Express Trusts

Question 1

What is an express trust?

Answer 1

• arises from the express intention of the party who creates the trust
• applies where the settlor deliberately sets out to create a trust over specific properties in favour of specific beneficiaries
• where an express trust fails this gives rise to an implied trust

Question 2

What are the 2 requirements needed to create an enforceable express trust?

Answer 2

• valid
• properly constituted

Question 3

What are the 4 conditions needed for a trust to be valid?

Answer 3

1. Capacity of settlor
2. Certainty of intention
3. Certainty of subject matter
4. Certainty of objects

Three certainties- lord langdale in knight v knight

Question 4

Capacity of the settlor

Answer 4

• must be of full age (18+) and have the mental capacity to make a trust
• where a person under 18 purports to make a trust, it is voidable on or before their 18th bday and only becomes valid once turned 18- edwards v carter
• where a person lacking mental capacity purports to make a trust it is void- mental capacity act 2005 and Re Beaney
• s18.1.h.i- court can make a trust on behalf of someone

Question 5

Certainty of intention

Answer 5

• Pearson v Lehman brothers finance- court will not convert a failed gift into a trust
• must be certain that the settlor intended to create a trust rather than a gift and this is ascertained from words and conduct- knight v knight
• word ‘trust’ doesnt have to be used- north v wilkinson. And even where it is used it doesnt create a trust
• imperative words used not precaratory- lamb v eames
• only words used at the time of creation are relevant- north v wilkinson
• self-declaration cases: Paul v Constance- words and conduct considered
• commercial cases: re multi gurantee co- courts reluctant to find for unless business segregated property to be held on trust

Question 6

Absence of certainty of intention?

Answer 6

• purported trust is void and effect is 2 fold
• self-declaration cases= property remains in settlors estate
• where property is transferred to purported trustee it is deemed as an absolute gift

Question 7

Certainty of subject matter

Answer 7

• trust property must be described with sufficient clarity and identifiable with certainty- sprange v Bernard
• uncertain expressions that will fail: bulk (palmer v simmonds), remaining part (sprange)
• tangible property= subject matter must be segregated physically from the rest of the bulk- re London wine co
• intangible property= no requirement of segregation so long as they are identical- Hunter v moss

Question 8

Absence of certainty of subject matter

Answer 8

• trust is void and consequence is two fold
• where settlor transfers bulk and only intends part of property to be held on trust it constitutes a gift- Hancock v Watson
• if subject matter is not certain- trust is void and all property remains in estate of settlor

Question 9

Certainty of objects

Answer 9

• objects must be capable of being identifiable with certainty
  Bare trust: in favour of a single beneficiary, must be capable of being identifiable with certainty

Fixed trust: in favour of a class of persons, must be possible to identify all the beneficiaries- IRC v broadway cottages trust established complete list test. Must be identifiable at the time of distribution. Where there is a condition, it will be satisfied once one beneficiary satisfies the condition. Where a beneficiary cannot be found, a share will be paid into court- Re Gulbenkian

Discretionary trust: group of persons where trustees are given discretion as to which objects benefit. Is or is not test- Re Badens trust. No need to compile a list

Question 10

Absence of certainty of objects

Answer 10

• trust is void and trustee holds property on a resulting trust for the settlor- Briggs v Penny

Question 11

What is the beneficiary principle

Answer 11

• beneficiary must be a living person- motive v bishop of Durham

Question 12

What is the rule against perpetuity

Answer 12

• trust property must be capable of vesting on a person with the perpetuity period- 125 years or else will be void
• s2 perpetuity and accumulation act 2009

Question 13

What are the 2 requirements for constituting a trust?

Answer 13

• declaration of trust
• vesting of title

Question 14

Declaration of trust

Answer 14

• chattels= can be done orally
• land= s53 LPA 1925 must be done in writing and signed by settlor
• where it is not done in writing it is simply unenforceable and not necessarily void- bannister v bannister
• consequently equity will intervene and declare a resulting trust or a constructive trust

Question 15

Vesting of title

Answer 15

• once vested the trustee is the legal owner
• vesting does not have to be done at the same time as declaration but must be done in this order
• Re Bowden- can change mind before vesting but not after
• in self-declaration cases no vesting is required even if there are other trustees- T Choithram international SA v Pagrani
• land= deed or registration (s52.1 LPA or LRA 2002)
• Shares= delivery of a share transfer form followed by registration of title in companies share register- ss544-770 CA 2006, stock transfer act 1963
• chattels= transferred either by gift or delivery of possession to trustee- Jaffa v Taylor gallery

Question 16

Effect of non-compliance with vesting of title

Answer 16

• trust not void but unenforceable- Milroy v lord

Question 17

Rule in Re Rose?

Answer 17

• where settlor has done all that is necessary to transfer title but it hasn’t happened due to reasons outside their control, then equity will intervene and assume the legal title has passed to the trustee

Question 18

Dona Mortis causa

Answer 18

• deathbed gift
• where title doesnt pass whilst the settlor is alive
  3 conditions must apply here:
  1. Gift must have been in contemplation of sett lord impending death for a specific reason e.g terminal illness
  2. Gift must be conditional to death and settlor should intend property be reverted back to them should the settlor recover
  3. Property delivered to trustee or documents passed to trustee with a view of settlor parting with dominion over property rather than parting with the physical possession

Question 19

Rule in Strong v Bird

Answer 19

• where the donee of a promised gift obtains title in another capacity e.g executor, this will be sufficient to properly constitute the gift