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FORMALITIES OF DECLARATION OF TRUST OF LAND (EXPRESS) - Coggle Diagram
FORMALITIES OF DECLARATION OF TRUST OF LAND (EXPRESS)
FORMALITIES
Manifested and proved
: evidential requirement only. This means:
The declaration and the writing need not be contemporaneous. Their order is unimportant
Some writing
: Something in writing which provides evidence of
The settlor’s intention to create the trust
The terms of the trust
Signed by some person
who is able to declare such trust: settlor, or arguably the trustee
OR By will
: Option for a trust of land to be created by will. As long as the will is validly executed
Non-compliance with formalities
Trust is
unenforceable NOT void
An unenforceable trust
exists from the moment is declared
but the beneficiary
cannot enforce their rights unless and until formalities are met
> when met they can enforce their rights in respect of period between declaration and satisfaction
A void trust
does not come into existence
at all
Uneforceable trusts
Self-declaration of trust over land
=
settlor can choose
not to create the signed, written evidence of the declaration
+ if no facts rendering it unconscionable for the settlor to deny the trust > the
beneficiary will not be able to assert any interest in the land
Transfer of trusts
=
If settlor changes their mind and makes no attempt to constitute it, the trust will not be
unenforceable AND void for lack of constitution
If the settlor
transfers legal title but does not comply with formalities
> prudent for the trustee to seek
directions from the court as to their obligation
CONSTITUTION OF TRUSTS
Transfer of legal title from one party to another
Transfer on trust
= constitution rules apply
Gift
– constitution rules apply
Self declaration of trust
= legal title automatically constituted > no constitution rules necessary
Testamentary trust
= constitution takes place via the will
Inter vivos trust (lifetime)
= legal title must be transferred using the correct method depending on property
Methods of transferring legal title
Registered Land transfers
= by deed and registered with the Land Registry.
Legal title passes on registration of the new owner at the Land Registry
Shares in a private company
= by the transferor signing a stock transfer form and sending it to the company.
Legal title passes when the transferee is registered in the company’s internal register of members
Choses in action
(eg debts) = by notice in writing to the debtor or to the bank
Legal title passes once notice has been received
Chattels
= transferred either (i) by deed of gift or (ii) by delivery of the chattel with evidence of the transferor’s intention to transfer it
Cheques
= transferred to a third party by the transferor endorsing the cheque by signing their name on the back
Effect of constitution
Effective constitution = Disposition is irrevocable
Once a trust is constituted the settlor ceases to have any beneficial or legal interest in the trust property
Once a donor gives a gift, the donee has legal title, the donor has no more rights to that property
Failed constitution
Trust property not vested in trusted > trust is VOID = equity will not correct an imperfect gift or establish that a trust is created (
Milroy v Lord
)
Gift: if legal title has not passed to the donee > gift is imperfect and donor can change their mind
Milroy V Lord exceptions
to rule that if legal title has not been vested in the intended recipient the disposition will fail
1. RE ROSE
Disposition (shares / registered land) will not fail if:
The
correct method
of transfer has been used
The transferor has done
everything within his own power
to effect the transfer OR
put the matter beyond their control
(e.g giving docs away to transferee NOT own agent)
The documentation ends up with the
person capable of effecting the legal transfer
IF TEST MET = donor will
hold the property on a constructive trust
for the intended donee
2. UNCONSCIONABLE PRINCIPLE: PENNINGTON V WAINE
Disposition (shares / registered land) will not fail if:
It would be ‘
unconscionable’ to resile
from the transfer
Considering mainly
conduct of transferor
: transferor's free will in making transfer / telling the transferee / no action needed from transferee / signing relevant forms
3. FORTUITOUS VESTING: STRONG V BIRD
Disposition will not fail if:
gift is made to a donee who subsequently obtains legal title to it by becoming the donor’s personal representative
AND
there is a
continuing intention
until death
to make an
immediate gift to the intended donee
of existing property NOT future
who becomes the
executor/one of the executors/ administrator (PRs)
under the
donor’s will
.
4. DONATIONES MORTIS CAUSA
Disposition will not fail if:
donor makes a gift in contemplation of death but does not have time to make a valid will
AND
Gift is
made in contemplation of death
from an identifiable cause which the donor believes to be imminent
The gift is
conditional on death
There is
delivery of the property
> the donor must
part with control
of the property by handing it (land/shares) / title to it (only for chattels) to donee