Creation of trusts Flashcards
What is the difference between 1. express and 2. resulting and constructive trusts?
- Express = intentionally created, private or public
- Resulting and constructive trusts = arise by operation of law (implied trusts)
What are the 2 methods of creating express trusts?
- Self-declaration of trust
- Transfer on trust
What happens on a self-declaration of trust?
- Settlor becomes T and retains legal title (now held in new capacity);
- New equitable title creatred and beneficial ownership transferred to B
What happens on a transfer of trust (for TP)?
- TP becomes T and receives legal title from settlor who ceases to have interest;
- New equitable title created and beneficial ownership transferred to B (intentionally)
What are the requirements for the creation of express trusts?
- Three certainties (intention, subject matter, object)
- Beneficiary principle (objects of trust must be legal persons bar charitable purpose and non-purpose)
- Perpetuity rules
- Formalities (declaration and constitution)
- Registration (does not affect validity but important; should be done by Ts rather than settlor)
What are the 3 categories of trust arising from operation of law?
I.e. implied (imposed) trusts
- Resulting trusts
- Constructive trusts
- Statutory trusts (trust imposed because statute imposed that it must be; intention of owners not relevant)
Why does an implied trust operate?
To correct the fact that legal ownership of property does not reflect what equity recognises to be the true beneficial ownership of that property
When does resulting trust arise?
Broadly - where legal owner transfers legal ownership of property to TP, but equity recognises that they should retain/regain the beneficial interest in that property
What are the 2 subcategories of resulting trusts?
- Automatic resulting trusts
- Presumed resulting trust
Whenwill automatic resulting trusts arise and what is their effect?
- Default trusts arising when transfer on trust fails either wholly/partly
- If Ts holding legal title but trust fails = equity imposes RT meaning they hold property on trust for settlor who can use SvV rights allowing them to collapse trust and recover property
What is the difference if trust fails from outset (e.g. problem with certainty) or at later date (e.g. purpose trust loses purpose)?
- Fails from outset = S can attempt to correct problem
- Fails at later date = RT ensures surplus trust property is returned to property
Do automatic resulting trusts respond to the intention of S?
No - are a default trust and are equity’s way of ensuring property returns to original owner when unclear what should happen to it
How is a presumed resulting trust different? What type of transfer gives rise to it, what presumption does it create and how is it rebutted?
I.e. what is the presumption
Intention of S is relevant to whether RT has arisen
- Where person makes gratuitous transfer of property to TP, equity raises presumption of RT (equity is cynical maxim; questions why property would be transferred to someone else) = equity presumes they wanted other person to hold property on trust for them
- Presumption can be rebutted by evidence that transferor did not intend property to be held on trust for them e.g. clear transferor intended gift = presumption rebutted and gift takes effect
When will a presumed RT arise?
Only where there is no evidence rebutting presumption
Why are constructive trusts imposed?
I.e. what do they seek to correct?
To correct unconscionability