5 - Express Trust: Formalities Flashcards
What are the formalities required for the declaration of a trust of land as set out in s 53(1)(b) LPA 1925?
Section 53(1)(b) LPA 1925 states that “a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.”
What is the effect of failing to comply with s 53(1)(b) LPA 1925 concerning trusts of land?
- Failing to comply with s 53(1)(b) renders the trust unenforceable rather than void.
- An unenforceable trust exists from the moment it is declared, but the beneficiary cannot enforce their rights unless and until s 53(1)(b) is satisfied.
Example: If a life interest trust is declared in January but evidenced six months later in June, the life tenant is entitled to the income produced by the land between January and June once the trust becomes enforceable.
Once the trust becomes enforceable, the life tenant can sue to enforce this interest, and the trustee can be sued for any breaches of trust occurring between January and June.
What does “manifested and proved” entail in the context of s 53(1)(b) LPA 1925?
“Manifested and proved” indicates that Section 53(1)(b) is an evidential requirement only, meaning the declaration and the writing of the declaration of trust need not be contemporaneous.
The order in which they take place is unimportant, and the trust will remain unenforceable unless and until s 53(1)(b) is satisfied.
What constitutes “some writing” for the declaration of a trust of land under s 53(1)(b) LPA 1925?
“Some writing” signifies that there is no prescribed form for the written evidence. All that is needed is something in writing that provides evidence of:
- The settlor’s intention to create the trust.
- The terms of the trust.
Who is required to sign the declaration of trust according to s 53(1)(b) LPA 1925?
- The declaration must be signed by some person who is able to declare such trust.
- Although the signature will usually be that of the settlor, it is arguable that the trustee (being the legal owner) can also provide the written evidence.
- This point is not settled, and it is preferable to seek directions from the court in situations where the trustee considers doing so.
How can a trust of land be validly created by will under s 53(1)(b) LPA 1925?
Section 53(1)(b) expressly provides for the possibility that a trust of land is created by will.
As long as the will is validly executed in accordance with s 9 of the Wills Act 1837, this will be sufficient to satisfy the requirements of s 53(1)(b).
What occurs if a trust of land is declared but the formalities of s 53(1)(b) are never satisfied?
If the formalities are never satisfied, the trust will simply not become enforceable, giving the settlor a chance to change their mind about parting with beneficial ownership.
In cases involving a gratuitous self-declaration of trust over land (the settlot creates a trust by declaring that they hold a certain piece of land on trust for the benefit of another person), the settlor can choose not to create the signed, written evidence of the declaration.
In the absence of any facts rendering it unconscionable for the settlor to deny the trust, such as proprietary estoppel, the beneficiary will not be able to assert any interest in the land.
What happens if the settlor changes their mind regarding an intended trust of land?
If the settlor changes their mind and makes no attempt to constitute the trust, their change in mind will not only be unenforceable under s 53(1)(b) but also void for lack of constitution.
This is again subject to any additional circumstances that may make it unconscionable for the settlor to deny the existence of the trust.
What should a trustee do if they transfer legal title but do not comply with s 53(1)(b) LPA 1925?
If the settlor transfers legal title but does not comply with s 53(1)(b), it would be prudent for the trustee to seek directions from the court regarding their obligations.
Provide a summary of the formalities for declaration of a trust of land set out in s 53(1)(b) LPA 1925.
A declaration of trust over land must satisfy the requirements of s53(1)(b) LPA 1925.
Section 53(1)(b) is an evidential requirement only. The trust will be valid but unenforceable unless and until it is ‘manifested and proved’ in signed writing.
If the trust is never evidenced in signed writing, it will remain unenforceable, subject to anything rendering it unconscionable to deny the interest of the beneficiary (such as proprietary estoppel or the imposition of a constructive trust).
If a trustee receives land to hold on a trust which has not been evidenced in writing, and the settlor is unable or unwilling to provide this evidence, it would be prudent for the trustee to seek directions from the court as to their obligations.
What are the requirements for correctly transferring legal title in the context of trusts and gifts, and what is the significance of constitution?
Constitution refers to the transfer of legal title from one party to another, which is essential for both trusts and gifts.
- For a trust, legal title must be vested in the trustees to constitute the trust.
- For a gift, the legal title must pass to the donee.
- A self-declaration of trust automatically constitutes the trust as legal title is already held by the settlor.
Example: In Milroy v Lord [1862], the settlor’s failure to properly transfer shares meant the trust was not constituted, demonstrating that equity does not perfect an imperfect gift.
How does the method of constitution differ between testamentary trusts and lifetime trusts?
Testamentary trusts are created through a will, where personal representatives obtain legal title after the testator’s death. They must ensure legal title is transferred to recipients of gifts and trustees of trusts.
In contrast, lifetime trusts require legal title to be transferred using the correct method during the settlor’s lifetime.
What are the formal requirements for transferring legal title to various types of property?
Registered land: Must be transferred by deed and registered with the Land Registry; legal title passes on registration.
Shares: Transferred by signing a stock transfer form and sending it to the company; legal title passes upon registration in the internal register.
Choses in action: Transferred by written notice to the debtor or bank; legal title passes on notice receipt.
Chattels: Can be transferred by deed of gift or delivery with intent.
Cheques: Must be endorsed by the transferor; legal title passes upon endorsement.
Example: In Jones v Lock (1865), a father’s failure to endorse a cheque meant legal title did not pass to his son, highlighting the importance of correct procedures.
What is the effect of constitution on the rights of the settlor or donor regarding the trust or gift?
Once a trust is constituted, the settlor has no legal or beneficial interest in the property, and the trustee holds legal title on trust for the beneficiary.
- For gifts, once the donee has legal title, the donor cannot reclaim it.
- Example: When Jamal transferred shares to Paul for Sian, once Paul was registered, Jamal could not revoke the trust. Similarly, when Tarek gifted a watch to Ariana, the gift was complete upon delivery, so Tarek could not demand its return.
What happens if legal title to trust property is not vested in the trustees, and what principle applies?
If legal title is not transferred, the trust is incompletely constituted and therefore void. Similarly, an imperfect gift means the donor can change their mind. This illustrates the equitable maxim that “equity will not assist a volunteer.”
Example: In Milroy v Lord, the settlor intended to create a trust but did not transfer legal title, resulting in the trust being void. Thus, the settlor’s intention alone was insufficient without proper legal transfer.
