Formalities of Trusts

Question 1

What formalities are required to declare a trust?

Answer 1

1. Usually, none at all
   [Paul v Constance: Declaration of trust of personalty can be in any form]
2. If will, need s 9 Wills Act 1837
   (In writing, signed, and attested)
3. If over land, need s 53(1)(b) LPA 1925
   (In signed writing by person with beneficial ownership)
   BUT does not apply to CT/RT over land per s 53(2) LPA 1925
4. If not oral self-declaration of trust over land, [Rochefoucauld] applies

Question 2

What if formalities are not complied with?

Answer 2

Trust becomes unenforceable
[Gardner v Rowe: Formality > S’ intention]

If will, trust will just fail and property will pass to either person named in will or to residuary legatees absolutely

Because risk to parties of unwarranted claims may be especially serious

Question 3

Can formalities be avoided?

Answer 3

Equity will go as far as to uphold trust as intended

s 53(1)(b) LPA 1925 effectively limited to oral self-declaration of trust of land; otherwise, [Rochefoucauld] principle enforces trust regardless of lack of written evidence

Question 4

Rochefoucauld v Boustead

Answer 4

[EQUITY WILL NOT ALLOW A STATUTE TO BE USED AS AN ENGINE OF FRAUD]
[LINDLEY LJ: FRAUD = AGREEING THEN DENYING THE TRUST AND CLAIMING THE LAND HIMSELF]

Facts:
• D orally agreed to hold land for R, then sold land

Judgment:
•D could not take advantage of lack of formality to deny the trust; D held proceeds on trust for R
• Trust was express (i.e. what S intended to create) but later cases held it as CT

Question 5

Bannister v Bannister

Answer 5

[SUPPORTING ROCHEFOUCAULD]

Facts:
•A agreed to convey house to B in exchange to living there rent-free for life; B then sought possession of the house

Judgment:
• Trust for A for life was enforced despite lack of formality
• Trust was CT, so not directly challenging statutes

Question 6

Can Bs create a trust for someone else for something that is not land?

Answer 6

Yes, but probably no formalities required because is carving new interest out of old one

S 53(1)(c) LPA 1925 requires disposition of a subsisting equitable interest to be made in writing and signed by disponor/agent BUT probably won’t apply to subsisting trusts