A Simple Definition of a Trust

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‘It is simply not possible to formulate a single, simplified definition of ‘a trust.’ “The word ‘Trust’ refers to a duty or aggregate accumulation of obligations that rests upon a person as a person described as a trustee. The responsibilities are in relation to property held by him or under his control. He will be compelled by a court in its equitable jurisdiction to administer that property in the manner lawfully prescribed by the trust instrument… As a consequence the administration will be in such a manner that the consequential benefits and advantages accrue, not to the trustee, but to the persons called the beneficiaries.”[1] A trust essentially is a relationship between the trustee and the beneficiary.

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The trustee (formerly known as a ‘foefee to uses’) will hold property on trust for the benefit of another person who is regarded as the beneficiary (formerly known as ‘cestui qui use’). For a trust to be valid there must be: capacity, three certainties, formality and constitution. A person must have legal capacity in order to create a trust. This means that a minor cannot do so unless they are soldiers.[2] A person may also be deemed to be unfit for capacity if they are held to be mentally disabled under the Mental Capacity Act2005.[3] However, if they made a trust when they were of sound mind, then this may be held valid as they were capable of understanding the conditions laid out. There must also be three certainties contained within a trust to make it valid. These three certainties were established in the case of Knight v Knight (1840).[4] Lord Langdale stated the criteria “First if the words were so used, that upon the whole, they ought to be construed as an imperative; secondly, if the subject of the recommendation or wish is certain; and thirdly, if the objects or persons intended to have benefit of the recommendation or wish also be certain.”[5] Therefore, the three certainties are: certainty of intention, certainty of subject matter and certainty of objects. Without these certainties, the trust will not be validly ‘declared’ as such. The wording of a trust is fundamental to get correct and the wording may be sub-divided into imperative words and precatory words. In the cash of Jones v Lock (1865)[6] it was held that a cheque in the testators name, which he wished to give to his baby before dying, could not be held to be a valid trust or an absolute gift. When creating a trust, the Administration of Estates (NI) Act 1955 s2(3) must be adhered to. This states “A grant of probate or letters of administration shall, unless containing an express limitation to the contrary, have effect as well over the real as over the personal estate and the personal representatives of a deceased person shall hold his real estate as trustees for the persons by law entitled thereto.”[7] The certainty of intention is key in order to remove any ambiguity in wording.

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