Legal Issues of Constitution of Trust

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The legal issue of constitution of trusts is very important, judicial decisions over the years on cases where trusts were not properly constituted indicates that constitution of trusts could be quite complex and must be very cautiously done by a property owner as a simple factor could make his trust void. An express trust is completely constituted either by effectively transferring property to trustees or by effectively declaring a trust. In case of personal property, the declaration of the trust may be put in writing; however, equity will not perfect an imperfect gift. It is only when the trust is constituted that it is binding on the settlor. The long-standing idea that equity will not perfect an imperfect gift can be traced back to the 19th century cases of Ellison v Ellison and Milroy v Lord , and was further emphasized in the 20th century in the case of Re Fry . Completely constituted trusts are segmented into executory and executed trusts. Executory trust is when a declaration or instrument requires the successive execution of further instruments while an executed trust is when the settlor has clearly and expressly stated what the interests of the beneficiaries are in the trust instrument. When a trust is not properly constituted, there will be no equitable proprietary interest for the beneficiaries. In such situations, the trust is enforceable under contract otherwise the beneficiaries are regarded as “volunteers”. A volunteer is a beneficiary who does not have valuable consideration for a promise or agreement for property to be transferred to him through trustees. Settlors must do everything within their power as necessary according to the nature of the property so that the settlement would be binding. There are three wa... ... middle of paper ... ...he and other latest cases that some form of flexibility is developing in the kinds of interests or rights that equity is capable of providing. Overall therefore, the court considers Milroy as good and valid law. The principle established in Milroy has been the focal point of judicial decisions and the major influence on the attitude of the judiciary. The courts, no matter how onerous a situation may be or the trend in the development of the law, they seek to ensure that the Milroy principle is not violated, thus its re-emphasis in Re Rose . Over the years, some form of flexibility has been seen by the courts towards the enforceability of imperfect gifts. However, despite the caveats characteristic of Re Rose , the courts still considers the case to be good authority proved by its subsequent application in Mascall v Mascall and its approval in Vandervell v IRC .

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