Where a property owner seeks to declare a trust to come into action on his death, the trust must comply with the formalities outlined in s.9, Wills Act, 1837, stating that it must be: Declared in writing. The document must be signed by the testator (creator of the will) and that it must be witnessed by at least two persons.
Where a person intends to create a trust that is enforceable during his lifetime (inter vivos trust) or wishes to dispose of an equitable interest, the formal requirements are set out on s.53 Law of Property Act, 1925 explaining the trusts needs to (a) be evidenced in writing (for a declaration) or made in writing (for a disposition); and (b) be duly signed.
Every form of trust will have different formalities and procedures to follow in order to be valid trust.
There are two forms of property that may be declared under a trust, Trusts of personality and trusts of land.
Where the subject matter of a the trust is Personality (physical objects that is not land i.e. pictures), there are no formalities required. The trust to be created in writing is desirable but not essential.
The formalities required in relation to a trust of land can be found under s53(1)(b) of the Law of property Act 1925 stating:
The following three points should be noted in relation to s.53 (1) (b):
An owner of an equitable interest in property may give away the benefits of that interest on another person by: (a) assigning it to the other person; (b) assigning it to a trustee on trust for the other person; or; (c) declaring himself a trustee of the interest for that other person..
Under s.9 of the Statute of Frauds a “grant or assignment” of an existing equitable interest was required to be made in writing. If the Beneficiary sets out to give away his equitable interest to a third party, he must do so in writing otherwise the assignment (giving away of property) will be void.
Where a beneficiary directs his trustee to hold his equitable interest on trust for a third party this is considered to be an agreement (disposition or assignment) under s 53(1)(c) and will be void if not declared in writing.
Another possibility is that the Beneficiary, instead of directing the Trustee to hold his equitable interest on trust for the third party, may direct the trustee to transfer the legal title to the trust property into the name of the third person, with the intention that his equitable interest are to pass to X as well. In this case there won’t be the need for the trustee after the transferral and the third person will have the legal ownership rather than mere rights over the property.
If a beneficiary, owns an equitable interest in property held on trust by the Trustee, then the beneficiary can give his consent to the trustee for him to declare a the property on trust for a third party instead of keeping the trust property in the name of the original beneficiary. This must be made in writing by virtue of s.53 (1) (c).
Where the Trustee holds the property on trust for the Beneficiary it is up to the Beneficiary to declare himself a trustee of his equitable interest (property given to him through the original trust) for the benefit of a third party.
In this case the benefits and liabilities connected to the property that was left to the original beneficiary will be transferred to the third party under what is called a sub-trust. The beneficiaries therefore take on the role of the trustee holding the property on trust for the third party.
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