Formalities for Declaring a Trust

Question 1

What are the 2 formalities for declaring a trust?

Answer 1

1. On death through s.9 Wills Act 1837 amended by s.17 of the Administration of Justice Act 1982
2. Intervivos- during a lifetime
   Personalty (anything other than land e.g. money)- orally and conduct is enough to transfer
   Land- s.52(1)LPA 1925 , s.1 LPA MP 1989- deed, signed, sealed and witnessed, s.4 LRA 2002 register the new proprietor.

Question 2

Personalty case- Paul v Constance, what happened?

Answer 2

C had money in his bank, the couple wanted a joint account but did not create one via bank. C said to P that the money was as much his as it was hers. P paid in her bingo winnings into the account. C died without a will, had not divorced wife. Widow wanted the money as she was his next of kin and he died intestate.
HELD: there had been a declaration of trust by what C had said to P, thus the money was held on trust for both of them. So when he died, the money was split between the two of them. No formality needed. Equity looks to substance and not form

Question 3

To transfer land, what statute do you need to comply with?

Answer 3

s.53(1)(b) LPA 1925- a declaration of trust of land has to be evidenced by signed writing. Signed written evidence is required.

Question 4

Does s.53(2) LPA 1925 affect the creation or operation of resulting, implied or constructive trusts?

Answer 4

No. They arise by operation of the law of equity rather than the expressed intention of a settlor

Question 5

If the formalities are not followed through what do you have?

Answer 5

You get a incompletely constituted trust or an imperfect gift which is a defective transfer. It legally still belongs to the owner. If done properly, a completely constituted trust or a perfect gift is enforceable.

Question 6

What is the effect of a valid declaration of trust? Can the settlor change their mind?

Answer 6

You have an enforceable completely constituted trust. No, they cannot change their mind as the beneficiaries have an enforceable equitable interest

Question 7

What happened in Bowden (change of mind)?

Answer 7

B declared a trust for her property, transfer to trustees and said it should be held on trust for charity. She became a nun 60 years later, changed her mind and asked for the property back.
HELD: she had no ownership, it had been completely transferred over.

Question 8

What are the 4 functions of the formalities?

RPEC

Answer 8

1. Ritual or cautionary function- making sure donor pauses and gives due consideration of what they are about to do.
2. A protective function
3. Evidentiary function
4. Channelling function- standardising the important transactions in an important way

Question 9

Under Milroy v Lord, what are the methods of transferring ownership during a lifetime? SOT. What happens if you fail one mode?

Answer 9

1. Settlor declares himself a trustee- requires signed written evidence of that declaration of trust. If not land, it can be oral.
2. Outright gift followed by relevant formalities
3. Transfer to trustees, valid declaration & valid transfer

You must comply with one of the 3, cannot apply other modes if fail one