Formalities for creating a trust and the 3 certainties (combined unit 1+2)

Consequence of a valid declaration of trust?

Settlor cannot change his mind

• Re Bowden

• Paul v Paul

3 ways to create a trust per Milroy v Lord

• self-declaration of trustee

• declaring other person as trustee

• outright gift

precedent of milroy v lord

• transfers during lifetime only

• if intended to be one method, court will not give effect by applying another method; equity will not assist a volunteer

formalities for declaring a trust for personalty + caselaw

none required; only clear intention

• paul v constance - oral declarations and conduct sufficient ‘ the money is as much yours as mine’

• re kayford - no need for the word ‘trust’; creating a separate bank account sufficient (business)

formalities for declaring a trust of land intervivos (no 3 certainties)

• in writing and signed LPA s53(1)(b)

• need not be a deed, just evidence of the declaration

formalities for declaring a testamentary trust of land (no 3 certainties)

• valid will per Administration of Justice Act s17

  • in writing and signed

  • signature intended to give effect to will

  • 2 witnesses present

  • each witness attests and signs OR acknowledges his signature in presence of testator (did it already or testator didn’t see)

formalities to transfer land (milroy v lord methods #2+#3, NO 3 CERTAINTIES)

• made by deed LPA s52(1)

• stated to be and signed as deed LP(MP)A s1(2)

• deed is witnessed and signed LP(MP)A s1(3)

• transferee registered as new proprietor of land LRA 1925 ss19-22 (if transaction took place pre Oct 2003) OR (post-Oct 2003)

  • LRA s4 if unregistered land

  • LRA s27 if registered land

formalities to transfer personalty (milroy v lord methods #2+#3, NO 3 CERTAINTIES) + caselaw

delivery + requisite intention

• Thomas v Times = obtaining chattel w donor’s consent which owner intends to gift is sufficient delivery to perfect a gift

• Re Cole = gift cannot be perfected by stating words of a gift and showing them to donee. Must eb intention, delivery and acceptance

• Jaffa v Taylor - where physical delivery of a chattel isn’t possible, deed is effective

formalities to transfer shares (milroy v lord methods #2+#3, NO 3 CERTAINTIES) + caselaw

• delivery of share certificate and signed stock transfer form per stock transfer act 1961 s1

• registration in company share register in order to transfer legal title per s112 of companies act (unless CREST)

formalities to transfer existing equitable interests in a trust (milroy v lord methods #2+#3, NO 3 CERTAINTIES) + caselaw

• equitable interest exists at time of transference and in writing and signed by person or agent s53(1)(c)

  • doesn’t exist = no writing bc doesn’t fall under statute per danish bacon

• transference of JUST equitable interests MUST be in writing per Grey v IRC

• transference of both legal AND equitable interests by a beneficiary who orders their bare trustee to transfer to 3rd party requires no writing per Vandervell v IRC

• No writing necessary for disclaimers per paradise motor

• email signoff sufficient for signature per Hudson v Hathaway.

Outright gift transfer process?

valid transference to donee like in Milroy v Lord method #2

imperfect gift = valid declaration of trust

no per richards v delbridge

perfecting imperfect gift cases? RMFPT

• re rose - ‘every effort’ test, all formalities passed and failure of 3rd party in registration will be perfected

• mascall v mascall - fall out after formalities but before registration = every effort passed

• re fry = all formalities, must be failure of 3rd party

• pennington v waine - if unconscionable not to pass gift, partial completion of formalities = perfected gift

• thomas v times book co - obtaining chattel w/ donor’s consent which owner intends to gift is sufficient for delivery to perfect a gift

3 elements which must be expressed with certainty….

intention, subject matter and objects per knight v knight

certainty of intention: caselaw examples of precatory wording

• lamb v eames AND re adams and kensington vestry - a trust will not be construed when no trust obligation implied; outright gift present

  • (“to be at her disposal in any way she may think best, for the benefit of herself and her family?”)

  • (“ in full confidence that she will do what is right as to the disposal thereof between my children“)

• re diggles (“and it is my desire”)

examples of phrases that impli precatory wording

• in full confidence

• and it is my desire

• i request that

gold v hill (precatory wording)

despite being the absolute beneficiary, held to be a secret trust as there were non-precatory, imperative words and he was actually the legal owner.

• (look after carol and the kids, don’t let that b*stard get anything)

shah v shah (precatory wording)

certainty of intention as the subject “to you being responsible” was a condition and implied obligation

Comiskey v Bowring-Hanbury

A court will look at the whole document to determine the intention of the settlor and find a trust even when precatory wording present. Earlier parts of the trust suggested moral obligation but later showed full intention to create legally binding trust

• A gift by Will to wife “absolutely in full confidence that she will make such use of it as I should have done myself and that at her death she will devise it to such one or more of my nieces as she may think fit and in default to be divided equally between the nieces”

Re Hamilton

courts must assess the actual language used in a will or trust instrument to determine whether a trust was intended—not rely on precedent or assumptions from similar cases.

Re Steele’s Will Trusts

certainty of intention can be found despite precatory wording because used identical language to that of will that did find a trust.

