WEEK 1/2: NATURE AND CLASSIFICATION WHAT IS A TRUST? • A trust is an equitable obligation binding a person (the trustee) as owner of specific property (the trust property) to deal with that property for the benefit of another person (the beneficiary) or for the advancement of certain purposes. Fixed Trust: I hold my house on trust for Catherine o Trust Property: house o Beneficiary: sister Catherin o Settlor: creator a trust o Trustee: you holding house for Catherine Discretionary Trust: I give my house to my husband to hold on trust for our 4 children, he can allow whosoever of those children to live in the house from time to time o He has power as to which children has what right at what time Purpose Trust: for a charitable purpose Trust inter vivos vs trust post mortem: o Trust inter vivos: a trust where the settlor intends trust will start during settlor’s life o Trust post mortem: trust comes into effect after death (usually in a will) ESSENTIAL ELEMENTS OF A TRUST A trustee in whom legal or equitable title to property is vested • Minimum of 1 trustee (s 11) • Private trust trustees must act unanimously, public trust trustees can be majority agreement • There may be more than one trustee • Trustee must have capacity (over 18, capable of holding property) Trust property • Vests in the trustee – separation of legal and equitable interest • Must be present property A beneficiary for whose benefit the property is held or an object (if valid charitable purpose) • Beneficiary principle: to be a valid trust there must be a beneficiary/beneficiaries • Trustee can be a beneficiary, but not a sole beneficiary (CSD v Livingstone) • Beneficiaries have an equitable interest in the trust property An equitable obligation binding the trustee to deal with the trust property for the benefit of the beneficiary • Obligation is personal AND proprietary o Personal: binds the conscience of the trustee – personal liable for breaching obligation o Proprietary: where breach, ben can seek personal AND proprietary remedy CLASSIFICATION Express trust • Settlor intends to create a trust • Intention of settlor may be express OR inferred Trusts arising by operation of law • Resulting trusts • Constructive trusts Trusts can be: • Private or public • Bare (trustees have no active duties) or active • Fixed or discretionary • Inter vivos or post mortem How to create an express trust   What if the settlor changes his/her mind? • Trusts are essentially irrevocable disposition of property. • There are exceptions; unless the settlor comes within an exception, the trust is irrevocable: o The trust deed can stipulate a power to revoke the trust o The beneficiaries can call for the trust to be ended (Saunders v Vautier) o The trustee completes disposition of the trust property to the beneficiaries o By order of the court (statutory power) TRUST V AGENCY • Both are fiduciary relationships • Difference – trustee has title to the trust property; Agent only has authority to deal with the trust property (does NOT have title) Holding money: o Ownership of money is determined by possession o Does agent have full ownership of money (and simply owes a debt to the principal) OR is the agent holding the funds as trustee for the principal? Factors relevant to intention: o Obligation to keep separate (Cohen v Cohen; Walker v Corboy) o Isolated transactions (Cohen v Cohen) o Ongoing dealings (Walker v Corboy)