Jill sets up a trust for the benefit of her grandson, Joe.The trust property - a small hotel - is to be legally owned by the trustee, Jack, for the benefit of Joe.Unfortunately, Joe falls terminally ill and passes away shortly after the trust is established.What happens to the trust property?

Question

Quizplus · Accepted Answer

When a trust is set up for a named beneficiary and the beneficiary predeceases the settlor, the trust property will revert back to the settlor unless the settlor intended for a resulting trust to arise. In this case, the trust was set up for the benefit of Joe, but he passed away shortly after the trust was established. Therefore, the trust property will revert back to Jill, the settlor, under a resulting trust. Jack, as the trustee, will still have legal title to the property, but he will hold it for the benefit of Jill as the new equitable owner of the trust property.

Jill Sets Up a Trust for the Benefit of Her