Once a trust is fully constituted, whether in consequence of a settlor’s declaration via trust deed or
through an effective transfer of the intention trust property to trustees, the trust it is irrevocable, and so
the settlor cannot reclaim the property at a later date. The beneficiaries are immediately entitled to the
equitable interest in the property held for them. The beneficiaries can also seek the aid of equity to
compel the trustees to abide by the terms of the trust, irrespective of whether the beneficiaries had
provided consideration to the settlor in return for the creation of the trust. The beneficiaries will
therefore certain remedies that he may exercise against the trustees if they do something inconsistent
with the terms of the trust.
However, where a trust for whatever reason has yet to fully constitute, the main concern for the
potential beneficiaries is whether they have any means of requiring the settlor to constitute the trust if
they are volunteers or had provided consideration to the settlor in return for the creation of the trust
• Lecturer: the majority of potential beneficiaries will be volunteers because it is rare that a
beneficiary provided valuable consideration in return for the benefit acquired under a trust.
• Note however that the general restriction against enforcing a promise to create a trust is subject to
a number of limited exceptions. (See later notes re. valuable consideration; the rule in Strong v.
Bird; deathbed gifts; proprietary estoppel).
• Alternatively, even if the potential beneficiaries are volunteers that are not entitled to any
equitable remedies, they may be able to seek common law remedies to compensate them for the
loss they have suffered because of an incompletely constituted trust. (For instance the Contract
Rights of Third Parties Act 1999 can allow applicable purported beneficiaries to obtain common
law damages for breach of contract. However the Contract Rights of Third Parties Act 1999 does
not enable them to obtain specific performance.)
Reasons why constitution is necessary:
• The trust arrangement becomes irrevocable once trust is properly constituted. (see Re Bowden
[1936] Ch 71 = To become a catholic nun this woman had to give away her property. She thus
settled property for the benefit of another to a trustee in 1871. In 1931, she decides to no longer
take the vow of poverty and takes trustees to court because she wanted the trustees to return the
trust property to her absolutely. The court however held that the settlor was not entitled to revoke
the a transfer because the property had already become impressed with the trust the moment it had
been initially transferred to the trustees. Had the settlor declared a trust, but failed to transfer the
property to the trustee, the settlor remains the owner of the property since no trust has been
constituted.)
• Beneficiaries receive immediate rights in the trust property: see. Saunders v Vautier (1841) 4
Beav 115 re. enforceability rights in personam against trustee in respect of trust property.
,• Beneficiaries receive proprietary rights in the property. They have rights to trace property back if
mishandled – as they immediately have right in property.
, FORMALITIES TO FULLY CONSTITUTE TRUST PROPERTY
The trust is fully constituted once legal title of the trust property has vested on the trustee. The
formalities required depend on whether the settlor self declares as trustee or whether they transfer
property to a third-party trustee. Further, the formality requirements of an inter vivos trust are more
complicated than that of a testamentary disposition.
A. CONSTITUTION OF AN INTER VIVOS TRUST
An inter vivos trust is a trust intended to take effect within the settlor’s lifetime.
In general, an inter vivos declaration of trust over personalty will be effective in creating a fully
constituted trust when it is made orally and without consideration. The settlor is simply changing the
nature of his ownership of the personalty from absolutely owning it as himself to owning it legally as
trustee for the benefit of the beneficiaries.
However there are particular formalities for the transfer of certain types of property so that the
declaration of the trust in question is effective.
o Per section 53(1)(b) Law of Property Act 1925, the conveyance of land requires that the
conveyance deed be in writing.
o Per section 53(1)(c) Law of Property Act 1925, the conveyance of an equitable interest of land
requires that the conveyance deed be in writing.
o Per section 52 Law of Property Act 1925, the conveyance of a leasehold interest of land requires
that the conveyance deed be in writing.
o The transfer of chattels (e.g. jewellery) – by deed, gift or actual/symbolic/constructive delivery of
possession.
• Actual delivery: Physical delivery is sufficient. As soon as in their possession it is vested.
• Constructive delivery: Friend has my necklace. I then wish for her to hold my necklace on
trust for the benefit LAW211. Although physical delivery is not possible here, constructive
delivery is via oral communication^.
