Ch1 - Express Trusts- Declaration of Trusts Flashcards
What are the key components of a trust?
A settlor creates the trust, transferring property to a trustee, who holds it for the benefit of beneficiaries. The trustee is legally obligated to manage the property for the beneficiaries, who can enforce these duties.
What can be the subject matter of a trust?
Almost anything, including money, land, and company shares.
What are the two main types of trusts?
- Express trusts – created intentionally by the settlor. 2. Implied trusts – imposed by law to achieve fairness.
What are the requirements for a valid express trust?
- A valid declaration of trust. 2. Proper constitution (legal title transferred to the trustee).
What are the three certainties required for a valid declaration of trust?
- Certainty of intention – clear intention to create a trust. 2. Certainty of subject matter – clear identification of trust property and beneficiaries’ interests. 3. Certainty of objects – clear identification of beneficiaries.
How is certainty of intention established?
By ensuring the settlor’s words impose a trust obligation (e.g., ‘must’ or ‘shall’). Non-mandatory language like ‘hope’ or ‘trusting’ does not create a valid trust.
What are the two aspects of certainty of subject matter?
- Trust property must be clearly described. 2. Beneficiaries’ interests must be clearly defined.
Give an example of when certainty of subject matter is not satisfied.
‘I give my art collection to Susan to hold some on trust for Harry and Mike.’ Without clarity on which paintings are held on trust, the trust fails.
What is certainty of objects?
The need to clearly identify who the beneficiaries are.
How does the test for certainty of objects differ for fixed interest and discretionary trusts?
- Fixed interest trusts: Require both conceptual and evidential certainty. - Discretionary trusts: Require only conceptual certainty but must not be administratively unworkable.
What happens if a fixed interest trust lacks evidential certainty?
The trust fails, e.g., if beneficiary records are lost and beneficiaries cannot be identified.
What is administrative unworkability in discretionary trusts?
The class of beneficiaries must not be excessively wide, e.g., numbering into the millions.
What formalities apply to trusts over land?
They must be evidenced in writing, with signed written evidence containing all material terms. Oral declarations are void if not followed by written evidence.
Do formalities apply to trusts over money or shares?
No, these can be created orally, though written declarations are preferred for evidential purposes.
What are the two key requirements for a valid express trust?
- Proper declaration. 2. Proper constitution (legal title transferred to the trustee).
