A Student's Guide to Equity and Trusts

Where a settlor creates a trust it will be enforceable once the requisite formalities are satisfied. A key feature of a trustis the separation of the legal and the beneficial title. The trustee holds the legal title and the beneficiaries hold the equitable interest. In order for the trust to be enforceable by the beneficiaries there must be no doubt that the property has been validly passed to the trustee or that the settlor has made a valid declaration of a trust. Anyone can create a trust of personalty unless he/she is shown to be mentally ill and unable to understand the nature of the gift and or in the case of land under under the age of eighteen. There are strict formalities where trust property comprises land the formalities are very specific and must conform with the Law of Property Act 1925 s.53. A distinction is drawn between trusts of land which must be evidenced in writing and trusts of equitable interests which must be in writing at the time of the disposition. There are some exceptions to this rule for instance there is no disposition if both the legal and equitable interest are transferred together. Emphasis is placed on the role of formalities. It is important to be able to locate the legal and equitable title in particular to prevent fraud.