DOWNLOADED FROM ISOCHUKWU.WORDPRESS.COM FOR THE LOVE OF CHRIST benefit of another (called beneficiary) JESUS THE BEGINNING AND or some object permitted by law. THE END A trust involves the notion of holding EQUITY PART II/LAW OF any property on behalf of someone TRUSTS. else. Even in Yearworth and Others DEFINITION OF TRUST. V North Bristol NHS Trust, the court held that sperm samples can be held in TRUST DISTINGUISHED FROM trust. Most members of the public have OTHER LEGAL CONCEPTIONS. little knowledge of what a trust is and CLASSIFICATION OF TRUST unknown to them, they may be EXPRESS PRIVATE TRUST beneficiaries or even trustees as well- Richard and Ademola complete equity ESSENTIALS OF A TRUST… THE and trust text, cases and materials. THREE CERTAINTIES. TRUST DISTINGUISHED FROM COMPLETELY AND OTHER LEGAL CONCEPTIONS. INCOMPLETELY CONSTITUTED TRUST Trust and Bailment: bailment occurs where the owner of a chattel keeps it in TRUST OF IMPERFECT OBLIGATION. the temporary possession of another. RESULTING AND Similarities: CONSTRUCTIVE TRUSTS. - Both control property which is CHARITABLE TRUSTS. not beneficially their own. - A bailee just like a beneficiary TRUSTEES. APPOINTMENT, can trace the bailed property or its QUALIFICATION, DUTIES, proceeds. POWERS, DETERMINATION, REMEDIES FOR BREACH OF - Both are required to take good TRUST, ETC. care of the property. THE EQUITABLE REMEDY OF Differences: TRACING. - Bailment is a common law PERPETUITIES AND concept while trust is equitable. ACCUMULATION. - Only chattels can be bailed while any property can be held on trust. - A trustee is generally the legal LAW OF TRUSTS. owner and can pass a valid title to a As implied from Keeton’s definition: bona fide purchaser for value without Where a person (trustee) holds notice while a bailee has mere special (whether by legal or equitable title) property, possession and cannot pass a property (real or personal) for the valid title. DOWNLOADED FROM ISOCHUKWU.WORDPRESS.COM - The obligations under a trust are except ostensible, apparent and ratified more onerous that that under bailment. agency. Trust and Agency: An agent is a Trust and Contract. person that acts on behalf of another person called his principal. Although both create binding obligations: Similarities: - A contract is a common law - The principle of non-delegation obligation while a trust is an equitable (delegatus non potest delegare) obligation. generally applies to both except - A contract arises from circumstances or the trust instrument agreement between the parties while a dictate otherwise. trust may arise without agreement - Both owe fiduciary duties and between the parties. E.g. where the are accountable. testator declares himself as the trustee Differences: of his property or constructive trust? - Agency is a common law - Valuable consideration has a concept while trust is an equitable wider meaning in trust than in contract concept. and includes not only money but also - Agency relationships can be other considerations like marriage. created without vesting of any property - The doctrine of privity operates in the agent while trust property must in contract and only parties to the be vested in the trustee to be contract can generally sue on it. Under completely constituted. trust, a beneficiary who is not a party to - At common law, agency the creation of the settlement can sue relationship can terminate upon death on it. however, death of a testator or trustee does not determine the trust. Trust and Administration of Estate. Unlike an agent who can make - Generally, the provisions of the his principal liable to debtors, the Trustees Act 1893 and Trustee Law trustee cannot involve the beneficiary applies to both. However: in liability. - A beneficiary can trace mixed - The major function of the funds while a principal’s remedy in the personal representative is to distribute event of mixed funds would be to estate while that of the trustees is to personally sue the agent-Lister V hold it. Stubbs. - Trustee must always act jointly - Trust may not come into while one of the PR may validly existence from an agreement between dispose of pure personalty. the parties. Agency generally does - Section 11 of the trustee Act relating to appointment and retirement DOWNLOADED FROM ISOCHUKWU.WORDPRESS.COM of trustees cannot apply to a PR- is meant to give the property to x if he Adeniji V Probate Registrar fails to make an appointment. Western Nigeria. Trust power distinguished from The limitation period for suing a - power: if there is a gift over in default trustee is 6 years while that of a PR is of appointment, then it would be 12 in respect of claims relating to the construed to be a trust power- personal estate of the deceased person Burrough V Philcox. Section 31 Limitation Decree. Where there is fraud however, there is no Discretionary trust and power: limitation. discretionary