Resulting Trust - Unlawful Purposes

Unlawful Purposes

Resulting trust laws arise in equity rather than common law because equity gives clean hand. Accordingly, some jurisdictions might impose equitable defenses such as laches, unclean hands, and the responsibility to do equity. Where a transferor has transferred property for an unlawful purpose, and gained the benefit, then a court might hold that he has waived his right to claim a resulting trust(i.e.:settlor)(inter vivos). In such situations, a court balances the transferee's unjust enrichment with the enablement of cheating by the transferor. Enabling a cheater at gaining from his transaction would erode the legitimacy of the court.

Other jurisdictions may elect to disregard an unlawful purpose.

In situations involving illegality, it can become difficult to distinguish implementation of a resulting trust theory (implied by operation of law) from an oral express trust (one implied by the facts). A transferor failing upon one theory might still prevail upon the other.