• Symbolic delivery: If something is impractical to actually or constructively deliver, you
can symbolically deliver – provide Mary only access to the trust property (via code to
safe). Once that transfer of code is given – the delivery is actively symbolic thus vested.
through an effective transfer of the intention trust property to trustees, the trust it is irrevocable, and so
the settlor cannot reclaim the property at a later date. The beneficiaries are immediately entitled to the
equitable interest in the property held for them. The beneficiaries can also seek the aid of equity to
compel the trustees to abide by the terms of the trust, irrespective of whether the beneficiaries had
provided consideration to the settlor in return for the creation of the trust. The beneficiaries will
therefore certain remedies that he may exercise against the trustees if they do something inconsistent
with the terms of the trust.
However, where a trust for whatever reason has yet to fully constitute, the main concern for the
potential beneficiaries is whether they have any means of requiring the settlor to constitute the trust if
they are volunteers or had provided consideration to the settlor in return for the creation of the trust
• Lecturer: the majority of potential beneficiaries will be volunteers because it is rare that a
beneficiary provided valuable consideration in return for the benefit acquired under a trust.
• Note however that the general restriction against enforcing a promise to create a trust is subject to
a number of limited exceptions. (See later notes re. valuable consideration; the rule in Strong v.
Bird; deathbed gifts; proprietary estoppel).
• Alternatively, even if the potential beneficiaries are volunteers that are not entitled to any
equitable remedies, they may be able to seek common law remedies to compensate them for the
loss they have suffered because of an incompletely constituted trust. (For instance the Contract
Rights of Third Parties Act 1999 can allow applicable purported beneficiaries to obtain common
law damages for breach of contract. However the Contract Rights of Third Parties Act 1999 does
not enable them to obtain specific performance.)
Reasons why constitution is necessary:
• The trust arrangement becomes irrevocable once trust is properly constituted. (see Re Bowden
[1936] Ch 71 = To become a catholic nun this woman had to give away her property. She thus
settled property for the benefit of another to a trustee in 1871. In 1931, she decides to no longer
take the vow of poverty and takes trustees to court because she wanted the trustees to return the
trust property to her absolutely. The court however held that the settlor was not entitled to revoke
the a transfer because the property had already become impressed with the trust the moment it had
been initially transferred to the trustees. Had the settlor declared a trust, but failed to transfer the
property to the trustee, the settlor remains the owner of the property since no trust has been
constituted.)
• Beneficiaries receive immediate rights in the trust property: see. Saunders v Vautier (1841) 4
Beav 115 re. enforceability rights in personam against trustee in respect of trust property.
,• Beneficiaries receive proprietary rights in the property. They have rights to trace property back if
mishandled – as they immediately have right in property.
, FORMALITIES TO FULLY CONSTITUTE TRUST PROPERTY
The trust is fully constituted once legal title of the trust property has vested on the trustee. The
formalities required depend on whether the settlor self declares as trustee or whether they transfer
property to a third-party trustee. Further, the formality requirements of an inter vivos trust are more
complicated than that of a testamentary disposition.
A. CONSTITUTION OF AN INTER VIVOS TRUST
An inter vivos trust is a trust intended to take effect within the settlor’s lifetime.
In general, an inter vivos declaration of trust over personalty will be effective in creating a fully
constituted trust when it is made orally and without consideration. The settlor is simply changing the
nature of his ownership of the personalty from absolutely owning it as himself to owning it legally as
trustee for the benefit of the beneficiaries.
However there are particular formalities for the transfer of certain types of property so that the
declaration of the trust in question is effective.
o Per section 53(1)(b) Law of Property Act 1925, the conveyance of land requires that the
conveyance deed be in writing.
o Per section 53(1)(c) Law of Property Act 1925, the conveyance of an equitable interest of land
requires that the conveyance deed be in writing.
o Per section 52 Law of Property Act 1925, the conveyance of a leasehold interest of land requires
that the conveyance deed be in writing.
o The transfer of chattels (e.g. jewellery) – by deed, gift or actual/symbolic/constructive delivery of
possession.
• Actual delivery: Physical delivery is sufficient. As soon as in their possession it is vested.
• Constructive delivery: Friend has my necklace. I then wish for her to hold my necklace on
trust for the benefit LAW211. Although physical delivery is not possible here, constructive
delivery is via oral communication^.
• Symbolic delivery: If something is impractical to actually or constructively deliver, you
can symbolically deliver – provide Mary only access to the trust property (via code to
safe). Once that transfer of code is given – the delivery is actively symbolic thus vested.
