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Home > Newsletters > Estate Planning Newsletter

Estate Planning Newsletter

Correcting Mistakes in Trust Distribution

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.

  • Returning Property to its Rightful Owner
    A constructive trust is a remedy imposed by a court when a person has wrongfully attained property in an inappropriate way. The court will undo the transaction and order that title to the property go to the rightful... Read more.
  • The QDOT and Non-Citizen Spouse
    A QDOT is a specific type of marital deduction trust that is designed to ensure that non-citizen spouses will eventually pay any taxes that may be due upon distribution of the principal from the trust, even if the surviving spouse... Read more.
  • Conservators of the Person and of the Estate
    A “conservator” is a court-appointed individual assigned to handle the daily affairs of those who cannot care for themselves due to physical or mental limitations (the “conservatee”). Conservatorships are... Read more.
  • Inheritance Rights of Spouses after Separation and Divorce
    Most people are aware that a surviving spouse is usually entitled to inherit all or a large portion of the estate of a deceased spouse. Fewer understand the effect on estates if one spouse dies during a legal separation or after a... Read more.
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