Equity and Trusts Basic Glossary

Settlor

The person who makes the trust

Trustee

The person holding the legal title to the trust property

Beneficiary

The person with the beneficial title to the property

Cestui que trust/Object

Other names for the beneficiary

Testator/Testatrix

The person (male/female) who has made a will (where they have created a trust).

Express Trust

A trust created intentionally by a settlor

Implied Trust

A trust that arises other than through the deliberate act of the settlor (can be a resulting or a constructive trust)

Resulting Trust

A trust that arises where the beneficial interest reverts to the settlor

Constructive Trust

A trust recognised by the law, commonly made to prevent a legal owner from ‘unconscionably’ denying the benefit of the property to another

Private Trust

A trust for the benefit of a person or persons

Purpose Trust

A trust that is for a purpose. These can be either private (not generally permitted in English Law) or public.

Charitable Trust

A trust for a public purpose, rather than a person or persons. It must meet the requirements of the Charities Act 2011 in being for a recognised charitable purpose, for the benefit of the public, and be wholly and exclusively charitable.

Fixed Trust

A trust where the beneficiaries and their beneficial interests are ‘fixed’ from the start. Trustees have no discretion as to who benefits from what share of the trust property.

Discretionary Trust

A trust where trustees are given the discretion about how to share out trust property between members of a group/class of beneficiaries/objects.

Testamentary Trust

A trust created in a will

Inter vivos Trust

A trust created during the settlor’s lifetime (literally ‘between the living’)

Bare Trust

Trustee holds trust property for adult beneficiary absolutely; the trustee has no active duties other than dealing with the property as the beneficiary directs. E.g a solicitor is holding money for a client.

Equity

A system of rules and principles originally developed by the Court of Chancery, rather than the courts of common law.

Common Law

The system of rules and principles originally developed in the common law courts, distinct from ‘common law’ in the sense of case law.

Legal Title

Ownership in law - held by the trustee

Equitable Title

Ownership in Equity - held by the beneficiary

Beneficial Title

The right to the benefit of the property, usually but not always, sits beside the Equitable Title

Fiduciary

Someone who owes a duty of loyalty to someone else. E.g a trustee owing fiduciary duties to the beneficiary. E.g Company director owing fiduciary duties to the company.

Fiduciary Duties

A set of duties based on overriding loyalty to the other person in the fiduciary relationship. Core fiduciary duties are the ‘no conflict’ and ‘no profit’ rules.

Beneficiary Principle

The notion that a trust must be for ascertainable beneficiaries to be valid, as opposed to a private purpose.

Personal Rights (rights in personam)

Rights against an individual, leading perhaps to a personal remedy (E.g compensation for loss monetarily)

Proprietary Rights (Rights in rem)

Rights in property, leading perhaps to a proprietary remedy (E.g recovery of the property)

Equity’s Darling

Someone who honestly purchases property for value without notice of someone’s rights in that property. ‘Bone fide purchaser for value without notice’

Bone Fide

It means in good faith - someone had sincere and genuine intention with their actions. No deceit involved.

Powers

The ability to do something, but not the obligation to do so

Duties

An obligation to do something, or refrain from doing something

Unconscionability

Unfairness of a type that triggers the involvement of equity. This is something that engages the ‘conscience’ of the individual.

Chattel

A physical item of personal property such as a car or jewellery