Trusts Revision
Trusts
Revision
1
,Trusts Revision
Types of property
Land = actual land; buildings on land; fixtures attached to land): s.205 (1)(9) Law of
Property Act 1925
Personal property
o Choses in possession/Chattels
o Choses in action
Transfer of legal title to chattels
Re Cole [1964]: To transfer legal title, need deed of gift OR intention and delivery.
o Delivery = actual, constructive (Winter v Winter [1861], Thomas v Time Book),
or symbolic (Rawlinson v Mort [1905])
o Constructive and symbolic only apply to items which cannot be actually
delivered.
o Intention and delivery don’t need to occur at the same time.
o Delivery must occur before a person dies, otherwise a will overrides the
transfer.
How a trust works
Property owner (settlor/testator) creates trust when they are alive (inter vivos) or
through their will (testamentary). Settlor = alive, testator = dead.
Must nominate trustee (can be self, or others but must transfer legal title)
Must also decide who the beneficiaries will be
Settlor/testator has absolute title, when trust is created the title splits and there is
both legal and equitable title. The trustees have legal title. The beneficiaries have
equitable title. Property right is when you can sell/give it away etc.
Legal owners can do whatever absolute owners can do, but it must always be for the
benefit of the equitable owner(s).
Equitable owners can bring personal claims against people (trustees) for
mismanagement, can take steps to recover lost property, but cannot pursue against
a bona fide purchaser of legal estate for value without notice (is there a valid claim
for equity’s darling)
o Bona fide = in good faith
o Purchaser for value = must give value in money or money’s worth
o Legal estate = must be buying legal title
o Without notice = without either of the 3 types of notice (actual, constructive
(would have notice if made such inquiries as a prudent purchaser would have
made), or imputed (agent has actual or constructive notice).
Types of trust
Express = voluntarily and intentionally created by the settlor/testator
o Fixed = beneficiaries and their share are set
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, Trusts Revision
o Discretionary = trustees have discretion, can decide who should benefit from
a class and/or how much they should benefit
Implied
o Constructive = implied by courts because of fraudulent/unconscionable
conduct or giving effect to common intentions of the parties
o Resulting = implied by courts where the beneficial interest goes back to
person who transferred property
Requirements to create an express trust
Always need… (Knight v Knight [1840])
o Certainty of intention (settlor must intend to create a trust)
o Certainty of subject matter
o Certainty of objects (must be clear who the beneficiaries are)
May also need
o To comply with the formalities (for land)
o Constitution (if the settlor is not going to be a trustee)
Certainty of subject matter
o Must be certain what the trust property is. Palmer v Simmonds [1854]: ‘the bulk of
my estate’ was uncertain. Where there is uncertainty, there is no trust.
o Chattels must be segregated.
Re London Wine Co [1986]: wine that customers had bought was stored
altogether with all the other wine in the warehouse. Company went into
receivership; customers could not claim the wine as there was no trust. The
trust property was uncertain.
Contrast with Re Stapylton Fletcher Ltd [1994]: wine was separated so
customers could claim.
Re Goldcorp Exchange [1995]: gold bullion had been bought but not delivered
to customers. Some gold had been separated, but majority not. Held that
because which gold specifically was to be sold was not certain, no trust could
arise.
Hunter v Moss [1994]: Settlor declared a trust of 50 of his 1000 shares. As the
shares were all identical, the lack of segregation between them did not
invalidate the trust.
Certainty of intention
Writing: look at trust instrument or any other writing.
o Use of the word ‘trust’ isn’t required (Pearson v Lehmann Brothers Finance
[2010]) or conclusive (Tito v Waddell (No 2)).
o Settlor doesn’t need to know he has created a trust (Twinsectra)
o Precatory expressions are not sufficient (Lambe v Earnes [1871], Re Hamilton
[1895]).
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Trusts
Revision
1
,Trusts Revision
Types of property
Land = actual land; buildings on land; fixtures attached to land): s.205 (1)(9) Law of
Property Act 1925
Personal property
o Choses in possession/Chattels
o Choses in action
Transfer of legal title to chattels
Re Cole [1964]: To transfer legal title, need deed of gift OR intention and delivery.
o Delivery = actual, constructive (Winter v Winter [1861], Thomas v Time Book),
or symbolic (Rawlinson v Mort [1905])
o Constructive and symbolic only apply to items which cannot be actually
delivered.
o Intention and delivery don’t need to occur at the same time.
o Delivery must occur before a person dies, otherwise a will overrides the
transfer.
How a trust works
Property owner (settlor/testator) creates trust when they are alive (inter vivos) or
through their will (testamentary). Settlor = alive, testator = dead.
Must nominate trustee (can be self, or others but must transfer legal title)
Must also decide who the beneficiaries will be
Settlor/testator has absolute title, when trust is created the title splits and there is
both legal and equitable title. The trustees have legal title. The beneficiaries have
equitable title. Property right is when you can sell/give it away etc.
Legal owners can do whatever absolute owners can do, but it must always be for the
benefit of the equitable owner(s).
Equitable owners can bring personal claims against people (trustees) for
mismanagement, can take steps to recover lost property, but cannot pursue against
a bona fide purchaser of legal estate for value without notice (is there a valid claim
for equity’s darling)
o Bona fide = in good faith
o Purchaser for value = must give value in money or money’s worth
o Legal estate = must be buying legal title
o Without notice = without either of the 3 types of notice (actual, constructive
(would have notice if made such inquiries as a prudent purchaser would have
made), or imputed (agent has actual or constructive notice).
Types of trust
Express = voluntarily and intentionally created by the settlor/testator
o Fixed = beneficiaries and their share are set
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, Trusts Revision
o Discretionary = trustees have discretion, can decide who should benefit from
a class and/or how much they should benefit
Implied
o Constructive = implied by courts because of fraudulent/unconscionable
conduct or giving effect to common intentions of the parties
o Resulting = implied by courts where the beneficial interest goes back to
person who transferred property
Requirements to create an express trust
Always need… (Knight v Knight [1840])
o Certainty of intention (settlor must intend to create a trust)
o Certainty of subject matter
o Certainty of objects (must be clear who the beneficiaries are)
May also need
o To comply with the formalities (for land)
o Constitution (if the settlor is not going to be a trustee)
Certainty of subject matter
o Must be certain what the trust property is. Palmer v Simmonds [1854]: ‘the bulk of
my estate’ was uncertain. Where there is uncertainty, there is no trust.
o Chattels must be segregated.
Re London Wine Co [1986]: wine that customers had bought was stored
altogether with all the other wine in the warehouse. Company went into
receivership; customers could not claim the wine as there was no trust. The
trust property was uncertain.
Contrast with Re Stapylton Fletcher Ltd [1994]: wine was separated so
customers could claim.
Re Goldcorp Exchange [1995]: gold bullion had been bought but not delivered
to customers. Some gold had been separated, but majority not. Held that
because which gold specifically was to be sold was not certain, no trust could
arise.
Hunter v Moss [1994]: Settlor declared a trust of 50 of his 1000 shares. As the
shares were all identical, the lack of segregation between them did not
invalidate the trust.
Certainty of intention
Writing: look at trust instrument or any other writing.
o Use of the word ‘trust’ isn’t required (Pearson v Lehmann Brothers Finance
[2010]) or conclusive (Tito v Waddell (No 2)).
o Settlor doesn’t need to know he has created a trust (Twinsectra)
o Precatory expressions are not sufficient (Lambe v Earnes [1871], Re Hamilton
[1895]).
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