Express Trusts: Constitution of Trusts Flashcards
What are the two methods of constituting an express lifetime trust?
The settlor appoints themselves trustee for the beneficiary by making a valid declaration of trust.
The settlor appoints someone else to be the trustee by making a valid declaration of trust. In this situation, the settlor must also transfer legal title in the trust property to the trustee.
How does a settlor transfer land to a 3rd party trustee?
The settlor must execute a deed and give the executed deed either to the trustee or send it to Land Registry direct.
How does a settlor transfer shares to a 3rd party trustee?
Legal title in company shares can be transferred within the CREST system. Outside the CREST system, the settlor must execute a stock transfer form and give the executed stock transfer form and relevant share certificate either to the trustee or send it to the company direct. Then, the company’s secretary will register the trustee as the new shareholder in the register of members.
How does a settlor transfer money to a 3rd party trustee?
Legal title to money generally passes with delivery
How does a settlor transfer chattel to a 3rd party trustee?
Title to chattels is passed by physical delivery of the asset to the trustee or by deed.
What happens if the settlor does not properly transfer the assets to the trustee?
If the settlor has not properly followed the transfer rules relevant to the property that was going to be held on trust, there will be no trust – equity cannot help, because equity will not assist a volunteer (the beneficiary).
What are the exceptions to the maxim that equity will not assist a volunteer?
The ‘every effort’ test.
The rule in Strong v Bird.
How can a settlor satisfy the every effort test?
In order to take the benefit of this exception it is often said that the settlor must have passed the point of no return or put the property being transferred ‘beyond recall’. The settlor must have completed all the steps they were required to take, ie the settlor took steps to properly execute and send out all documents relating to the transfer of the property. All that remains for the transfer to be completed is the act of a third party.
How can a settlor satisfy the rule in Strong v Bird?
The settlor intended to create an immediate trust with a third party acting as trustee. That trust was not immediately created due to a failure to comply with a relevant transfer rule. The settlor’s intention continued up to their death; and the intended trustee acquired legal title to the trust property by becoming the settlor’s executor or administrator.
What happens where the settlor appoints themselves and someone else to immediately act as trustee?
the settlor must take steps to transfer legal title from their sole name into the joint names of the settlor and the other trustees. The settlor must comply with the relevant transfer rules.
