Express Trusts Flashcards
What is an express trust?
- arises from the express intention of the party who creates the trust
- applies where the settlor deliberately sets out to create a trust over specific properties in favour of specific beneficiaries
- where an express trust fails this gives rise to an implied trust
What are the 2 requirements needed to create an enforceable express trust?
- valid
- properly constituted
What are the 4 conditions needed for a trust to be valid?
- Capacity of settlor
- Certainty of intention
- Certainty of subject matter
- Certainty of objects
Three certainties- lord langdale in knight v knight
Capacity of the settlor
- must be of full age (18+) and have the mental capacity to make a trust
- where a person under 18 purports to make a trust, it is voidable on or before their 18th bday and only becomes valid once turned 18- edwards v carter
- where a person lacking mental capacity purports to make a trust it is void- mental capacity act 2005 and Re Beaney
- s18.1.h.i- court can make a trust on behalf of someone
Certainty of intention
- Pearson v Lehman brothers finance- court will not convert a failed gift into a trust
- must be certain that the settlor intended to create a trust rather than a gift and this is ascertained from words and conduct- knight v knight
- word ‘trust’ doesnt have to be used- north v wilkinson. And even where it is used it doesnt create a trust
- imperative words used not precaratory- lamb v eames
- only words used at the time of creation are relevant- north v wilkinson
- self-declaration cases: Paul v Constance- words and conduct considered
- commercial cases: re multi gurantee co- courts reluctant to find for unless business segregated property to be held on trust
Absence of certainty of intention?
- purported trust is void and effect is 2 fold
- self-declaration cases= property remains in settlors estate
- where property is transferred to purported trustee it is deemed as an absolute gift
Certainty of subject matter
- trust property must be described with sufficient clarity and identifiable with certainty- sprange v Bernard
- uncertain expressions that will fail: bulk (palmer v simmonds), remaining part (sprange)
- tangible property= subject matter must be segregated physically from the rest of the bulk- re London wine co
- intangible property= no requirement of segregation so long as they are identical- Hunter v moss
Absence of certainty of subject matter
- trust is void and consequence is two fold
- where settlor transfers bulk and only intends part of property to be held on trust it constitutes a gift- Hancock v Watson
- if subject matter is not certain- trust is void and all property remains in estate of settlor
Certainty of objects
- objects must be capable of being identifiable with certainty
Bare trust: in favour of a single beneficiary, must be capable of being identifiable with certainty
Fixed trust: in favour of a class of persons, must be possible to identify all the beneficiaries- IRC v broadway cottages trust established complete list test. Must be identifiable at the time of distribution. Where there is a condition, it will be satisfied once one beneficiary satisfies the condition. Where a beneficiary cannot be found, a share will be paid into court- Re Gulbenkian
Discretionary trust: group of persons where trustees are given discretion as to which objects benefit. Is or is not test- Re Badens trust. No need to compile a list
Absence of certainty of objects
- trust is void and trustee holds property on a resulting trust for the settlor- Briggs v Penny
What is the beneficiary principle
- beneficiary must be a living person- motive v bishop of Durham
What is the rule against perpetuity
- trust property must be capable of vesting on a person with the perpetuity period- 125 years or else will be void
- s2 perpetuity and accumulation act 2009
What are the 2 requirements for constituting a trust?
- declaration of trust
- vesting of title
Declaration of trust
- chattels= can be done orally
- land= s53 LPA 1925 must be done in writing and signed by settlor
- where it is not done in writing it is simply unenforceable and not necessarily void- bannister v bannister
- consequently equity will intervene and declare a resulting trust or a constructive trust
Vesting of title
- once vested the trustee is the legal owner
- vesting does not have to be done at the same time as declaration but must be done in this order
- Re Bowden- can change mind before vesting but not after
- in self-declaration cases no vesting is required even if there are other trustees- T Choithram international SA v Pagrani
- land= deed or registration (s52.1 LPA or LRA 2002)
- Shares= delivery of a share transfer form followed by registration of title in companies share register- ss544-770 CA 2006, stock transfer act 1963
- chattels= transferred either by gift or delivery of possession to trustee- Jaffa v Taylor gallery
