Trust Laws
a. The Re-Denley Principle and Beneficiary Principle.
A trust is created by a settlor or a grantor, transferring property to a trustee to hold in trust for stipulated purposes and may be created inter vivos or on death by will[1]. This implies that a trust is formed when a person transfers a property or rights to another person who holds it for a third party. There are many reasons why trusts are created. The most common reason is where the intended beneficiary of a right is not capable of holding it at a given point in time. An example of this is where the beneficiary is a minor. Trusts create three legal persons: the settlor or grantor who is the legal owner of a property and he decides to transfer it to a third party via a trustee. The trustee is the one who holds the property for the beneficiary. The beneficiary is the original person for who the settlor seeks to transfer the property. Legally, a trust is not valid until there is a beneficiary. In other words, because a trust imposes an obligation on the trustee, there is the need to identify a person for whom the trustee is to hold the property otherwise the arrangement cannot be seen as a trust. A trust presents some kind of 'powers ' which places an obligation on the trustee. The breach of this obligation leads to legal action on the part of the beneficiary. The beneficiary therefore holds some proprietary rights to the trust property and this in turn gives the trustee a fiduciary duty towards the beneficiary[2]. This obligation is one that can only be enforced if there is an identifiable beneficiary for the trust. In Morice V Bishop of Durham [1805], the main legal element of trusts, which is known as the beneficiary principle was established[3]. The beneficiary principle states that for a trust to be valid, the following conditions must exist: 1. There should be someone in whose favour the courts can decree the performance of a trust. In other words there should be a beneficiary 2.
A trust is created by a settlor or a grantor, transferring property to a trustee to hold in trust for stipulated purposes and may be created inter vivos or on death by will[1]. This implies that a trust is formed when a person transfers a property or rights to another person who holds it for a third party. There are many reasons why trusts are created. The most common reason is where the intended beneficiary of a right is not capable of holding it at a given point in time. An example of this is where the beneficiary is a minor. Trusts create three legal persons: the settlor or grantor who is the legal owner of a property and he decides to transfer it to a third party via a trustee. The trustee is the one who holds the property for the beneficiary. The beneficiary is the original person for who the settlor seeks to transfer the property. Legally, a trust is not valid until there is a beneficiary. In other words, because a trust imposes an obligation on the trustee, there is the need to identify a person for whom the trustee is to hold the property otherwise the arrangement cannot be seen as a trust. A trust presents some kind of 'powers ' which places an obligation on the trustee. The breach of this obligation leads to legal action on the part of the beneficiary. The beneficiary therefore holds some proprietary rights to the trust property and this in turn gives the trustee a fiduciary duty towards the beneficiary[2]. This obligation is one that can only be enforced if there is an identifiable beneficiary for the trust. In Morice V Bishop of Durham [1805], the main legal element of trusts, which is known as the beneficiary principle was established[3]. The beneficiary principle states that for a trust to be valid, the following conditions must exist: 1. There should be someone in whose favour the courts can decree the performance of a trust. In other words there should be a beneficiary 2.
Bibliography: Berry, Jairus Ware & Howes, Edwin Jr (2000) A Treatise on the Law of Trusts & Trustees London: Beard Books Hudson, Alistair (2009) Equity & Trusts London: Taylor & Francis P. Matthews (1996) “The New Trust: Obligations without Rights”, in Oakley, Trends in Contemporary Trust Law Oxford University Press Ramjohn, Mohammed (2006) Equity & Trusts London: Routledge Taylor & Francis Thyronyi, Victor (1998) Tax Law Design Y Drafting Vol 2 New York: International Monetary Fund. [1] Thyronyi, Victor (1998) Tax Law Design Y Drafting Vol 2 New York: p949 [2] Hudson, Alistair (2009) Equity & Trusts London p118 [3] Hudson, Alistair (2009) Equity & Trusts London p116 [4] Re Astor’s STs [1952] Ch 534 [5] Berry, Jairus Ware & Howes, Edwin Jr (2000) A Treatise on the Law of Trusts & Trustees p172 [6] Re-Denley [1969] Ch 373 [7] Ramjohn, Mohammed (2006) Equity & Trusts London p57 [8] Morice V Bishop of Durham [1805] 10 Ves 522 [9] P. Matthews (1996) “The New Trust: Obligations without Rights”, in Oakley, Trends in Contemporary Trust Law Oxford University Press