Trusts

The most common method of trust creation is by deed. The settlor executes a deed assigning legal ownership of the property being placed into trust to the trustees, who will then hold that property for the benefit of the trust beneficiaries specified in the trust.

The deed will specify the trust property and name the trustees and beneficiaries. It will also specify the powers of trustees and the rights of beneficiaries. The deed needs to be signed by the settlor and ideally the trustees, to indicate that they accept their position.

Creation by will

Trusts are also often created within wills, either expressly or, for example, as a result of a will leaving assets to a minor. In the latter case, the trustees have to hold the trust assets until t...

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The testator must communicate a legally binding obligation on the legatee, and the legatee must accept the fully secret trust

Half secret trusts

A half secret trust does appear in the terms of the will, but its purpose is not specified.  The legatee is told of objects of the trusts and its purpose. The conditions that need to be satisfied in respect of a half secret trust are similar to those of a fully secret trust, other than the requirement that the testator must communicate the half secret trust before or at the same time as making the will.

Unwritten trusts

An unwritten trust is one that is implied from the actions or circumstances of the parties involved.

The three certainties of a trust

For a trust to be valid, there must be three certainties: certainty of words, certainty of subject matter and certainty of objects.

Words – The words must unmistakably show the intentions of the trust. No special words are necessary but using words such as “on trust for…” would provide clarity.

Subject – The property subject to the trust must be clearly specified.

Object – The objects of a trust, i.e. its beneficiaries, must be certain. This can be achieved by specifically naming each beneficiary or describing a class or classes of beneficiaries. Where a trust is being used exclusively for charitable purposes, there is no need to provide for certainty of beneficiaries. Where beneficiaries are described in a trust, the wording should be specific enough to avoid conflic...

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This Act came into force on 6 April 2010 and applies to all lifetime trusts created after that date. The new Act provides that:

A single 125 perpetuity period which will always apply, although individual trust wording may provide for a shorter period

Where the perpetuity period is difficult to establish, the trustees can execute a deed providing that the perpetuity period will become a fixed 100 years

Trustees are able to accumulate income for the entire trust period

The accumulation period for charitable trusts is now 21 years. This is to ensure that trust income is regularly used for the charitable purpose for which the trust was set up (previously it was indefinitely)

In the case of will trusts, where death occurred prior to this Act coming into force, or in the case where death occurred after the Act came into force but the will was made prior to this date, the existing perpetuities and accumulation periods apply.