Express Trusts

Question 1

Brief explanation

Answer 1

An express trust is a trust that the settlor expressly intends to create.

Two steps are required to create a valid express trust:
a) The settlor must make a valid declaration of trust.
b) The trust must be constituted. This means that the settlor must ensure that title to the property held in trust is put into the hands of the trustee, so the trustee can manage that trust property going forwards

A valid declaration of trust must:
a) identify the trustees
b) identify the property that is to be held in trust
c) identify the beneficiaries, and
d) identify the powers and duties of the trustees

Question 2

Fixed interest trusts

Answer 2

The trustees have no discretion as to how the trust property is to be distributed between the beneficiaries. The settlor has stipulated once and for all who the beneficiaries are and the proportions in which they will share the trust property

Question 3

Discretionary trusts

Answer 3

The trustee have a discretion as to the amounts any person may receive and/or whether particular people receive anything at all

Question 4

The three certainties

Answer 4

a) certainty of intention (certainty of words): it must be clear that the person making the declaration intended to create a trust
b) certainty of subject - matter: in must be clear what property is being held on trust and also what the individual interests of beneficiaries are, and
c) certainty of objects: it must be clear who the beneficiaries are

Question 5

The beneficiary principle

Answer 5

In order to be valid, a trust must (subjest to exceptions) be for the benefit of individuals.

Question 6

Formalities relating to the declaration of trust

Answer 6

For will trusts to be valid, the declaration of trust must be in writing and signed by the testator in the joint presence of two witnesses (who must then witness the testator’s signature by signing the will in the testator’s presence).

For lifetime trusts, most declarations of trust can be made orally, although this is not advised given that the trustees (and possibly the beneficiaries and the court in the case of any future dispute) will want to refer back to that declaration over the duration of the trust.

Declarations of trust over land must be manifested and proved by some writing signed by some person who is able to declare such trust. This means that the declaration of trust must be evidenced in writing signed by the settlor. If a declaration of trust over land does not comply with this formality, the trust will be unenforceable.