Trust Law- Creation of Trusts Flashcards
what are the ways in which a trust can be created?
by a voluntary act or legal implication
what is meant by a creation of trust by a voluntary act?
where a truster greants a deed either inver vivos or mortis causa
what is meant by a trust being created by a legal implication
the trust arises independently of the wishes of the parties involved. The law merely imposes a trust on the parties because of the factual circumstances they find themselves in
how can an express trust be constituted?
- a disposition to the trustee bearing to be in trust only
- a disposition to the trustee which is ex facie absolute but qualified by a seperate declaration or acknowledgement of the trust purposes
- a declaration of trust by a person who is already vested in the property
what are the two elements required to create a trust?
- declaration of trust purposes
- delivery (or some equivalent) of the trust property
give an example of trusts created by statute
Married Women’s Policies of assurance act 1880 s.2. as amended by Married Women’s Policies of assurance (s) amendment) act 1980. Connected to the purchase of a house in modern practice
who may be a truster?
As a general rule anyone who can competently alienate property in his possession can create a trust. This usually means persons of full age and capacity. (AGE OF LEGAL CAPACITY (S) ACT 1991)
can a person of unsound mind create a trust?
Persons of unsound mind cannot create a trust. Not all types of mental illness will be sufficient to bring this rule into operation. Only if the mentally ill person lacks the understanding of what he is doing will this render his attempt to create a trust invalid.
who may be a trustee?
Generally speaking any person who has the legal capacity to hold and deal with property is qualified to act as a trustee. Subject to any such express provision in the trust deed the matter is dealt with by the Common law which is subject to special statutory provision in special cases.
who cannot be a trustee?
- An insane person cannot accept office as a trustee.
- A person under 16 cannot be a trustee see AGE OF LEGAL CAPACITY (S) ACT 1991, s.1(1) and s.9(5).
- An insolvent party (even if he has been sequestrated) is not generally disqualified from being a trustee. Cf in charitable trusts there are special rules to disqualify insolvent parties. (See now the CHARITIES AND TRUSTEE INVESTMENT SCOTLAND ACT 2005 S.69, to be amended by the CHARITIES ACT 2011 Sch 7(2) para 107 as of 14.3.2012).
- the person who has killed the testator may not be appointed as the executor of the deceased.
what are the ex officio trustees?
Most trustees are appointed as individuals and the trust deed or other deed of appointment expressly names them as individuals. In certain other cases the holder of an office from time to time is appointed as a trustee.
There are special statutory rules for the transfer of titles to land held by ex officio trustees and these rules avoid the need for detailed conveyancing upon the appointment of new office bearers. See CONVEYANCING (S) ACT 1874, S.45 and TITLES TO LAND CONSOLIDATION (S) ACT 1868, S.26.
who may be a beneficiary?
Generally speaking it is the truster who identifies who are the beneficiaries under the trust which he sets up. Subject to such express limitations the Common law will govern the position.
Any person, legal or natural may be a beneficiary.
A beneficiary may be insane, not yet born or belong to a prescribed class of unascertained persons.
what property may be subject to a trust?
Subject to a number of qualifications outlined below, any property which can be alienated may be the subject of a trust. This includes heritage, moveables, corporeal property and incorporeal property.
A right to a peerage cannot be the subject of a trust. (See THE BUCKHURST PEERAGE (1876) 2 APP. CAS. 1). A trust of foreign land is invalid if the legal system where the land is situated does not give effect to trusts. BROWN’S TRS v GREGSON 1920 S.C. (H.L.) 87..
who owns trust property?
the trustee but they cannot use the trust property for their own purposes as it if were their own property. The trust property for their own purposes as if it were their own property. The trust property is not available for the satisfaction of the trustees’ personal debts. (HERITABLE REVERSIONARY CO. LTD v MILLAR (1891) 1166. Upon the sequestration of a debtor any property held by him in trust for any other person does not vest in the permanent trustee. (BANKRUPTCY (S) ACT 1985, s.33(1)(b)).
Where there is more than one trustee the type of ownership is joint ownership (as contrasted to common ownership).
Each trustee cannot separately dispose of his own share or burden it with a security.
what are the rights of the beneficaries to the trust property?
The beneficiaries and the truster have independent personal rights to require the trustees to carry out trust purposes but they are not the owners and they do not have real rights in the trust property.
