Constituting a trust

Caution Regarding Trusts

  • Suspicion of Trusts: Law views trusts cautiously, highlighted in Section 53(1)(c) of the LPA (Law of Property Act) due to potential for misuse.

Maxims of Equity

  • Equity Will Not Assist a Volunteer: Legal principle stating that if a person is not providing consideration (not getting something in return), they cannot seek equity’s help.
  • Equity Will Not Perfect an Imperfection: Addresses the need for formalities in trust declaration, ensuring that not completing a necessary action (like formal transfer of property) will leave the trust unenforced.

Principles of Constituting a Trust

  1. Declare Yourself as Trustee: If you have legal title to property, simply declaring yourself as trustee can create a trust without further action required.
    • Example: Declaring a pen to be held in trust for a child.
  2. Complications arise when involving third parties or peers, where merely declaring a trust isn't enough without transferring legal title or involving a different trustee.
    • Key Case: Milroy v. Lord - required a clear legal transfer for a trust to be constituted.
  3. Relaxation of Rules: Courts have started to allow some flexibility in trust creation, termed “equity loss.”
    • Key Cases: Re Rose, Masculine v. Masculine, and Choi Tirabh International exemplified situations where intent could be shown even when formalities were not strictly adhered to.

Closing the Gap in Constitution

  • Indicator of Intent: If a settlor names a trustee and later makes them an executor, this links and closes the gap in constituting the trust (refer to the Conductor Case).
  • Brady’s Wills Trust: If there are identical settlements and one trustee manages both, it confirms the establishment of both trusts.
  • Controversial Nature: Suspicions arise that intent might not be clear-cut, as seen in criticisms of cases like Brady’s Wills Trust where true intent may be obscured.

Deathbed Gifts (DMC) Principles

  • Ingredients of DMC: To be valid, the following must be shown:
    1. Imminent death.
    2. Recognized expectation of impending death.
    • Example scenarios illustrating the paradox of expectation vs. true constitutional intention.

Informal Acts Recognized in Law

  • Courts allow for principles of promissory or proprietary estoppel where promises about property lead to reliance without needing formal title. Such situations still confer equitable interests despite title issues.

Application to Land Law and Registration

  • Land Registration Act 2002:
    • Section 27: Dispositions of land require registration and deed to be effective.
    • Section 58: Only registered title holders can exercise ownership rights.
  • Academic Debate: Questions remain regarding whether DMC or proprietary estoppel are canceled by land registration processes. Current views generally allow for their relevance despite rigid land law standards.

Summary of Legal Framework

  • Understanding the principles, statutory requirements, case precedents, and potential loopholes in establishing trusts and equitable interests are key to navigating the complexities of trust law and property interest transfers. Ensure to highlight any criticisms or controversies related to each case dealt with.