Creating Express Trusts - The Constitution of the Trust

Equity and Trusts - Chapter 3

What are the formalities for a deed?

i) document stated to be a deed

ii) signed as a deed

iii) signed in the presence of a witness

*registered at LR under form TR1 (where the B is registered as the new legal owner of the land)

How are shares transferred (outside CREST system)?

i) share certificate

ii) stock transfer form sent to company with existing share certificate

iii) new shareholder is then registered in the Register of Members, and the legal title passes to them when registered - new share certificate is sent to them.

*under CREST - it is all recorded electronically

Is writing necessary to transfer cash?

NO - a promise is all that is needed.

How are chattels transferred?

i) physical delivery to the transferee

ii) DEED

What happens if a required element of the legal transfer process is missing?

The proposed transaction will be defective - as if the intended disposition never occurred

Limited ways to save it. (exceptions do exist)

What is the ‘every effort test’ in Milroy v Lord (1862)

Where the transferor (the settlor) has failed to transfer legal title, the transfer may, however, be regarded as complete in equity if the transferor has put the property beyond their recall

I.e. they have done everything they can to transfer legal ownership to the trustees

*if a court order is needed, this test will not apply - Mascall v Mascall.

Once you have done this - cannot recover property as trust has been constituted in equity (despite still being the legal owner)

What is the rule in Strong v Bird?

Allows the donee of a gift or the trustees to claim the property in priority to those entitled to the rest of the estate which the transferor has left on death - i.e. their heirs

What happens if it has reached the stage that it would be unconscionable for to recall the gift?

The gift will complete in equity

What are the four conditions in the Strong v Bird rule?

i) transferor intends to create a trust with third party trustees (or make an outright gift), but the intended disposition is invalid because the transferor failed to comply with the appropriate formality for transferring the legal title to the relevant property - e.g. no deed in land

ii) intention to make an immediate disposition (not conditional or in the future)

iii) intention must continue up to transferor’s death - still held belief when they died - cannot deal with the property in a way that suggests they still own it - e.g. try sell it

iv) The transferor dies, and the donee or an intended trustee (or one of them) is appointed the transferor’s personal representative - property vests in them on the transferor’s death - legal title and trust is now constituted.

What are the conditions for disposing an equitable interest?

i) must be in writing (not merely evidenced in writing)

ii) the written disposition can be signed by the person disposing of the interest by transferor or their agent

*this is only relevant when a beneficiary under an existing trust wishes to dispose of their existing equitable interest.

What are the methods of disposing an interest?

i) assigning it to someone else (in writing)

ii) orally direct the Ts to transfer the property to someone

What happens when you become an executor?

You acquire legal title to the estate by operation of law - it vests in you.