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Estate Planning Newsletter

The 'Good Faith' Implied Trust

There may be instances where property under a trust is transferred to the wrong beneficiary. This transfer can be corrected through a remedy called a resulting trust or an implied trust. Do not confuse a resulting trust, which is created by the court to remedy some error, from an express trust, which is a trust expressly created by a person (the trustor or settlor) who designates a trustee to manage assets or property for the benefit of trust beneficiaries.

When a Resulting Trust Is Imposed

A resulting trust is typically imposed by a court, and may occur under any of the following situations:

  • Failure of an express trust (due to unclear intentions or inherent illegality)
  • A need to determine who is to receive property that remains after an express trust has been administered and property has been distributed
  • A person acquires property that was not meant to be a gift to him/her

Distinguishing Characteristics

Resulting trusts are different from other trusts, in that they are:

  • Involuntary – Imposed by law, rather than being voluntarily created.
  • Not a Constructive Trust – Imposed because of a good faith error, instead of the fraudulent transfer or undue influence that characterizes constructive trusts.

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Carol A. Peters, Attorney at Law, is located in Pasadena, CA and serves clients in and around Altadena, Sierra Madre, South Pasadena, Alhambra, La Canada, Eagle Rock, Highland Park, Glendale, Echo Park, Silverlake, Arcadia, Monrovia, Duarte, San Gabriel, Temple City, Whittier, Los Angeles, Huntington Park, Norwalk, Santa Fe Springs, Pico Rivera and Los Angeles County.
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