trust occurs where a - Unlike trustees, PRs hold both trustee holds property on trust for a legal and equitable interest in the group of beneficiaries and is to pay to deceased’s estate so that they can easily such of the beneficiaries as he deems sell and administer it. fit. No beneficiary entitled as of right they only have a spes (hope) that the Note however that a person can be both exercise of the discretion is in their PR and Trustee where a will establishes favour. However they can sue where a trust and appoints the same persons to such appointment is not done in good be both executors and trustees. faith… but cannot claim entitlement to be appointed. Megarry VC in Re Trust and Powers. Hay’s Settlement Trust noted that As Megarry VC noted in Re Hay’s unlike mere power, the trustees here are Settlement, trust power is mandatory under a positive duty to consider the and the court would see to its execution exercise of their discretion while a done while mere power is discretionary. of power may decide not to do so. In Re Smith, all the beneficiaries combined Power of Appointment: occurs where together to claim the trust property and the donor empowers the donee to end the trust. appoint property to any person he chooses including himself (general Trust of imperfect obligation and power) or any person he chooses within power resemble in that they cannot be a specified class only (special power). compelled to act since there are no Appointment must be in accordance human beneficiaries. with the trust. In Turner V Turner, the Trust for sale distinguished from power trustee was given a power to appoint of sale and power to postpone sale. two members of the Turner family but he made three appointments. The court Trust for sale binds trustees to sell and held that the appointments were void as hold the proceeds in trust for the they were contrary to the intention of beneficiaries. Conversion operates the trust. There is always a gift in under trust for sale as equity regards the default of appointment where the donee land as converted to money even DOWNLOADED FROM ISOCHUKWU.WORDPRESS.COM though not actually sold. Under power used to circumvent tax liability. He of sale, the trustees cannot be only looks after the property. compelled to exercise power of sale- Re Hilton. Who can be a trustee?: Anyone qualified to take legal CLASSIFICATION. - interest in property. 1. 1. Express, implied/resulting - A public trustee (created under and constructive trust. statute). 2. 2. Private and public trust: the - Trust Corporation: like UBA. former is for the benefit of an Capacity: same as general law of individual or class of beneficiaries contract. If you can hold land, you can while the latter is for the benefit of the declare trust over land. Re Adams public as a whole. Kensington Vestry. 3. 3. Trust of Perfect and imperfect obligation: The former has human EXPRESS TRUST. beneficiaries while the latter is not EXPRESS PRIVATE TRUST enforceable by human beneficiaries. 4. 4. Executed and executory trust: Are trusts that are intentionally created the former entails where the precise by the owner of the property through beneficial interest of each beneficiary the following ways: has been clearly specified by the - - Where the settlor declares inter testator. While the latter merely vivos that he holds the property on trust indicates a scheme of settlement and for certain beneficiaries or leaves the details to be filled in by the - - The settlor conveys property to trustees. trustees to hold in trust. Where it is a 5. 5. Completely and incompletely trust of land, it must be evidenced in constituted: the former occurs where writing in accordance signed by the necessary steps have been taken to vest party declaring with Section 7 and 9 of the trust property in the trustees for the the Statue of Frauds, Section 78 benefit of the beneficiaries. All trusts PCL. Where pure personalty, oral arising under wills are regarded as declaration would suffice. In Grey V completely constituted. IRC, the court held that disposition of 6. 6. Blind trust: where a number equitable interest should be in writing. of donor pay into a trust fund for a The Lagos state law provides that beneficiary or beneficiaries who do not writing or oral conveyance may suffice. know them. E.g. when people donate - Where the settlor disposes the for politicians to run campaigns. property to trustee by will. (the trust 7. 7. Bare Trust: the trustee just arises after the death of the testator). holds property for beneficiaries Such testamentary trust must comply without any other obligation. This is with the provisions of Section 9 of the DOWNLOADED FROM ISOCHUKWU.WORDPRESS.COM Wills Act 1837 which requires that it be precisely identified/described so be signed be the testator and the must the separate beneficial interest to signature witnessed by two or more be taken by each beneficiary.