Week 5 (Trust)

Law 501: Equity & Trust

Definition: An express trust requires a valid declaration and valid transfer of legal title to the trustee. It is essential that all formalities are strictly adhered to avoid any issues regarding the trust's validity.

Land: Must comply with Section 9 of the Wills Act 1837 and Section 53(1)(b) to ensure validity. If these requirements are not met, the trust is deemed invalid and unenforceable.
Personal Property: Does not require formalities beyond demonstrating a clear intention to create the trust. It can be established through either oral or written communication, as long as the intent is articulated (this is referred to as the first certainty).

Circumstance: A mail order company separated customer deposits into a distinct account to manage transactions. The question arose regarding whether this separation amounted to a trust.
Conclusion: The establishment of this separate account created an express trust; as such, customers became the equitable owners of the deposits when the company entered liquidation.
Significance: This case highlights that written documentation is not mandatory to establish an express trust, as long as the trust's intention is clear.

Situation: The equitable tenure was questioned in relation to the joint use of funds between two individuals.
Finding: Evidence from the surrounding circumstances was deemed sufficient to declare the existence of an express trust. This case illustrates that trusts can be inferred from the conduct of the parties.

General Rule: Once constituted, a settlor generally cannot terminate an inter vivos trust. This principle ensures the security of the trust for beneficiaries.
Beneficiaries' Rights: Beneficiaries possess the right to enforce the trust provisions, even if they are mere volunteers, as established in the precedent of Paul v. Paul.
Exception: The principle outlined in Saunders v. Vautier allows beneficiaries who are all of legal age and capacity to terminate the trust. This provides a mechanism for beneficiaries to assert their rights under certain conditions.

Documenting the Trust: Writing down the trust terms is crucial, although in some cases, oral declarations may suffice, depending on the type of trust being created.
Court Involvement: If necessary, court action may be taken to declare a valid trust, especially if disputes arise concerning the trust's validity.
Bank Manager or Establishment Verification: Involving a bank manager or similar establishment can lend support to claims regarding the trust without the need for formal terminology.

Private Express Trusts: Typically involves three main parties:
- Settlor: The individual or entity creating the trust.
- Trustee: The person or entity appointed to manage the trust according to its terms and in the interest of the beneficiaries.
- Beneficiary: The individual or group who receives benefits from the trust like income or property.

Charitable trusts, which serve public interests, also fall within the realm of public trusts and require proper management by trustees.
Duty of Care: Trustees are legally obligated to manage the trust in accordance with the specified terms and principles, and any breach of this duty can give rise to legal action from beneficiaries.

Implied Trusts: These are created by courts based on the circumstances, e.g., resulting or constructive trusts that aim to uphold fairness in legal dealings.
Private Express Trusts: Created explicitly by the settlor for defined purposes. It is notable that the term “trust” is not necessary for creation, as the intention can be implied through actions.

This type of trust mandates that allocations must adhere to specific beneficiary designations as determined by the settlor's express directions. There must be identifiable beneficiaries to enforce the trust provisions, a principle evidenced in various case discussions.

These require the trustee to retain income accrued for designated beneficiaries. It is crucial that the identities of these beneficiaries are established and fixed within the trust's framework.

Legal Title Transfer: While a transfer of legal title is the general requirement for establishing valid trusts, there are notable exceptions:
- Strong v. Bird: This case illustrates that an intended gift, even if not fully completed, can still be validated under specific circumstances.
- Donatio Mortis Causa: Gifts made with the anticipation of the giver's death may alter the usual implications of trust creation, allowing for different legal consequences.

Milroy v. Lord: Confirms that if a gift is incomplete in accordance with legal requirements, it cannot constitute a valid trust.
Re Rose: Establishes that if the settlor has taken all necessary steps to divest property, equitable title may still pass, even if not all formal requirements are met.

Equity's Role: The principle of equity does not assist in perfecting an incomplete gift unless specific exceptions apply. Relevant cases, such as Re Cavendish Browne and Re Antis, highlight the significance of proprietary rights at the time of the trust's declaration and underline the importance of formality in trust creation.

An in-depth understanding of the principles regulating express trusts, declarations, and the subtleties of equitable interests is crucial for effective management in both administrative and legal contexts. Case law is pivotal in providing guidelines for the successful creation and enforcement of trusts.