquisition finance. Contributions to mortgage principal repayments that were assumed as part of the original purchase funding are treated as purchase money; by contrast, later improvements, council tax or utilities will not give rise to a purchase-money resulting trust (although they may support other equitable claims depending on the facts).

Rebutting the Presumption of Resulting Trust

The presumption of a resulting trust is not absolute and can be rebutted by evidence showing that the transferor (A) actually intended to make a gift to the transferee (B), or that the money provided was intended as a loan. The burden of proof lies on the person seeking to rebut the presumption (usually B, the legal title holder). Evidence considered usually relates to the circumstances at the time of the transfer.

Admissible evidence and its timing:

• Evidence of words or conduct before, at, or immediately after the transfer and forming part of the same transaction can be used for or against either party.
• Later statements or conduct by the transferor cannot generally be used by the transferor (or their estate) in their own favour to support a resulting trust; but such later statements can be used against the transferor (for example, to support the transferee’s gift case). The evidential rule ensures that parties cannot manufacture a trust afterwards with self-serving declarations.

What may rebut the presumption:

• Clear evidence of donative intent on the balance of probabilities (for instance, that the purpose was to gift a property on a special occasion or to settle a child in accommodation).
• Evidence that the transfer or the contribution was a loan to be repaid; a loan is inconsistent with a resulting trust because the lender’s remedy is repayment, not an equitable share of the asset.
• In qualifying relationships, the counter-presumption of advancement (discussed below).

A key way the presumption of resulting trust is rebutted is through the counter-presumption of advancement.

Presumption of Advancement

In certain relationships, equity presumes that a voluntary transfer or contribution to purchase price is intended as a gift (an 'advancement') rather than creating a resulting trust. This presumption arises from a perceived moral obligation to provide for the recipient.

Key Term: Presumption of advancement
A presumption, arising in specific relationships (e.g., father to child, husband to wife), that a transfer of property or contribution to purchase price was intended as a gift, rebutting the presumption of a resulting trust.

Historically, this presumption applied where:

• A father transferred property to his child.
• A person standing in loco parentis (acting as a parent) transferred property to a child under their care.
• A husband transferred property to his wife.
• A fiancé transferred property to his fiancée (if they subsequently married).

The presumption did not traditionally apply from mother to child or wife to husband, reflecting outdated societal views. In these reverse scenarios, the presumption of resulting trust would apply unless rebutted. Modern decisions emphasise that, even where a formal presumption does not apply, evidence of an intention to benefit can still rebut a resulting trust—so it may be easier to prove a gift from a mother to a child than from a stranger, even though no presumption of advancement arises.

The presumption of advancement is itself rebuttable. Evidence showing the transferor did not intend a gift (for instance, that repayment was anticipated or conditions were imposed inconsistent with a gift) can displace it. The overall inquiry remains one of actual intention at the time of the transaction.

Worked Example 1.3

David buys shares but registers them in the name of his adult daughter, Chloe. There is no other evidence of his intention. What presumption applies?

Answer:
The presumption of advancement applies. As David is Chloe's father, equity presumes the transfer was intended as a gift. Chloe holds both legal and beneficial title, unless David can provide evidence to rebut this presumption (e.g., evidence from the time of transfer showing he intended to retain beneficial ownership).

Worked Example 1.4

Maya places £60,000 into a savings account in the sole name of her adult son, intending that he “use it wisely.” There is no documentation and no discussion of repayment. What is the likely initial position?

Answer:
A presumption of advancement applies on a mother–child transfer only if recognised as such by law; in current English law the formal presumption does not operate for mother-to-child transfers. Accordingly, the starting point is a resulting trust in Maya’s favour unless the son can show, on contemporaneous evidence, that Maya intended an outright gift. Evidence such as a card or message making the donation as a gift at the time may rebut the resulting trust.

Worked Example 1.5

Ethan transfers £40,000 to his partner’s solicitor to be used for the partner’s flat purchase, which completes in the partner’s sole name. Ethan contemporaneously emails saying, “This is a loan—please repay me when you sell.” Years later, after a relationship breakdown, Ethan claims a resulting trust share. What result?

Answer:
The presumption of resulting trust arising from Ethan’s contribution is rebutted by his own contemporaneous statement that the money was a loan. The appropriate remedy is a debt claim, not a share under a resulting trust.

Rebutting the Presumption of Advancement

The presumption of advancement can itself be rebutted by evidence showing that the transferor did not intend to make a gift. Evidence must relate to intentions at the time of the transfer. Subsequent declarations or actions by the transferor cannot typically be used in their own favour to rebut the presumption.

Examples that may rebut advancement:

• An agreement, recorded at or before the transfer, that the property will be repaid or held for the transferor.
• The transfer being motivated by a non-donative purpose (for example, security for a debt or convenience) inconsistent with gifting.
• Evidence that the asset was to be held for investment on behalf of the transferor, such as continued control over dividends or sale proceeds in a way not consistent with an outright gift.

Exam Warning

Section 199 of the Equality Act 2010 abolishes the presumption of advancement. However, this section is not yet in force. For SQE1 purposes, you must apply the law as it currently stands, including the traditional presumption of advancement and its limitations. Be aware of the specific relationships it covers.

