Head 15: Creating an Express Trust Flashcards
What acts are needed to create an express trust?
Two juristic acts are needed
- Declaration of trust
- Transfer of property
How is a declaration of trust made?
Declaration of trust is by the truster and usually in writing. The deed of trust does not have legal
effect until it is delivered. The trust takes effect as soon as it is communicated by oral declaration
(look this up**). In a mortis causae trust the declaration of trust is a will in writing. Another
distinction is that there is no need to deliver your will to the executors or trustees. The trigger point
for a will coming into effect is the testators death.
What should you say as a trustee?
No magic formula — can say “for the benefit of”. See Gillespie v City of Glasgow Bank
Gillespie v City of Glasgow Bank
where two partners held shares in the bank and they had to pay an enormous sum of money arising out of the crash of that bank and it was held that this formula “for the behoof of the firm” meant that they held the shares in trust for the firm so they were jointly and severally liable.
Scarlett??
However must look at the deed as a whole — is it really setting up a trust? Scarlett: documents were not sufficient to create a trust over that money, which was important as the department store became insolvent. As there was no trust the money was available to the creditors; whereas if they had held it in trust for the folding agent then the private creditors would not have been able to get at it.
In wills — is an expression of wishes tantamount to the creation of a trust?
See Garden’s Exr: where it was not enough to impose a trust.
Can there be implied trusts?
There can be implied trusts, where trust implied from actions of the parties
Barbour v Marriott 2012
Businessman bought two plots of land. One to build a house for himself and his cohabitant, another as a yard for his business. For business reasons, title was taken in the name of his cohabitant. When they split up years later the businessman asked his cohabitant to reconvey it to him. She refused. The businessman then argued that it was an implied trust. We don’t know what the actual result of the case was but the sheriff principal stated that he had heard enough to interdict the wife from selling it while the court investigated further.
What is required to create an express trust?
Express trusts
⁃ Express trusts are created by juristic persons. Two juristic acts are required to create an express trust:
⁃ 1) The declaration of trust
⁃ 2) The transfer of trust property to the trustees.
⁃ Usually these two acts take place separately but they can be done simultaneously e.g. taking out a life assurance policy and simultaneously assign it to trustees. May be run together.
What is the form required for an inter vivos trust?
Can be in oral or writing;
What is the form required for a truster-as-trustee trust?
almost without exception in writing RW(S)A 1995, s 1(2)(a)(iii), but they can be oral in the circumstances set out in s 1(3) (this is extremely rare)
What is the form required for an inter vivos trust?
Must be in writing under the RW(S)A 1995, s 1(2)(c).
What is the trust deed?
Writing containing the declaration is often called the trust deed.
Is declaration alone sufficient?
The declaration on its own is insufficient. The truster must actually deliver the trust property to the trustees.
When is a declaration of trust made in an inter vivos trust?
where the declaration is in writing and the trust is inter vivos, at the moment when the deed of trust is delivered to the trustee;
When is a declaration of trust made in a mortis causae trust?
where the declaration is in writing and the trust is mortis causa, at the moment when the truster dies.
When is a declaration of trust made in an oral trust?
where the declaration is oral, when it is first pronounced in the presence of the trustee
What is the required content of a trust?
No special words are required. This means that equivalents can be used like: “for the benefit/behoof of” is a recognised equivalent to trust, Gillespie v City of Glasgow Bank (1879)[ A trust was held to exist by using the words “for the behoof of”.], but depends on context (these words won’t automatically create a trust), see Style Financial Services Ltd v Bank of Scotland (No 2) 1998[ Money was taken from a customer in a department store in Edinburgh and held for the benefit of a finance house Style. Although the words “for the benefit of” were used, the court held that this was not a trust - all it was was a forwarding arrangement under which the money was held for a bit then forwarded to Style.] SLT 851.
What are the issues with precatory trusts?
Another area where problems arise is where legacies are given with directions or expressions of wishes to the legatee. I think these are known as precatory trusts but look up.
Garden’s Ex v More 1913
the testator provided in his will: “I should like not less than £50 sterling left to the widow of my brother and I desire that my wife make a settlement providing for this.” It was held this was merely an expression of wishes and was not sufficient to impose a trust on the wife.
What must the trust deed also specify in addition to the declaration?
In addition to declaring the trust the declaration must also specify:
⁃ a) the trust property (more can be added later)
⁃ b) the trust purposes; and
⁃ c) the beneficiaries (or at least indicate how they are to be ascertained), but not for a public purpose trust.
What is the general rule on the transfer of ownership of a trust?
Ownership of the trust property must be transferred from the truster to the trustee (generally, but not necessarily, from the truster).
What are the rules on the transfer of ownership in an inter vivos trust?
In inter vivos trusts the owner will transfer the property to the trustees by the appropriate methods, disposition and registration (for heritage property), assignation and intimation (for shares or life policy), or delivery (corporeal moveables).
What are the rules on the transfer of ownership in a mortis causa trust?
In mortis causa trusts property of the deceased vests a personal right in executors by confirmation, Succession (Scotland) Act 1964, s 14(1). If executors same as trustees make up title to property, if not they transfer it. There is no owners the executors merely act as stewards. NB confirmation takes months/year.
