First class notes of constituting trusts with academic commentary. Covers key case judgments and notable academic debate - highlighting judicial dissent, uncertainties, ambiguities, etc. The structure flows by breaking down each concept first so that the content is easily digestible.
Once a trust is fully constituted, whether in consequence of a settlor’s declaration via trust deed or
through an effective transfer of the intention trust property to trustees, the trust it is irrevocable, and so
the settlor cannot reclaim the property at a later date. The beneficiaries are immediately entitled to the
equitable interest in the property held for them. The beneficiaries can also seek the aid of equity to
compel the trustees to abide by the terms of the trust, irrespective of whether the beneficiaries had
provided consideration to the settlor in return for the creation of the trust. The beneficiaries will
therefore certain remedies that he may exercise against the trustees if they do something inconsistent
with the terms of the trust.
However, where a trust for whatever reason has yet to fully constitute, the main concern for the
potential beneficiaries is whether they have any means of requiring the settlor to constitute the trust if
they are volunteers or had provided consideration to the settlor in return for the creation of the trust
• Lecturer: the majority of potential beneficiaries will be volunteers because it is rare that a
beneficiary provided valuable consideration in return for the benefit acquired under a trust.
• Note however that the general restriction against enforcing a promise to create a trust is subject to
a number of limited exceptions. (See later notes re. valuable consideration; the rule in Strong v.
Bird; deathbed gifts; proprietary estoppel).
• Alternatively, even if the potential beneficiaries are volunteers that are not entitled to any
equitable remedies, they may be able to seek common law remedies to compensate them for the
loss they have suffered because of an incompletely constituted trust. (For instance the Contract
Rights of Third Parties Act 1999 can allow applicable purported beneficiaries to obtain common
law damages for breach of contract. However the Contract Rights of Third Parties Act 1999 does
not enable them to obtain specific performance.)
Reasons why constitution is necessary:
• The trust arrangement becomes irrevocable once trust is properly constituted. (see Re Bowden
[1936] Ch 71 = To become a catholic nun this woman had to give away her property. She thus
settled property for the benefit of another to a trustee in 1871. In 1931, she decides to no longer
take the vow of poverty and takes trustees to court because she wanted the trustees to return the
trust property to her absolutely. The court however held that the settlor was not entitled to revoke
the a transfer because the property had already become impressed with the trust the moment it had
been initially transferred to the trustees. Had the settlor declared a trust, but failed to transfer the
property to the trustee, the settlor remains the owner of the property since no trust has been
constituted.)
• Beneficiaries receive immediate rights in the trust property: see. Saunders v Vautier (1841) 4
Beav 115 re. enforceability rights in personam against trustee in respect of trust property.
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