What is a trust?
A trust arises when money or property is held on behalf of someone else (or a group of people) for specific purposes. The trustees have legal control of the trust money or property which is held on behalf of the beneficiaries. The trust must comply with the required legal formalities.
Some trusts are created during someone’s life time. A trust can also arise on someone’s death when, for instance, they leave property, a sum of money or other assets on trust for the benefit of others.
What are these formalities?
Where a trust arises on death under the terms of a will, the trust must comply with the formalities outlined in section 9 of the Wills Act 1837. This states that the will must be in writing, signed by the testator (creator of the will) and that it must be witnessed by at least two persons in the presence of the testator (the will maker).
Where a person intends to create a lifetime trust (an inter vivos trust) or wishes to assign their beneficial interest in property that they own, the formal requirements are set out in section 53 of the Law of Property Act 1925. The trust needs to be evidenced in writing (if it’s a declaration) or made in writing (if it’s a disposition); and be signed by the trustee.
Declarations of trusts
There are two forms of property that may be declared trust property under a trust: trusts of personalty (someone’s personal property), and trusts of land.
Trusts of personalty
Where the subject matter of the trust is personalty (physical objects that are not land, eg. vehicles or antiques) there are no formalities required. The trust can be created in writing but this is not a legal requirement.
Trusts of land
The formalities required in relation to a trust of land under section 53(1)(b) of the Law of property Act 1925 are:
“A declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such a trust”. Note that:
- The declaration need not be in writing: section 53 (1) (b) requires only evidence of writing in support. However, it is best to set it all down in writing to avoid the risk of a future dispute.
For more information on:
- ‘Giving away’ an equitable interest to another person