Summary
Summary Requirements for creating trusts
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Property law notes summary on the requirements for creating trusts
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Outlining the requirements for a valid privatetrust
By way of introduction, there are four key elements which are “validity requirements” for
creating a valid express private trust:
The settlor must have the CAPACITY to ‘settle’ the property on trust
The CERTAINTY requirements must be met
Any FORMALITY requirements must be met; and
The trust must be CONSTITUTED.
In this scheme of study, only very brief reference will be made to the ‘capacity’
requirement, the formality requirement and the need to get the trust property effectively
into the ownership of the trustees (the need to constitute the trust). All these will be re-
visited later. For the moment, the focus will be on the certainty requirements.
Brief reference to the meaning given to capacity and its significance
Capacity requirements in the context of what is required for a valid trust to arise are
concerned with the capacity of the settlor. The general position is that anyone who has
the capacity in law to hold legal title to property has the capacity to declare trust of it.
You know that holding legal title to
property is proof (which is good against As you will discover when we look at trusteeship
later in the course, the capacity of the trustee to
the world) of entitlement to deal with
hold legal to title IS significant, but not in the same
property freely. Having legal title to way as it is with a settlor’s capacity. This is
property entitles the holder to sell the because, as you will notice in your reading,
according to one of the equitable principles,
property or use it to raise security, and
“equity will not allow a trust to fail for want of a
it also entitles him to give it to another trustee”.
if he wishes to. Anyone who holds legal
title to property is also entitled to make
his property subject to a trust.
Alongside the gift (which is an outright transfer of property), the trust is another
mechanism by which to give the benefit of property to another. Thus, generally there are
limitations for minors and those who are deemed by law to be mentally incapacitated.
Formality
You should just be aware that an express trust of land needs to be evidenced in writing
signed by the person declaring the trust: Law of Property Act 1925, s 53(1)(b) and 53(2).
Other express trusts can be created without any formality, though it’s usually desirable to
declare the trust in writing so the declaration is considered carefully by the settlor, clear
and recorded for the future.
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