FW: The constitution of a Trust

To answer my own question, equity will not help a volunteer, so unless consideration was given the statement that the settlor
will transfer the property is not enforceable and no trust exists.

If anyone considers there is another angle I have missed, please let me know!

Simon Northcott

I imagine that the trust instrument is a deed executed by the settlor (et al.). If the provision that the settlor “will” transfer the property is in the operative provisions (rather than just the recitals), does that help you in the context of the specific wording that you have? Possibly some part of the deed could be construed as the settlor declaring that he holds the property on trust for the trustees until such time as the settlor transfers the legal title to the trustees?

Paul Davidoff
New Quadrant Partners

I was always under the impression that consideration is not necessary under a deed - this is why gifts (such as deeds of variation) are usually effected by deed, so they can be enforced.

On reflection, not sure this applies to gifts to trustees!

Richard Whitaker
LexisNexis

I suspect that there will be few replies. The angle that is no considered is the , in my view, the fundamental and acknowledged reason by experts for the continuing confusion that pervades all understanding of Trusts for decades.

Disposing of any property has separate and distinct Rules depending on how the owner wishes to make that disposal. He can dispose of it by way of contract, exchange, sell it, by will, by gift, and by trust, to name a few. If he chooses to dispose by trust then he must comply with the Certainty of Intention and transfer his ownership to the Trust. Whether or not trustees are appointed at this time is immaterial. Without all the certainties in place, a trust cannot exist. The actual transfer, is essential.

I concur that a trust therefore cannot exist if any of the certainties are missing and the property remains in his name. It remains part of his estate and will be disposed of as and when he pleases or by intestacy.
The disposal by trust is not a future intention to be fulfilled but a absolute legal requirement at the time the Deed is made. For completion, the deed can state that the instrument is revocable or irrevocable but the property nevertheless must be transferred to the trust for a trust to legally exist.

I recognize that this is not the widely held view of the industry but a great number of longstanding acknowledged contradictions would be resolved if a trust was viewed not as some mystifying and unresolvable legal puzzle but as a disposition option amongst many methods of disposal available to all owners wishing to transferring their property.

Paul Doherty

My understanding is that even where a gift is made by deed the “beneficiary”, whether an individual absolutely entitled or a trustee, in the absence of consideration is a “volunteer”. Applying the maxim “equity will not assist a volunteer”, the beneficiary cannot sue for specific performance.

However, the force of the House of Lords’ decision in Milroy v. Lord, 1862, has been whittled down by more recent judgments, such as Re Rose 1949 and the Pennington/Crampton litigation.

As the outcome in each case will tend to be fact specific, I suggest the specific circumstances be put to Chancery counsel for a definitive opinion.

Paul Saunders

From the judgement of Lord Browne-Wilkinson in T Choithram International SA and others v Pagarani and others: “Although equity will not aid a volunteer, it will not strive officiously to defeat a gift.”

Paul Davies
Clarke Willmott LLP

I believe equity does not recognise the seal on a deed as consideration, hence the inability to obtain specific performance. The concept in Re Rose and alike could help but a court would need persuading either the settlor had done all he could to effect a transfer or it would be unconscionable to not insist on the transfer. Difficult I would suggest.

Paul Lapham
Law Lecturer Kingston College

The only thing that trust experts and other commentators agree on is that trusts are difficult to understand, let alone reconcile… My approach was to look at all the legal options available to any owner who wished to dispose of his property. His choices divide into those that require a counterparty and those that do not. In the absence of a ‘party’ the legislation ensures the ultimate transfer of the property to a new owner. His choice of disposition will determine the Rules that must apply and the ‘deed’ must confirm his choice. A deed cannot both be a ‘contract’ and a ‘trust’ at the same time. .An individual cannot therefore create a trust by contract , it is either one or the other.

‘Specific performance’ does not arise in a trust as the trustees must give effect to the deed and the powers available to the trustees ensure the ultimate transfer to a new owner. If commentators can be persuaded that the rules pertaining to contract and those applying to trusts are materially different, it will ,in my view, resolve/reconcile many of the acknowledged difficulties currently being reviewed by the OTS

Paul Doherty