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Constitution of trusts
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Constitution of trusts
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Constituting a TrustConstitution is about has the title to the subject matter of the trust or give been transferred or vested
into the trustees? This is so they can implement the trust. Look at formalities, check for certainties, then
constitution.
Self-declaration or Transfer to Ts?
Has title to the property vested in the trustee so that they are able to implement the trust, i.e. is title
to the property now in the hands of the T.
In order to work out whether a trust is properly constituted you need to distinguish between two
possible scenarios:
1. Self-declaration of trust; or
2. Transfer of title to the trustee(s).
Self-declaration of trust
LAW
EQUITY Beneficiary
- Self-declaration- have the owner of the subject matter, at law they are the owner. They declare
they will hold it on trust for someone else. No transfer is necessary as they are already the
owner. The owner says they hold it on trust for beneficiary. As soon as the owner declares
themselves to hold it for the benefit of another, its enforceable. It can be inferred from what
they have said or done.
Self Declaration?
The key question here tends to involve whether the settlor or testator intended to declare him or
herself as a trustee. To give you an example:
Jones v Lock (1865) 1 Ch App 25
The court held that the father had NOT declared himself to be trustee as the language used was too
‘loose’.
Father returned from a business trip and didn’t get his newborn child a gift. He arrives home and says
there is a check for himself for £900 which is a gift for the baby. He puts it in infants hands and puts it
in a safe for him. Dad died a few days later. Did he declare himself as a trustee for the money? Was this
a self-declaration? The court said there was no declaration for him to be a trustee as the language was
too loose. The court is looking for certainty.
, Self-declaration of trust 2
LAW
EQUITY
Beneficiary
Can the Creator Benefit Under a Self Declared Trust?
Paul v Constance [1977] 1 WLR 527
The court found in favour of Mrs P claiming that this was a self-declaration of trust and so Mrs P was
entitled to half of it and Mr C to the other half which now went to his estate.
- Can declare themselves to be a trustee for themselves as well so they retain some of the
beneficial ownership. Owner declares themselves to be trustee for themselves and another
beneficiary. This is possible. This is seen in Paul v Constance. ‘money is as much yours is as much
yours as it is mine- self declaration so she was entitled to half. He was both trustee and
beneficiary.
Self-declaration of trust 2
LAW
Mr C
EQUITY Mrs P
Mr C’s estate
Transfer of Title to Trustees
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