Law of Trust Intro
Law of Trust Intro
LAW OF TRUST
Introduction
Definitions of Trust
Terms Associated with Trusts
Legal and Equitable Ownership
Nature of Beneficiary’s Interests
Trusts Distinguished from other
Relationships/Concepts
Conclusion
INTRODUCTION TO THE
LAW OF TRUST
Introduction:
• Many attempts have been made to define the term “trust”, but none as
yet have been wholly successful. A trust is, therefore, easier to describe
than to define. Although trusts come in a variety of forms and cater for
different types of property and purpose, they all share the same essential
characteristics. At its heart, a trust involves the fragmentation of legal
title (legal ownership) and equitable title (beneficial ownership). The
legal title is vested in a character known as the “trustee” and the trustee
holds the trust property on behalf of the “beneficiary”. It is only on this
separation of title that equitable title assumes importance because the
general rule is that the legal title carries with it all rights.
• The existence of a trust is dependent upon identifiable property (whether
tangible or intangible) being transferred from its legal owner to one or
more trustees to hold and manage property for the benefit of
ascertainable beneficiaries. The trust may be created inter vivos (i.e.
during the lifetime of the settlor) or may be post-mortem/testamentary
(i.e. on the death of the settlor).
INTRODUCTION TO THE
LAW OF TRUST
Introduction: (Continuation)
• The trustee owes a “fiduciary” duty (i.e. a duty of utmost good faith) to
both the settlor and the beneficiary. The entitlement of the beneficiaries
will normally be set out in the document creating the trust (the “trust
instrument”), but where this is not the case the rights of the beneficiaries
can be implied by equity. Trusts can be of any sort of property: land,
money, chattels, cheques and debts, etc.
• In general terms, therefore, a trust is either a self-imposed obligation or
an obligation imposed on a third party (in whom legal title to the
property becomes vested) to act for the benefit of another which is
enforceable in equity. The equitable interest in the property thereby
becoming different and distinct from the nominal legal ownership vested
in the trustee. .
INTRODUCTION TO THE
LAW OF TRUST
Definitions of Trust:
(1) Halsbury’s Laws of Malaysia
• Meaning of “trust”. Where a person has property or rights which he
holds or is bound to exercise for or on behalf of another or others, or for
the accomplishment of some particular or particular purposes, he is said
to hold property or rights in trust for the other or those others, or for that
purpose or those purposes, and he is called a trustee. A trust is a purely
equitable obligation and is enforceable in the High Court.
(2) Maitland
• ‘I should define a trust in some way as the following- When a person
has rights which he is bound to exercise upon behalf of another or for
the accomplishment of some particular purpose he is said to have those
rights in trust for that other and for that purpose and he is called a
trustee’.
INTRODUCTION TO THE
LAW OF TRUST
Definitions of Trust: (Continuation)
(3) Pettit
• A trust is an equitable obligation, binding a person (who is called a
trustee) to deal with property over which he has control (which is
called the trust property) either for the benefit of persons (who is
called beneficiaries or cestui que trust) of whom he may himself be
one, and any one of whom may enforce the obligation, or for a
charitable purpose, which may be enforced at the instance of the
Attorney-General or for some other purpose permitted by law though
unenforceable.
(4) Underhill
• A trust is an equitable obligation binding a person (who is called a
trustee) to deal with property over which he has control (which is
called the trust property), for the benefit of persons (who are called
beneficiaries or cestui que trust), of whom he may himself be one,
and any one of whom may enforce the obligation. Any act or neglect
on the part of a trustee which is not authorised or excused by the
terms of the trust instrument, or by law, is called a breach of trust.
INTRODUCTION TO THE
LAW OF TRUST
Definitions of Trust: (Continuation)
(5) Lewin
• ‘The word “trust” refers to the duty or aggregate accumulation of
obligations that rest upon a person described as trustee. The
responsibilities are in relation to property held by him, or under his
control. That property he will be compelled by a court in its equitable
jurisdiction to administer in the manner lawfully prescribed by the
trust instrument, or where there be no specific provision written or
oral, or to the extent that such provision is invalid or lacking, in
accordance with equitable principles. 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 cestui que trust, or beneficiaries, if there be any; if not, for
some purpose which the law will recognise and enforce. A trustee
may be a beneficiary, in which case advantages will accrue in his
favour to the extent of his beneficial interest’.
INTRODUCTION TO THE
LAW OF TRUST
Definitions of Trust: (Continuation)
(6) Keeton
• ‘All that can be said of a trust... is that it is the relationship which
arises whenever a person called trustee is compelled in Equity to hold
property, whether real or personal, and whether by legal or equitable
title, for the benefit of some persons (of whom he may be one and
who are termed as cestui que trust) or for some object permitted by
law, in such a way that the real benefit of the property accrues, not to
the trustees, but to the beneficiaries or other objects of the trust’.
(7) The Hague Convention on the Recognition of Trust
• For the purpose of this Convention, the term “trust” refers to the legal
relationship created- inter vivos or on death- by a person, the settlor,
when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose.