Written Formalities and the Constitution of Trust
Formalities
Necessary Written Formalities
Depends on the nature of the property.
Is it personal property?
Is it real property?
Depends on whether the person declaring the trust is alive.
Inter vivos?
Will?
Declaration of a Trust by Will
Wills Act 1837 s9(a)(c)(d).
A will – to be valid – must be made in writing, signed by the testator (or some
person acting on his direction in his presence), in the presence of two
witnesses, who must also attest and sign the will (or acknowledge their
signature) in the presence of the testator.
To create a valid trust on death, these written formalities must be complied
with:
Must be in writing.
Must be signed by the testator.
Must be signed and attested to by two witnesses.
Failure to comply with those formalities means that the will would be invalid,
and the testator will be deemed to have died in testate.
Other rules will apply there has to how the property is distributed.
Inter Vivos Trust of Land
Law of Property Act 1925 s53(1)(b).
A declaration of trust respecting any land or interest therein must be
manifested and proved by some writing signed by some person who is able to
declare such a trust or by his will
To create a valid trust, inter vivos, this written formality must be complied
with:
Must be in writing.
Inter Vivos Trust of Personalty
Inter vivos – between living people.
Personalty – personal property.
Money.
Jewellery.
Paintings.
No written formalities necessary to create a valid inter vivos express trust of
personal property.
Oral, verbal declaration that satisfies the 3 certainties will be sufficient.
Paul v Constance.
, Husband told his wife that the money in the bank account was ‘as much
yours as it is mine’.
Court found that he had intended to create a trust.
Property was certain.
Beneficiaries were certain.
An absolute owner of personal property may declare himself to be the trustee of
such property or may declare that such property is to be held by trustees on trust
without the need for any written formalities.
What if the Formalities Are Not Complied With?
Equity may impose a trust upon a person, even though there was no valid
declaration of one, or where the formalities have not been complied with.
In some cases, equity implies a trust where it is conscionable to do so.
Law of Property Act 1925 s53(2).
‘This section does not affect the creation or operation of resulting, implied or
constructive trusts’.
Written formalities are only required for the valid creation of express
trusts.
Equitable maxim:
Statute cannot be used as an engine of fraud.
Rochefoucauld v Boustead (1897).
The plaintiff had mortgages on several properties and he was in financial
difficulties.
The defendant bought the properties from the mortgagee, but orally agreed
to hold the properties on trust for the plaintiff subject to mortgage
repayments to the defendant.
The verbal promise is not compliant with the written formalities.
The defendant got into financial difficulties and sold the properties on and
became bankrupt.
The trustee in bankruptcy claimed that the declaration of trust of the
properties was invalid because there had been no writing which was
required to make the trust valid.
Court said that equity would not allow the statute to be used in this case as
an engine of fraud.
The land had been conveyed to the defendant under a trust, and it
will be fraud for him to deny the existence of that trust, and treat the
land as if it were his own.
His conscience was bound even though the written formalities had
not been complied with.
A fraud will arise where land has been transferred subject to an oral
understanding that it is to be held on trust and then the person to whom it
has been transferred tries to deny the trust and claim absolute title.
Contrast Between Declaration and Disposition
Formalities
Necessary Written Formalities
Depends on the nature of the property.
Is it personal property?
Is it real property?
Depends on whether the person declaring the trust is alive.
Inter vivos?
Will?
Declaration of a Trust by Will
Wills Act 1837 s9(a)(c)(d).
A will – to be valid – must be made in writing, signed by the testator (or some
person acting on his direction in his presence), in the presence of two
witnesses, who must also attest and sign the will (or acknowledge their
signature) in the presence of the testator.
To create a valid trust on death, these written formalities must be complied
with:
Must be in writing.
Must be signed by the testator.
Must be signed and attested to by two witnesses.
Failure to comply with those formalities means that the will would be invalid,
and the testator will be deemed to have died in testate.
Other rules will apply there has to how the property is distributed.
Inter Vivos Trust of Land
Law of Property Act 1925 s53(1)(b).
A declaration of trust respecting any land or interest therein must be
manifested and proved by some writing signed by some person who is able to
declare such a trust or by his will
To create a valid trust, inter vivos, this written formality must be complied
with:
Must be in writing.
Inter Vivos Trust of Personalty
Inter vivos – between living people.
Personalty – personal property.
Money.
Jewellery.
Paintings.
No written formalities necessary to create a valid inter vivos express trust of
personal property.
Oral, verbal declaration that satisfies the 3 certainties will be sufficient.
Paul v Constance.
, Husband told his wife that the money in the bank account was ‘as much
yours as it is mine’.
Court found that he had intended to create a trust.
Property was certain.
Beneficiaries were certain.
An absolute owner of personal property may declare himself to be the trustee of
such property or may declare that such property is to be held by trustees on trust
without the need for any written formalities.
What if the Formalities Are Not Complied With?
Equity may impose a trust upon a person, even though there was no valid
declaration of one, or where the formalities have not been complied with.
In some cases, equity implies a trust where it is conscionable to do so.
Law of Property Act 1925 s53(2).
‘This section does not affect the creation or operation of resulting, implied or
constructive trusts’.
Written formalities are only required for the valid creation of express
trusts.
Equitable maxim:
Statute cannot be used as an engine of fraud.
Rochefoucauld v Boustead (1897).
The plaintiff had mortgages on several properties and he was in financial
difficulties.
The defendant bought the properties from the mortgagee, but orally agreed
to hold the properties on trust for the plaintiff subject to mortgage
repayments to the defendant.
The verbal promise is not compliant with the written formalities.
The defendant got into financial difficulties and sold the properties on and
became bankrupt.
The trustee in bankruptcy claimed that the declaration of trust of the
properties was invalid because there had been no writing which was
required to make the trust valid.
Court said that equity would not allow the statute to be used in this case as
an engine of fraud.
The land had been conveyed to the defendant under a trust, and it
will be fraud for him to deny the existence of that trust, and treat the
land as if it were his own.
His conscience was bound even though the written formalities had
not been complied with.
A fraud will arise where land has been transferred subject to an oral
understanding that it is to be held on trust and then the person to whom it
has been transferred tries to deny the trust and claim absolute title.
Contrast Between Declaration and Disposition
