The history of the resulting trust concept: The resulting trust is not a new concept. Not long after the chancellor began enforcing uses in fifteenth-century England, he was confronted with the issue of what was to happen to land that was enfeoffed by A (think proto-settlor) to B (think proto-trustee) and his heirs for the use of C (think proto-beneficiary) for life when there was no mention of what was to be done with the beneficial interest once C died. As there was no evidence that B should have the use in himself, the inference was that A was entitled to it. It was said that B held the property upon a resulting use for A, the transferor. In other words, the use “sprang back” or “resulted” to A. Gratuitous land transfers also raised the presumption that the transferee held the property upon a resulting use for the transferor. Even the purchase money resulting trust can be traced back to what was essentially the purchase money resulting use.

The practical present-day applications of resulting trust doctrine: Resulting trust doctrine is a creature of equity. At law, a completed gift entails a transfer of legal title to the donee. Even when a legal reversion is reserved, the title is shared with the owners of the various legal interests. Take, however, an irrevocable inter vivos trust, which is a creature of equity. A donative transfer to the trustee entails a transfer of legal title to the trustee, who, qua trustee, does not also take beneficial ownership. Should the trust fail ab initio or in mid-course, what then is to be done with the subject property, the settlor never having intended to make an outright gift to the trustee? It is said that the settlor from the outset possessed by operation of law an equitable vested reversionary property interest, subject to divestment upon the trust terminating in favor of persons or institutions designated in the trust’s terms. That being the case, the equity court developed over time a procedural equitable mechanism for getting legal title from the express trustee back to the settlor, or over to the settlor’s successors in interest, in vindication of the vested equitable reversion should the trust fail ab initio or in mid-course. Again, the process kicks in only in the absence of express direction in the terms of the trust as to what is to be done with the legal title in the event of such a failure. The process is simple: The equity court declares the express trustee now to be a resulting trustee and issues an equitable specific-performance order to the resulting trustee personally, formerly the express trustee, to transfer the legal title to the settlor, or over to the settlor’s successors in interest.

Some things to keep in mind: First, a reversion, whether legal or equitable, arises by operation of law. A remainder, on the other hand, “can never be limited, unless either by deed or devise.” See Blackstone’s Commentaries, Book II, 175. Second, reversionary interests are always vested and assignable, and thus exempt from application of the rule against perpetuities, at least on this side of the Atlantic. Third, the resulting trust is generally exempt from application of the statute of frauds.

For a discussion of what an equitable vested remainder incident to a trust relationship looks like, see §8.2.1.3 of Loring and Rounds: A Trustee’s Handbook, which section is reproduced in its entirety in the appendix below. The Handbook is available for purchase at https://law-store.wolterskluwer.com/s/product/loring-rounds-a-trustees-handbook-2022e-misb/01t4R00000OVWE4QAP.