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Estate, Powers and Trusts, § 7-1.3: Purchase-Money Resulting Trust Abolished
Generally speaking, a purchase-money resulting trust occurs when property is purchased by two people, but the title is only in the name of one person. If the title-holder dies intestate, meaning that the title-holder dies without leaving a will, the purchase-money resulting trust is awarded to the non-title holding person. However, New York Estate law, under New York Estate, Powers and Trusts law § 7-1.3, abolished the concept of the purchase-money resulting trust, with two exceptions. A resulting trust may be established if:
- Title to the property is taken in the name of one person without the consent of the person who paid for it.
- The property is purchased with title in the name of one person but using the money of another person.
To learn more about the estate planning process and how to create a trust that will meet your estate planning goals, contact an experienced Manhattan Probate Lawyer.Related Statutory Provisions
- When trust interests not to merge: Estates, Powers and Trust, § 7-1.1
- Trustee of passive trust not to take: Estates, Powers and Trust, § 7-1.2
- Purposes for which trust may be created: Estates, Powers and Trust, § 7-1.4
- When trust interest inalienable; exception: Estates, Powers and Trust, § 7-1.5
For example, Dorothy and John dated for several years, but never married. They decided by buy a house and live together. Dorothy and John each paid for 50% of the purchase price of the house. However, the title was put in only John’s name. John passes away without a will. Under the law related to purchase-money resulting trusts, Dorothy would be entitled to have the value of the house. However, because under New York estate law purchase-money resulting trusts have been abolished, Dorothy may not be automatically entitled to half the value of the house.
Agush Kurtish and Nick Iskokovic agreed to purchase from John Goldberg a multiple dwelling as partners. When Iskokovic lacked sufficient funds with which to close title, however, plaintiff proceeded on his own. A closing was held in Kurtish’s absence and title was transferred to plaintiff and Jovan Iskokovic, the brother of Nick Iskokovic. Jovan Iskokovic’s name was placed on the deed without Kurtish’s knowledge. Kurtish provided $8,000 for the down payment with the balance of $74,420.08 to by paid by mortgage payments. The mortgage was in Kurtish’s name. Iskokovic lived in an apartment in the building rent free, collected the rents, paid the bills and managed the building, while Kurtish made the monthly mortgage payments of $965 from his own funds to Goldberg, who forwarded it to Francis Leatham, the mortgagee.
Kurtish eventually learned that he was not the sole titled owner and, he evicted Iskokovic from the building. In response, Iskokovic had title to Iskokovic's interest transferred to a corporation solely by Goldberg. Kurtish sued Iskokovic and prevailed based on the rules related to a purchase-money resulting trust. Kurtish v. Iskokovic, 612 N.Y.S.2d 263 (N.Y.A.D. 3 Dept., 1994)Estate, Powers and Trusts, § 7-1.3- Purchase-money resulting trust abolished
- A disposition of property to one person for a valuable consideration paid, in whole or in part, by another is presumed fraudulent as against the creditors of the payor at the time of such disposition and, unless the presumption is rebutted, a trust results in favor of such creditors to the extent necessary to satisfy their claims; but title to the property vests in the transferee and no trust results to the payor unless the transferee either:
- Takes such property, in his own name, as an absolute transfer without the consent or knowledge of the payor; or
- In violation of some trust, purchases the property so transferred with money or property belonging to another.
New York law relating to purchase-money resulting trust is complex. If you have concerns about how property will be treated upon the death of the person who holds title to the property, it is important to contact someone with experience. The staff of Stephen Bilkis & Associates, PLLC has experience representing clients on estate matters related to wills, trust, powers of attorney, advance healthcare directives and other estate planning documents. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate issue. We serve individuals throughout the following locations: