The Settlor holds absolute title in the property before the creation of a trust.
The Trustee once a trust has been created the legal title in the trust property must be vested in the trustee and held by the trustee on trust for the beneficiaries.
The Beneficiary the person(s) for whom the property title is to eventually end up in.
Bare Trust: where the trustee holds property for a single absolute beneficiary and therefore owns the entire equitable interest in the trust fund, the trustee has no discretion or any obligation other than stewardship.
Fixed Trust; when a trust is held by a trustee for a fixed list of beneficiaries.
Discretionary Trust and power of appointment: discretion of distributing property in a manner the trustee deems suitable.
Notice: A purchaser is taken to have notice of an equitable interest unless they had either actual notice of the equitable interest of the beneficiaries or constructive or imputed notice.
Capacity: the ability to own property (under 18s cant legally own property[land]). Therefore a trust is usually created to transfer property once he/she turns 18.
A valid trust can only exist if the settlor intends to create a trust and defines the relevant property an beneficiaries clearly. The criteria to decide this was established in Knight v Knight per Lord Langdale;
- Certainty of Intention, which is an intention on the part of the settlor to create a trust. This is usually done by examining the words used by the settlor. Did he intend to impose a trusteeship on the recipient of the property? 'The words must be imperative' Wright v Atkyn. However since equity looks at intent rather than form theres no technical way to create a trust. Re Hamilton is the authority for looking at the entire document to determine the existance of a trust. Mere expression of hope, wish and trust does not amount to a trust.
- Certainty of subject matter, which the settlor expresses the a clear description of the trust property and what type of interest each beneficiary has and the respective interests they will share. Re London Wine Co buyers of wine stored in warehouse-not segregated-unable to ID which bottles belonged to whom... therefore no trust. However in Hunter v Moss oral declaration of 5% of shares - held valid. If shares in the same company and of the same class, no need to segregate. The rule in Hancock v Watson states where a property has been left to a beneficiary as an absolute gift subject to a trust which has failed, then the bene takes the property absolutely.
- Certainty of Object, sufficient identification of the beneficiaries.
Re Aster Settlement Trust: a trust was created with the objective of advancing 'the preservation' of the independant and the integrety of newspapers in particular the Observer. It was held that there was no beneficiary of such a purpose and uncertain therefore the trust was held void.
Deal with each certainty in a logical order even where there are no problems.
- Subject Matter
- Beneficial Interest
- Effect of any uncertainty.