LAD (precatory)

• lamb v eames

• Adam’s trust (re)

• Diggles (re)

soft words = no trust

GSC (precatory wording)

• Gold v Hill

• Shah v Shah

• Comiskey v Bowring-Hanbury

precatory words found but trust obilgation present

H&S (precatory wording)

• Hamilton (re)

• Steele’s will trusts

don’t copy past cases, look for individual wording and facts of case

certainty of intention: conversations and conduct caselaw? People Just Require Truth

paul v constance - ‘the money is as much mine as it is your's’ sentiment repeated sufficient in addition to sharing a non-joint bank account

jones v lock - baby cheque case. single casual statement cannot be the same as repeated ones and conduct.

rowe v prance -our yacht (renamed) case repeated informal statement can establish a trst if they demonstrate clear intention to share beneficial ownership

tito v waddell - political promises are not legally binding statements, also no fiduciary duty as was claimed here so no trustee relationship present

certainty of intention: sham trusts caselaw? Shams With Mutual Nonsense, True Knowledge Leads

snook v london - a common intention between the parties, to deceive 3rd parties or the court, by creating a false appearance of legal rights or obligations

• for acts or documents to be a sham, all parties must have a common intention that the acts ro documents are not to create the rights and obligations which they purport to create.

midland bank v wyatt - no intention to relinquish control (of house e.g.) and treats as one’s own for insolvency reasons = sham

marquis-antle - trustee not properly informed or involved = lack of certainty

ND v SD - (alleged financial remedy case) if trustee doesn’t claim control inconsistent with the terms of the trust, cannot be a sham

Twinsectra v yardley - Later breach or misuse does not retroactively prove a sham; intention is assessed at the moment of creation.

re kayford - deliberate steps to segregate and protect money showed intention showing certainty of intention to create a trust

re lewis’s of leicester - separate named bank account = intention (objects = named benes and subject matter = identifiable in account)

what happens if it is deemed there is no certainty of intention in a scenario

recipient takes property as outright gif without any associated duties/obligations.

in homemade wills made resolve uncertainty with presumption of outright gift to wife via s22 administration of justice act

• “ I give all my estate to my wife then to my children”

what is certainty of subject matter?

no stipulation of exact amount but property/assets being described must eb identifiable

failure certainty of subject matter caselaw? Some People Just Aren’t Keen; Let’s Be Honest, Meaning’s Broken

sprange v barnard -“The remaining part of what is left”

palmer v simmonds - “the bulk of my residuary estate”

jubber v jubber - “A handsome gratuity”

anthony v donges - “such minimal part of my estate as she might be entitled to under English law for maintenance purposes”

re kolbs - “First class stocks and shares and/or convertible debentures in the blue chip category”

• (Can’t agree on which companies will perform well to give enough certainty what a blue chip is, impossible to identify the meaning of the word no trust.)

certainty of subject matter: residuary estate precedent

re last; identifiable because identification possible when the time comes

certainty of subject matter; unfortunate will case

boyce v boyce, property and interest each beneficiary to receive must be certain

• could choose which house she wanted after her sister chose hers, she and father died before they picked so entitled to nothing

certainty of subject matter: reasonable?

re golay’s - ‘reasonable income’ could be reasonable quantified from her circumstances.

certainty of subject matter: unsegregated assets Labelled Stuff Good for H/Holdings

re london wine - no segregation of bottles = uncertainty cf stapylton where they had been segregated with written records

re goldcorp - segregated gold bars on trust, non-segregated weren’t

hunter v moss - SHARES CASE a portion of intangible assets doesn’t need to be segregated to form the subject of a trust (different from chattels, here shares)

re harvard securities - intangible assets should be treated differently than tangible chattels so no need for segregation

critical academic commentary regarding hunter v moss

• hayton 1994 - conceptually incoherent because allows a trust of unsegregated, intangible property without certainty of subject matter seen in re london wine and goldcorp.

• unprincipled convenience exception

positive academic commentary regarding hunter v moss

martin 1996

• segregation for intangible, homogenous property unnecessary because they’re interchangeable

• beneficiary entitled to a proportionate slice fo the whole mass

• aligns trust law with commercial reality

• avoids unnecessary formalism which makes sense when dealing with intangible vs tangible assets

• backed up in re harvard securities

certainty of subject matter: future property as subject matter? Exisrs, Locked, Missing, Hollow

re ellenborough - if they don’t exist, no certainty

re lewis’s of leicester - future receipts put into separate anmed bank account, deemed sufficiently certain

macjordan - defendant went into liquidation with no identifiable funds; alleged 3% trust entitlement for completion of contract uncertain subject matter

hemmens v wilson browne - promise of 110k for option to buy house in future, promise needs a pot of segregated money.

what is the consequence of no certainty of subject matter?

trust never attempted so no change as no assets have been given or received. wouldn’t be able to say with certainty what to give.

what are the requirements for a trust to be ocnsidered a sham and from which case

snook v london - a common intention between the parties, to deceive 3rd parties or the court, by creating a false appearance of legal rights or obligations

• for acts or documents to be a sham, all parties must have a common intention that the acts ro documents are not to create the rights and obligations which they purport to create.