3. Formalities and Constitution

A declaration of trust may be made in writing, orally or arise from the circumstances

Paul v Constance [1977]

Where the trust property is land, the declaration of trust must be made in writing and signed

s.53(1)(b) of the Law of Property Act 1925

Where the settlor makes a self-declaration of trust,

They themselves are the trustee and so there is no need for a transfer of the legal title to the trust property

Where the settlor appoints a third party trustee,

The transfer of the legal title to the trust property from settlor to trustee must be done properly, and this is dependent on the type of asset the trust property is

Where the asset is land,

The settlor must have had the land registered with the Land Registry and the transfer of its legal title must be made by deed — s.52(1) of the Law of Property Act 1925

Where the asset is a share or shares,

1. The settlor must complete a stock transfer form and deliver this to the trustee along with the share certificate — Milroy v Lord [1862]

2. The trustee must then register as a shareholder with the company — Re Rose [1952]

Where the asset is a chattel,

The settlor must physically deliver the chattel to the settlor, but if the chattel is fairly large then a symbolic transfer may be sufficient — Jaffa v Taylor Gallery [1990]

Where the asset is an equitable interest,

The settlor must make a written assignment of the transfer — Grey v IRC [1960]

If the legal title to the trust property is not transferred properly, there is generally no trust

Milroy v Lord [1862]

Where the settlor has done everything in his means to transfer the legal title to the asset to the trustee but the transfer is not completed due to a third party failing to do something,

The trust may still stand — Re Rose [1952]

Where the settlor went back on a promise to transfer the legal title to the asset and the ‘beneficiary’ acted on this promise and suffered loss or harm as a result,

The trust may still stand — Re Basham (Deceased) [1986]

The beneficiary must have provided consideration in return for the trust property for the courts to enforce the trust

Re Ellenborough [1903]

But if the beneficiary is party to the trust deed, they may be able to use contract law to enforce the trust despite a lack of consideration

Cannon v Hartley [1949]