Trusts: Backbones Notes
Creation of a trust
Express Trusts
Declaration
o Self-declaration on trust: Settlor becomes the trustee
o Transfer on trust: third party becomes the trustee and must be transferred the
beneficial ownership
o 3 Certainties
Certainty of intention
Indicated by word or conduct
The word trust will not be required
Spoken/written, holding bank account jointly, segregating
assets
Certainty of subject matter
Trusts property requirement – identifiable trust property
o Same type/percentage of interest will be valid
Beneficial entitlement requirement – beneficiaries’ interest
must be ascertainable.
Certainty of Objects
Fixed trusts – higher degree of certainty required (complete
list test)
o Conceptual certainty – precision of language used to
define the class of person.
o Evidential certainty – extent to which evidence enables
the trustees to identify objects.
Discretionary Trusts – carry out a survey of the class (given
postulant test)
o Is/is not test – whether or not the individual fits into the
class.
o Conceptual certainty – ‘friends’ would be too
ambiguous
o Evidential certainty – for claimant to prove within class.
o Must not be capricious/unworkable
Constitution
o Transfer of legal title from one party to another, putting the trust assets with
the trustee
Self-declaration: no movement required
Testamentary: in writing, singed by the testator, in the presence of two
witnesses.
Legal title of land: Deed, signed, in writing, passes upon registration at
the land registry.
, Equitable title: signed, in writing.
Shares: stock transfer form, sent to company and registered.
Chattels: deed, gift or delivery
o Failed gifts – general rule: equity will not assist a volunteer.
Exceptions
Re Rose Test: perfects imperfect gifts and trusts
o Correct method of transfer used
o Transferor did everything in their power
o Documentation ended up in the hands of the person
capable of affecting the legal transfer.
o Equity may intervene
Fortuitous vesting (Strong v Bird)
o Where the PR on death is the intended recipient
o Gift will be perfected
Executor is the recipient of the gift
Beneficial Entitlement: rights of objects
o Vested interest – current right to the enjoyment of property
In possession – current right to enjoyment
In interest – current right to future enjoyment
o Successive interest trusts – some beneficiaries entitled to income, others
entitled to capital on their death.
o Contingent interest trusts – one beneficiary being alive determines if the other
receives property upon reaching a certain age.
Saunders v Vautier rights – if all trustees have vested interest and can
be severed without impacting the others, the beneficiary can sever. If a
successive trust, all must be over 18 and agree to bring the trust to an
end.
Quistclose trust – creditor lent money to debtor for a particular purpose, it will be
held on trust for that purpose. If used in any other way, will be a breach of trust.
Perpetuity – rules against the remoteness of vesting
o Perpetuity period 125 years- can be shorter not longer
o Any interest not vested in this time is void
Purpose Trusts
Charitable Purpose Trusts – trust which has a public benefit
o Three requirements
Be for a charitable purpose
Defined under the Charities Act 2011 s3
Satisfy a public benefit test
Identifiable benefit
Constitutes section of the public
Be wholly and exclusively charitable – e.g for political purpose would
not be wholly charitable.
Creation of a trust
Express Trusts
Declaration
o Self-declaration on trust: Settlor becomes the trustee
o Transfer on trust: third party becomes the trustee and must be transferred the
beneficial ownership
o 3 Certainties
Certainty of intention
Indicated by word or conduct
The word trust will not be required
Spoken/written, holding bank account jointly, segregating
assets
Certainty of subject matter
Trusts property requirement – identifiable trust property
o Same type/percentage of interest will be valid
Beneficial entitlement requirement – beneficiaries’ interest
must be ascertainable.
Certainty of Objects
Fixed trusts – higher degree of certainty required (complete
list test)
o Conceptual certainty – precision of language used to
define the class of person.
o Evidential certainty – extent to which evidence enables
the trustees to identify objects.
Discretionary Trusts – carry out a survey of the class (given
postulant test)
o Is/is not test – whether or not the individual fits into the
class.
o Conceptual certainty – ‘friends’ would be too
ambiguous
o Evidential certainty – for claimant to prove within class.
o Must not be capricious/unworkable
Constitution
o Transfer of legal title from one party to another, putting the trust assets with
the trustee
Self-declaration: no movement required
Testamentary: in writing, singed by the testator, in the presence of two
witnesses.
Legal title of land: Deed, signed, in writing, passes upon registration at
the land registry.
, Equitable title: signed, in writing.
Shares: stock transfer form, sent to company and registered.
Chattels: deed, gift or delivery
o Failed gifts – general rule: equity will not assist a volunteer.
Exceptions
Re Rose Test: perfects imperfect gifts and trusts
o Correct method of transfer used
o Transferor did everything in their power
o Documentation ended up in the hands of the person
capable of affecting the legal transfer.
o Equity may intervene
Fortuitous vesting (Strong v Bird)
o Where the PR on death is the intended recipient
o Gift will be perfected
Executor is the recipient of the gift
Beneficial Entitlement: rights of objects
o Vested interest – current right to the enjoyment of property
In possession – current right to enjoyment
In interest – current right to future enjoyment
o Successive interest trusts – some beneficiaries entitled to income, others
entitled to capital on their death.
o Contingent interest trusts – one beneficiary being alive determines if the other
receives property upon reaching a certain age.
Saunders v Vautier rights – if all trustees have vested interest and can
be severed without impacting the others, the beneficiary can sever. If a
successive trust, all must be over 18 and agree to bring the trust to an
end.
Quistclose trust – creditor lent money to debtor for a particular purpose, it will be
held on trust for that purpose. If used in any other way, will be a breach of trust.
Perpetuity – rules against the remoteness of vesting
o Perpetuity period 125 years- can be shorter not longer
o Any interest not vested in this time is void
Purpose Trusts
Charitable Purpose Trusts – trust which has a public benefit
o Three requirements
Be for a charitable purpose
Defined under the Charities Act 2011 s3
Satisfy a public benefit test
Identifiable benefit
Constitutes section of the public
Be wholly and exclusively charitable – e.g for political purpose would
not be wholly charitable.
