Express trust: Formalities and constitution - Inter vivos trusts Flashcards
What trusts should consider formalities and constitution?
The issue of formalities should be considered in EXPRESS TRUSTS:
a) Self-declaration trust; formalities dealing with creating new equitable interest since the legal interest does not change.
b) Transfer on a trust:
formalities involved in changing both legal and equitable title.
PS: no specific formalities for the creation of equitable interest when the property is NOT land.
The formalities for the declaration of a trust of LAND?
Section 53(1)(b) LPA 1925
Section 53(1)(b) LPA 1925:
a declaration of trust respecting any land or any interest therein must be manifested and proved by…
- some writing; containing intentions and terms of the trust.
- signed by the settlor.
Non-compliance with Section 53(1)(b) LPA 1925 (formalities for a trust on land)?
Will render the trust unenforceable rather than void.
This means that the trust exists from the moment it was declared but the beneficiary cannot enforce their rights unless and until s.53(b) is satisfied.
Exceptions under Section 53(1)(b) LPA 1925?
As s.53(1) only applies to express trusts, s.53(2) includes exceptions for resulting, constructive and statutory trusts.
This means that there are cases where trust on land CAN arise in the absence of written evidence.
Failure of formalities?
The trust will simply not be enforceable.
In cases of transfer on trust, a trust will be enforceable regardless of lack of formalities if it would be fraudulent to do otherwise (either enforcement or recognition of a resulting or constructive trust).
Equity will not allow a statute to be used as an instrument of fraud.
Failure of formalities when considering a third party?
When the settlor is not the intended beneficiary in self-declaring trusts, a third party beneficiary makes things more complicated.
If the third party has no written evidence or unwilling/unable to share it, the trustee should seek the court’s direction as they cannot keep the land for themselves - leading to a constructive or resulting trust.
What is the constitution of trusts in Milroy v Lord?
A constitution is the transfer of legal title from one party to another through
- A transfer on trust
- A gift
- A self declaration trust.
What is ‘equity will not assist a volunteer’ in Milroy v Lord?
Equity will not assist a volunteer by compelling the settlor/donor to transfer legal title to the trustee/donee if the settlor had not completed the process of transferring legal title.
A transferor must do EVERYTHING NECESSARY to effect the intended disposition of the asset
Exceptions to the rule in Milroy v Lord?
- Re Rose principles
- Fortuitous vesting
- Donationes mortis causa (DMC)
What are Re Rose line of exceptions?
The transferor must do everything in his power to transfer legal title.
As such even if the legal title has not occurred - equity may regard the transfer of the EQUITABLE interest complete.
- correct method of transfer was used
- the transferor did everything in his power
- the document ended up in the hands of someone capable of effecting the legal transfer
What is Fortuitous vesting (the rule in Strong v Bird)?
When the legal title vests in the recipient in another capacity.
Usually occur because the intended recipient of a gift is also the personal representative of the transferor’s estate.
Since all legal title is transferred to the PR when they die, equity will perfect any imperfect gift made to them.
- must be an intention to make a gift
- the intention must continue until the donor’s death
- the intended donee becomes an executor.
What is Donationes Mortis causa?
Anomalous type of gift which only applies in very specific circumstances.
- the gift is made in contemplation of death from an identifiable cause that the donor believes to be imminent.
- the gift is conditional on death
- there is delivery of the property (chattels yes but with land, shares and banc accs more must be done)
How do we complete transfer of Land?
Registered land:
By deed under s 52(1)LPA 1925 and registered with the land registry under s27 LRA 2022.
How do we complete transfer of shares?
Shares:
A stock transfer form being sent to the company. Completed when the transferee is registered in the company’s internal register of members.
How do we complete transfer of chose in action?
Debts and money in bank etc is transferred by a written transfer and notice in writing to the debtor or the bank. Completed when the notice has been received.
