Formalities and Constitution Flashcards
What is meant by the formalities for declaration of trusts?
The formal requirements for creating a completely new trust
What is meant by the formalities for constitution of trusts?
The formalities requirements for transferring legal title to another person
Only required where gift or transfer on trust - not self-declaration of trust as legal title does change
When will a testamentary trust be valid?
Where the Will complies with s 9 Wills Act 1837, any trust created by it will be valid.
Valid Will = valid gift and trust
What are the formalities for trusts of land?
Must comply with s 53(1)(b) LPA 1925
Must be:
- manifested and proved - declaration and writing need not be contemporaneous and the trust will be unenforceable unless and until s 53 (1)(b) is satisfied
- some writing - must be in writing (no prescribed form), must show settlor’s intention to create the trust and the terms of the trust
- signed by some person who is able to declare such trust - arguable that the trustee (being the legal owner) can also provide the written evidence
- by Will - expressly provides for the possibility that a trust of land is created by Will. Valid Will = valid trust
What is the consequence of a trust not complying with s 53(1)(b)(a)?
General rule - it is unenforceable but not void
Trust exists from moment that it is declared but beneficiary cannot enforce their rights unless and until s 53(1)(b) is satisfied
S 53(1)(b)(a) is an evidential requirement not a constitutive requirement
What are the exceptions to the s 53(1)(b)(a) rule?
Only applies to creation of express trusts.
So exception for resulting, constructive, and statutory trusts
What is the consequence of failing to comply with s 53(1)(b) where there is a gratuitous self-declaration of trust?
If gratuitous self-declaration of trust over land, if not unconscionable for settlor to deny existence of the trust, beneficiary will not be able to assert any interest in the land
What is the consequence of failing to comply with s 53(1)(b) where there is a gratuitous transfer on trust?
If gratuitous transfer on trust and settlor changes their mind, trust will be enforceable because of not complying with s 53(1)(b) and void for lack of constitution (providing not unconscionable for settlor to deny existence of trust)
What is the consequence of failing to comply with s 53(1)(b) where there is a legal transfer on trust?
Conflicting case law but equity will not allow a statute to be used as an instrument as fraud
Will either result in there being an express trust despite lack of formalities or constructive trust over land or resulting trust
What happens if the settlor transfers to a third party trustee who then denies the trust or if the settlor denies the trust?
Trustee should take advice from court regarding their obligations
What is required for transferring legal title of registered land?
Transfer must be made by deed under s52(1) LPA 1925
Registered with Land Registry under s 27 LRA 2002
Legal title passes on registration
What is required for transferring legal title of shares in private company?
- transferor signs stock transfer form and sends it to company
- legal title passes when transferee is registered in company’s internal register of members
What is required for transferring legal title of choses in action (debts and money in bank account)?
Transferred by written transfer and notice in writing to debtor or bank
Legal title passes on notice being received
What is required for transferring legal title of chattels?
May be transferred either by:
- deed of gift
- delivery of chattel with evidence of transferor’s intention to transfer it
What is required for transferring legal title of cheques?
Transferor endorsing the cheque by signing their name on the back according to the Bills of Exchange Act 1882
What is the effect of constitution?
The disposition is irrevocable
Settlor ceases to have any beneficial or legal interest in the trust property
Trustee has legal title and holds it on trust for the beneficiary
What is meant by ‘equity will not assist a volunteer’? (Milroy v Lord)
Equity will not step in to compel a settlor/donor to transfer legal title to the trustee/donee where there has been an imperfect transfer so legal title has not passed
What is the relationship between constitution requirements and certainty of intention?
If legal title to property has not been transferred to a trustee or donee, the court needs strong evidence that the owner intended themselves to act as trustee.
Court must be satisfied that the owner intended to take on the onerous obligation of trusteeship and divest themselves of beneficial ownership
What requirements are there for the exception to Milroy v Lord in Re Rose to apply?
Equity will step in to say there is a trust where the legal transfer has not taken effect where:
- the correct method of transfer has been used
- the transferor has done everything in their power to effect the transfer; and
- the documentation ends up in the hands of the person/organisation capable of effecting the transfer
What is the extension of the Re Rose extension to the Milroy v Lord rule in Mascall v Mascall?
The transferor does not have to have done everything in their power to effect the transfer IF they have put the matter beyond their control
Which case transfer will be irrevocable
(Instructing agent to transfer is not putting matter beyond their control because can instruct agent to not transfer)
What is the effect of the exception of Re Rose or Mascall v Mascall applying?
The court will find that there as a constructive trust for the intended donee
What is the rule in Pennington v Wine?
Exception to Milroy v Lord rule where it would be ‘unconscionable’ to resile the transfer
Generally seen as confined to own facts
May best be characterised as case of proprietary estoppel
What is fortuitous vesting? Strong v Bird
- Rule in Strong v Bird
- Where gift is made to donee but not constituted at time but donee subsequently obtains legal title to it by becoming the donor’s personal representative
When will the rule in Strong v Bird apply?
Must be continuing intention to make immediate gift to intended donee who becomes the executor/one of the executor’s under donor’s Will
When will there be a valid donatio mortis causa?
- donor is contemplating imminent death
- donor expresses intention that the gift if conditional on their death
- donor parts with dominion (control) of property
