Trusts2 can be established orally, in writing or by
conduct (s.6 of the 2007 law), and may be established during a
settlor's lifetime (an inter vivos trust) or upon death under
the terms of the settlor's will (a testamentary or will trust).
Regardless of how a trust is established, the following
requirements must be met so that a trust is not declared invalid
with the result that the assets revert back into the settlor's
Certainty of Subject Matter
The trust property must be clearly identified. For example, a
declaration that a trust is to contain "the bulk of my
estate" is insufficient.
Certainty of Objects
It must be possible to determine who the beneficiaries (the
objects) are. For "fixed" trusts it must be possible to
identify all the beneficiaries in person, but for
"discretionary" trusts it must be possible for the
trustees to say if the beneficiary comes within a class of
identifiable potential beneficiaries.
Certainty of Intention
The settlor must have genuinely intended to create a trust and
the court will look at the entire context in determining this,
including, where necessary, subsequent behaviour. However, it is
always important to use words that make it clear a trust is
intended - for example, a settlor who gave his property by will to
his wife "in full confidence that she would do what was
right as to the disposal thereof between his children, either in
her lifetime or by will after her decease" had not done
enough to create a trust, but had merely given the property to his
widow absolutely. It is also important to note that where the
settlor and trustee have a common intention that the acts and
documents do not create the legal rights and obligations which they
give the appearance of creating, the courts may hold that the trust
is a formal "sham" - i.e is not a valid trust.
Further, to create a valid trust the settlor must divest
themselves of their assets completely, as a trust
is only established upon the property being transferred to the
trustee - not on the signing of the trust instrument. This will
involve fulfilling the required formalities to transfer the assets
such as signing share transfer forms, transferring property
registration etc. It is essential that the settlor does everything
they can to ensure the property is transferred.
2. This relates to "private" trusts - special
rules apply to some non private trusts such as unit trusts, purpose
To view Part 1 of this article please click on the link
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about your specific circumstances.
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