Trusts FLK Summary
Contents
Declaration of Trust 1
Constitution of a Trust and Entitlement 2
Charitable and Non-Charitable Purpose Trusts 3
Resulting Trust 4
Trusts of Family Home 5
Trustee Appointment, Removal and Retirement 5
Trustee Duties 7
Remedies: Personal Claims 9
Remedies: Proprietary Claims 10
Remedies: Third Parties 11
Declaration of Trust
Trust basics:
● Legal owner (trustee) holds the property for the equitable owner (beneficiary)
● Trustee has a duty to deal with trust property and preserve it for the benefit of
beneficiaries
● Safeguard and invest the trust property for beneficiaries
● Settlor can choose themselves or a third party to act as trustee
● Must transfer legal title to the trustee
● Perpetuities - beneficial interests in a trust must vest within a period of 125 years
Types of Trusts:
● Express trust - Settlor creates a declaration of trust in writing - trust deed
● Implied trust - resulting or constructive
● Resulting - settlor would have intended a trust
● Constructive - implied to create a fair result between the parties
Valid declaration of trust:
● Identifies trustees and property
● Identifies beneficiaries
● Identifies powers and duties of trustees
Formalities:
● Will trust - in a will, signed and witnessed
● Lifetime trust - oral or written
● Trust over land - in writing and signed
● Fixed interest trust - no discretion on how property is distributed
● Discretionary - discretion on the amounts they receive, usually a class of people e.g. my
children
3 certainties:
1
, ● Certainty of intention
○ Clear intention to create a trust
○ Must use words to impose a duty on the trustee
● Certainty of object
○ Clear beneficiaries described with certainty
○ Complete test list - must be able to draw up a complete list of beneficiaries for a
fixed interest trust
○ Given individual test - need to ensure distributed to right people as a member of
a class for a discretionary trust and must be administratively workable e.g. not
too large
● Certainty of subject matter
○ Clear what property is to be held and how to share it
○ Identifiable and must be currently owned by them
○ Sufficiently describe shares e.g. generous amounts is invalid
Constitution of a Trust and Entitlement
Express lifetime trust:
● Appoint themselves as trustee by valid declaration of trust
● Appoints someone else by valid declaration of trust and transfers legal title to them
● If legal title not properly transferred, there will be no trust, unless:
● Every effort test:
○ Did everything they could to transfer legal title, passed the point of no return and
was waiting for third party action
Transferring legal title of land:
● Settlor must:
○ Execute a deed
○ Give the executed deed to a trustee who sends to the LR and then will be
registered as new legal owner
● When registered as owner = constituted
Transferring legal title of shares:
● CREST system used for public quoted shares or
● Stock transfer form executed and given with share certificate to trustee
● When registered as shareholder = constituted
Transferring legal title of money and chattels:
● Hands cash and title passes on delivery
● By bank, when reaches account
● Cheque, when the cheque clears
● If a chattel, by physical delivery or by deed
● Strong v bird:
○ Intended to create an immediate trust
○ Was not transferred properly
○ Intention continued until death
2
Contents
Declaration of Trust 1
Constitution of a Trust and Entitlement 2
Charitable and Non-Charitable Purpose Trusts 3
Resulting Trust 4
Trusts of Family Home 5
Trustee Appointment, Removal and Retirement 5
Trustee Duties 7
Remedies: Personal Claims 9
Remedies: Proprietary Claims 10
Remedies: Third Parties 11
Declaration of Trust
Trust basics:
● Legal owner (trustee) holds the property for the equitable owner (beneficiary)
● Trustee has a duty to deal with trust property and preserve it for the benefit of
beneficiaries
● Safeguard and invest the trust property for beneficiaries
● Settlor can choose themselves or a third party to act as trustee
● Must transfer legal title to the trustee
● Perpetuities - beneficial interests in a trust must vest within a period of 125 years
Types of Trusts:
● Express trust - Settlor creates a declaration of trust in writing - trust deed
● Implied trust - resulting or constructive
● Resulting - settlor would have intended a trust
● Constructive - implied to create a fair result between the parties
Valid declaration of trust:
● Identifies trustees and property
● Identifies beneficiaries
● Identifies powers and duties of trustees
Formalities:
● Will trust - in a will, signed and witnessed
● Lifetime trust - oral or written
● Trust over land - in writing and signed
● Fixed interest trust - no discretion on how property is distributed
● Discretionary - discretion on the amounts they receive, usually a class of people e.g. my
children
3 certainties:
1
, ● Certainty of intention
○ Clear intention to create a trust
○ Must use words to impose a duty on the trustee
● Certainty of object
○ Clear beneficiaries described with certainty
○ Complete test list - must be able to draw up a complete list of beneficiaries for a
fixed interest trust
○ Given individual test - need to ensure distributed to right people as a member of
a class for a discretionary trust and must be administratively workable e.g. not
too large
● Certainty of subject matter
○ Clear what property is to be held and how to share it
○ Identifiable and must be currently owned by them
○ Sufficiently describe shares e.g. generous amounts is invalid
Constitution of a Trust and Entitlement
Express lifetime trust:
● Appoint themselves as trustee by valid declaration of trust
● Appoints someone else by valid declaration of trust and transfers legal title to them
● If legal title not properly transferred, there will be no trust, unless:
● Every effort test:
○ Did everything they could to transfer legal title, passed the point of no return and
was waiting for third party action
Transferring legal title of land:
● Settlor must:
○ Execute a deed
○ Give the executed deed to a trustee who sends to the LR and then will be
registered as new legal owner
● When registered as owner = constituted
Transferring legal title of shares:
● CREST system used for public quoted shares or
● Stock transfer form executed and given with share certificate to trustee
● When registered as shareholder = constituted
Transferring legal title of money and chattels:
● Hands cash and title passes on delivery
● By bank, when reaches account
● Cheque, when the cheque clears
● If a chattel, by physical delivery or by deed
● Strong v bird:
○ Intended to create an immediate trust
○ Was not transferred properly
○ Intention continued until death
2
