Trusts Law
What this domain tests
Trusts Law tests whether you can identify a valid trust, classify it, and apply the rules that determine enforceability and breach. The exam favours application: given facts, spot the missing certainty or formality, then explain the consequence.
Core rules
- Three certainties. Intention (words or conduct show a binding obligation, not a moral wish), subject matter (the property and beneficial shares are identifiable), and objects (beneficiaries are ascertainable).
- Constitution. A trust is completely constituted when the settlor has transferred the property to trustees or declared themselves trustee. An incompletely constituted trust is generally unenforceable by volunteers.
- Formalities. Cash can be settled by delivery or declaration; land usually requires signed written evidence of the declaration; wills need testamentary formalities. For example, in England and Wales, Law of Property Act 1925 s.53(1)(b) requires signed writing for a declaration of trust over land.
- Beneficiary principle. A trust must have ascertainable beneficiaries, or fall within a recognised exception, not merely a purpose.
- Classification. Fixed trusts have defined shares; discretionary trusts give trustees a power or trust to select within a class; resulting and constructive trusts arise by operation of law.
- Trustee duties. Act in good faith, in the beneficiaries' interests, avoid conflicts, keep accounts, invest prudently, distribute only to objects, and act unanimously unless the deed allows otherwise.
Worked example
A transfers £200,000 to T "to hold for my sister for life, remainder to her children." This is a valid fixed trust: intention is binding, the fund is certain, and sister and children are ascertainable; transfer constitutes the trust. If A instead signs no writing and merely declares himself trustee of a house for the same persons, the declaration may fail for want of the required signed writing; the intended trust is unenforceable, and A may hold on resulting trust.
Traps
Confusing a discretionary trust's "any given postulant" object test with fixed-trust list certainty; treating a letter of wishes as binding; missing constitution; assuming all trusts need writing; and ignoring conflicts or unauthorised delegation.