Lecture Notes on Express Trusts

Flashcards for reviewing key vocabulary and concepts related to the creation and essential elements of express trusts as discussed in the lecture.

Creation of Express Trusts

Requires the intention to create a trust, constitution of the trust, and adherence to legal formalities.

Declaration of Trust

Intention must be expressed, usually through words, and is constructed objectively.

Requirements of Declaration of Trust

Expressed intent, subject matter, objects, beneficiary interests, and workability.

Certainty of Intention

The words used must manifest an intention to create legal obligations, not merely moral ones.

Several aspects are looked at by courts when deciding whether or not a trust was intended

Looked at by courts when deciding whether or not a trust was intended: Moral vs Legal Obligations, Precatory Words, Equity looks at intent not form, Immediate rights vs an intention to benefit in the future, True intentions of the Settlor/ Sham Trusts/ Illusory Trusts, Letter of Wishes, Trust vs Power of Appointment, Commercial Contexts.

Precatory Words

Words of prayer/requests/desire, usually indicating no trust is intended unless context suggests otherwise.

Equity Looks at Intent, Not Form

No specific formula is needed; intent is key. Use of the word 'trust' is not necessary.

Immediate Rights vs. Future Benefit

A mere intention to benefit someone in the future is not enough; there must be an immediate legal obligation.

Sham Trusts/Illusory Trusts

If the trust is a sham or illusory, or the settlor intends to retain beneficial control, the court may disregard the trust terms.

Letter of Wishes

A non-binding document providing directions to trustees, but may form part of trust terms if drafted imperatively.

Power of Appointment

A discretionary power, while a trust imposes an obligation on a trustee.

Quistclose Trust

The transferee holds the property on trust for the transferor until a particular purpose is achieved.

Whereabouts Uncertainty

This arises when the whereabouts of the subject matter of a trust or gift is unknown. Generally, no trust ever fails for the present lack of knowledge of the whereabouts of the trust property

Evidential Uncertainty

This defeats a trust or gift. When a settlor expresses his gift/declaration of trust in such a way that evidence must be adduced to identify the object or subject matter concerned, the gift/ trust will fail for evidential uncertainty if that evidence is unavailable.

Conceptual Uncertainty

Occurs when vague or imprecise language is used to identify the subject matter or objects of a trust.

True intentions of the Settlor

An intention to create an immediate legal obligation giving the other a right to sue.

Future Property

Not possible to create a trust of rights which the settlor does not have but expects to have in the future

Certainty of Objects

A trust must have beneficiaries (ascertained/ascertainable), unless it is a charitable trust, in which case the trust can be created for a purpose.

conceptual uncertainty

If words used for describing the class of objects is too vague the trust will fail for uncertainty.

Gifts, Fixed Trusts & Borough v Philcox trusts:

In these cases the test of certainty is the ‘complete list test’.

The ‘is or is not' test

In a discretionary trusts and powers of appointment there is a discretion to choose how to distribute the property among the potential objects.

Discretionary Trusts

Since there is no requirement to distribute the income or capital equally to all, the share each person will receive is not contingent on the number of people in the class.

ADMINISTRATIVE UNWORKABILITY

The acceptance of the ‘is or is not’ test has given rise to a specific problem –administrative unworkability.