TYPES OF TRUSTS

Question 1

3

Express Trusts
Definition

Answer 1

1. Express trusts are created by the express intention of the creator of the trust, known as the settlor.
2. A settlor may create a trust in their lifetime (inter vivos), either by declaring themselves trustee of specific property the settlor owns, or by transferring property to one or more trustees to hold on trust.
3. Alternatively, a settlor may create a** testamentary trust **by declaring it in their will. Express trusts may be classified according to the nature of the beneficial interests they create.

Question 2

types of express trusts

Answer 2

1. private trusts
2. charitable trusts

Question 3

Private Trusts

Question 4

3

private trusts

Answer 4

Private trusts are created for the benefit of certain ascertainable persons and are either** fixed, discretionary, or purpose trusts**

Question 5

fixed trusts

Answer 5

A fxed trust exists where the interests of the benefcia-ries are defned by the settlor; for example, “to T on trust for my husband for life, and at his death to my children in equal shares”.

Question 6

discretionary trusts

Answer 6

In a discretionary trust, the trustee is given discretion in how to distribute the trust property, usually among the members of an identifable class; for example, “to T on trust for my children in such shares as T shall in his absolute discretion decide”.

Question 7

purpose trusts

Answer 7

A purpose trust is one set up** for a purpose rather than for people**. A trust for a private purpose which does not have defned benefciaries will normally fail (see below), but there is a limited class of private purpose trusts,sometimes known as ‘honorary trusts’, which are rec-
ognised as valid (for example, trusts for the maintenance of particular animals).

Question 8

Charitable Trusts

Answer 8

A charitable trust is a type of purpose trust. Unlike a typical private trust, a charitable trust is created for the beneft of an indefnite class of persons or the public in general

Question 9

Implied Trusts
Definition

Answer 9

A trust is implied in equity where the intention of the settlor is not expressed, but a trust is presumed in order t**o ensure that an equitable result is achieved. There are two main catego-ries of implied trust.

Question 10

Types of Implied Trusts

Answer 10

a.Resulting Trusts
A resulting trust arises when: (1) an interest under an express trust fails, (2) an express trust fails to exhaust the benefcial interest, or (3) a person makes a voluntary transfer or purchase in the name of another. The benefcial interest reverts to the settlor or the settlor’s estate.
b.Constructive Trusts
A constructive trust is an equitable remedy imposed by a court to **prevent an unjust enrichment **of one person at the expense of another as the result of wrongful conduct, such as fraud, undue infuence, or breach of fiduciary duty such as when a third party receives trust property with knowledge of a breach of trust.