Resulting Trusts

In re Marriage of Kendra, 351 Ill App 3d 826, 815 NE2d 22, 286 Ill Dec 812 (3rd D 2004).

Facts: A father purchased property and then deeded it to his daughter and son-in-law by a warranty deed. The father purchased the land with the stated purpose of encouraging his children to hunt, and ensuring that they would be licensed to do so as landowners, rather than being subject to a chance lottery. The father consistently paid property taxes for the deeded land, and limited his actions in relation to the land to clearing a few trails.

When the daughter began having marital problems, she executed a promissory note to the father to signify that the property was still owned by the father. The father brought a declaratory judgment action, claiming title to the property after the daughter filed a divorce proceeding. The trial court ruled that the father was the beneficial owner of the property through a resulting trust. The son-in-law appealed that decision.

Holding: Reversed. A resulting trust originates when a party purchases property with his or her own funds, and then places title to the property in the name of another but actually intends to retain legal ownership for him or herself. The trust arises at the time of the conveyance, and its existence is determined by the intent of the purchasing party at that time. The intent of the parties is determined by their conduct, relationship, and the surrounding circumstances. Clear and convincing evidence is necessary to establish the existence of a resulting trust. As such, a resulting trust will not be found if the evidence in the matter supports any other type of transaction.

In addition, because the law of resulting trusts was created to enforce the intent of the parties, certain rebuttable presumptions have arisen. One such presumption is to presume that the placement of title in the name of an adult child by a parent is a gift, rather than a resulting trust. Illinois law further includes a presumption of gift with respect to transfers to sons- or daughters-in-law. In this case, the father's actions surrounding the deeded property indicated that the deed was intended as a gift, as much as they suggested the intention of creating a resulting trust. The court cited several factors as support for its conclusion including the following: (1) the lack of documentary evidence to establish that the father intended to create a resulting trust; (2) the father neglecting to make statements to anyone at the time of transfer indicating that this was a conveyance of convenience and that he intended to retain legal ownership of the property; and (3) the only evidence to rebut a finding that the property deed was a gift was the father's assertion. As such, the court held that there was evidence in the case to support the conclusion that the property deed was a gift.

In light of the clear and convincing evidence standard, evidence that the father's deed may have been a gift negated the father's ability to establish the existence of a resulting trust.

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