Illegality

If a transfer was made for an illegal purpose (e.g., to defraud creditors), the court must consider public policy factors to determine whether allowing a claim based on a resulting trust (or rebutting a presumption of advancement) would be contrary to the integrity of the legal system (Patel v Mirza [2016] UKSC 42). This involves assessing the purpose of the prohibition transgressed, other relevant public policies, and proportionality. The previous reliance principle from Tinsley v Milligan [1994] 1 AC 340 is no longer the sole test.

Applying the Patel approach, courts ask whether allowing a resulting trust claim would undermine the policy behind the prohibition, consider competing policies (including discouraging unjust enrichment), and assess whether denial would be a proportionate response. For example, if property was put into a partner’s sole name to facilitate an unlawful benefits claim, but the evidence shows that the claimant provided the purchase money intending to retain beneficial ownership, the court will evaluate whether granting a resulting trust aligns with the public interest or whether refusal better serves policy.

Worked Example 1.6

Nadia transfers her investment portfolio into her brother’s name to shield it from anticipated civil creditors. Relations sour and she seeks to assert a resulting trust. There is no written declaration; both agree the transfer was motivated by creditor avoidance.

Answer:
The court will apply the Patel v Mirza policy-based approach. It will consider the purpose of the prohibition (protecting creditors), any competing policy (preventing unjust enrichment of the brother), and proportionality. Depending on the facts, the court may either refuse relief (to avoid endorsing evasion) or permit the resulting trust to prevent disproportionate forfeiture, especially if creditors’ positions were not worsened or if denial would hand the brother a windfall.

Additional Practical Considerations

Presumed resulting trusts raise a series of practical questions that frequently arise in co-ownership and family property problems.

What counts as a “purchase money” contribution?

• Cash towards the deposit.
• Mortgage capital repayments assumed as part of the acquisition finance (especially if liability was jointly assumed at purchase).
• Statutory or contractual discounts (such as a right-to-buy or sitting-tenant discount) treated as value that purchased the property.

What does not count for a purchase-money resulting trust?

• Household bills, insurance, utilities, and general living expenses.
• Works of improvement, décor, or routine repairs carried out after completion (these may be relevant to constructive trusts or proprietary estoppel but do not create a purchase-money resulting trust).
• Payments made after completion that were not part of the purchase arrangements, unless clearly part of the acquisition finance.

How are shares quantified?

• Proportionately to contributions. If A contributes 25% of the price and B 75%, the presumption is a 25:75 split in the beneficial interest.
• The presumption can be displaced by evidence of a different common intention (bringing constructive trust principles into play), particularly in the domestic context.

Where do resulting trusts sit alongside constructive trusts?

• Resulting trusts are often the starting point in investment property cases and in domestic cases where the only evidence is direct financial contribution to price.
• In the family-home context with complex non-financial contributions or clear common intentions, courts frequently prefer common intention constructive trusts to produce a fair division reflective of the parties’ dealings. The existence of direct purchase-money contributions can both raise a resulting trust and simultaneously support an inference of common intention for a constructive trust, in which case the constructive trust analysis may take precedence for quantification.

Worked Example 1.7

Olu is a sitting tenant entitled to a 40% discount on the purchase price of his flat. His partner, Priya, provides all cash actually paid, and legal title is registered in Priya’s sole name. They later sell and buy a house in Priya’s sole name using the proceeds. No express trust is declared. Does Olu have a beneficial share?

Answer:
The discount is treated as Olu’s contribution to the purchase price. A resulting trust arises in the flat in proportion to the discount, and if the sale proceeds are rolled into the next purchase, that equitable share can be traced into the replacement property absent contrary intention. Olu can assert a beneficial share reflective of the discount value.

Worked Example 1.8

Sana pays the first year’s mortgage instalments after completion on her partner’s house (in his sole name) but made no contribution to the deposit or the purchase at exchange. She claims a resulting trust share based solely on those later payments.

Answer:
Payments that are not part of the acquisition finance generally do not found a purchase-money resulting trust. Sana’s later payments are more naturally analysed under constructive trust or proprietary estoppel principles depending on the broader facts; a resulting trust claim is unlikely to succeed solely on that basis.

Key Point Checklist

This article has covered the following key knowledge points:

• Resulting trusts are implied by law based on presumed intentions or failure of express trusts.
• Presumed resulting trusts arise from voluntary conveyances (especially of personalty) or contributions to purchase price without consideration.
• The contributor is presumed to retain a beneficial interest proportionate to their contribution.
• The contribution must be to the purchase price or acquisition finance and broadly contemporaneous with the acquisition; routine expenses and later improvements are not purchase-money for resulting trust purposes.
• This presumption can be rebutted by evidence of a contrary intention (e.g., gift or loan).
• The presumption of advancement acts as a counter-presumption in certain relationships (father–child, husband–wife, fiancé–fiancée), suggesting a gift was intended.
• The presumption of advancement can also be rebutted by evidence of contrary intention.
• Evidence for rebuttal usually must relate to the time of the transaction; later declarations assist only against the transferor.
• LPA 1925, s.60(3) affects the presumption for voluntary conveyances of land; courts look for “something more” to infer a resulting trust in land cases.
• Illegality may affect the court's willingness to recognise a resulting trust based on public policy considerations using the Patel v Mirza proportionality test.
• In family-home disputes, a purchase-money resulting trust can arise from direct contributions or discounts, but constructive trusts may better reflect the parties’ overall intentions and dealings.

Key Terms and Concepts

• Resulting trust
• Purchase money resulting trust
• Presumption of advancement