Creation of Trusts

CREATION OF TRUSTS
Capacity to Create Trusts

• There is no special capacity required to create a Trust except that anyone who has
the mental and physical capacity or right to convey or transfer property can create
a trust in relation to that property. A Settlor must thus be of a sound mind and of
the required age of majority.
• It also need not take a particular form and therefore the word trust need not be
used.
Formalities for Creating a Trust
• Where the trust relates to movable property there is no need for writing and it can
be created orally.
• Where however the subject matter of the trust is immovable property then
sections 1 & 2 of NRCD 175 must be complied with since it involves a conveyance
of land.
Despite the above there are also three formal basic requirements for the creation of a
trust. These requirements are known as the Certainties of Trusts.
These requirements of certainties only apply to express trust and are irrelevant under
implied, resulting and constructive trusts.
Certainties of Trusts: These are Certainty of Intention/words, Certainty of Subject
matter and Certainty of Objects
See the case of Knight v Knight (1840) 49 E.R. 58 .The absence of any of these will
not create an express trust.
Certainty of Words and Intention

• Although no particular form of words is required, the settler or testator must
use words which clearly show an intention to create a trust.
• The Courts have held that an obligation or duty must be imposed on the person
in whom the legal interest is vested to use the property for the benefit of
others. Thus if the words used simply indicate a wish, desire or preference by
the settlor for the person holding the legal interest to use the property for
certain ends, then a trust will not be said to have been created.
• The trust must be created by clear mandatory words and not precatory and not
leave the legal interest holder with any discretion. Where the words used are
precatory or an admonition, the transferee holds both the legal and equitable
interest and a trust is not created. Re Adams and Kensington Vestry 1884 27 Ch.
D. 394, Gyesi v Quagraine [1963] 2 GLR 161, Sey v Sey [1963] 2 GLR 220
Certainty of Subject Matter
• This relates to the subject of the trust and the interest in the subject matter.
The particular property known as corpus for the trust must be sufficiently
described otherwise no trust can be created.
• There must also be a sufficient quantum of interest in the corpus (property)
which should be held in trust, whether a freehold, leasehold or life interest.
• Where the corpus has been identified without the sufficient quantum, then S
13(2) of the NRCD 175 applies if it involves an immovable property, that is the
rights and interest of the transferor/settler is what shall pass unless a contrary
intention applies. Nemo dat so no greater interest shall pass than what the
settlor has. Vague descriptions of the property and interest are thus
unacceptable. In the Estate of Last [1958] P. 137.
• Where a trust fails due to lack of certainty of subject matter and S 13(2) is not
applicable then the holder/trustee is to hold the property in resulting trust for
the settlor. Re Clarke [1923] 2 Ch. 407
• Where the corpus has been clearly identified without the interest of each of the
beneficiaries, equality is equity or equity is equality and each of the
beneficiaries will have an equal share.
Certainty of Objects
• Persons to be benefited from the trust must be clearly identifiable.
• The beneficiaries need not be natural beings but non-humans or artificial
beings will also suffice. If there are no persons whose benefit the trust is
created then there is no trust. Re Wood [1949] Ch. 498 .
• The courts are strict on this and therefore if the beneficiaries are
unascertainable then there is no valid trust. Re Vandervell’s Trust No 2 1974
Ch. 269 at 319 where Lord Denning said that ‘It is clear law that a trust
(other than a charitable trust) must be for ascertainable beneficiaries.’
• Where this is absent the trustee holds the trust as a resulting trust for the
settlor. Re Carville [1937] 4 All E.R. 464, Mamavi v. West Africa Building Ltd
[1965] GLR 216
Note: Trust may also usually be created by Wills and it has to comply with S1 &
2 of the NRCD 175 if it is immovable property by being in writing and signed by
the testator except under privileged or Armed Forces Wills.
Legal Effect of absence of any of the Certainties
• All the three certainties must be present and the absence of one will cast
doubts on the other and thus invalidate an express Trust.
• Where this happens, a resulting trust is created in favour of the settlor.
Missouri Bank v Rayner (1882) 7 App. Cases 321
Secret Trusts
It is fully possible that there is a trust document which does not disclose a trust
on the face of it. This is referred to as a secret trust.
• Normally this is created in a Will and the recipient of the property may be
kept entirely secret by not being disclosed in the will.
• It is used by persons to create a trust for people whose identity they wish to
conceal. For instance mistresses and children born out of wedlock. As such
instead of leaving a property by a will directly to such a person you may leave
it with a trusted friend and on the face of the will it does not show the
identity of the beneficiary but in reality it has been agreed that it would be
passed on to the unrevealed beneficiary. Blackwell v Blackwell [1929] AC 318.
Types of Secret Trusts: A trust may be fully secret or half-secret.
Fully Secret Trusts:

• A trust is said to be fully secret when the trust document on the face of it
does not create a trust but there is simply a conveyance. However there is a
second document which indicates that the transferee is to hold the property
in trust for the benefit of others with reference to the terms of the trust.
• Where the trust is fully secret and it is being created by a Will then the
legatee or devisee holding it in trust must be communicated to before the
death of the testator.
• If the intention to create a trust is not communicated to him before the death
of the testator then no trust is created and he will hold it in resulting in favour
of the Testator’s Estate. Boyes v. Carritt 1884 26 Ch. D. 531
Half Secret Trusts:
A half secret trust is distinct from a fully secret trust.
• With half secret trusts, the instrument indicates that there is a trust but
the terms of the trust do not fully or sufficiently appear on the trust
instrument or the will. It may be that the trustee is not named and details
and particulars of the trust are also left out.
• This may create its own problems as the Devisee Trustee may use his
discretion to decide the terms of the trust and at what point should the
trust take effect.
• It is thus prudent that the particulars must be communicated to the

trustee devisee before the death of the testator
PUBLIC TRUSTS (Popularly called Charitable Trusts)
This is a kind of trusts whose object is the public welfare and not a particular
private individual or persons. The beneficiaries are the general public though
it may confer incidental benefit on a private individual/person.
What is most important is the meaning of the word “Charity”. Commissioner

of Income Tax v. Pensel [1891] A.C.531.
A Charitable Trust must fall into at least one of these categories or purposes.
 Charity – Something for relief of poverty, incapacitation or age
 Advancement of education
 Advancement of religion
 Omnibus of any other purpose beneficial for the charity not falling under 1-
3.
 Care of orphans and advancement of health and benefit to community
National Anti-Vivisection Society v. Inland Revenue Commissioner [1948] A.C
496
Nature of Public/Charitable Trusts
By virtue of their nature ,

• The beneficiaries are the general public
• Their income or profits are generally exempted from income tax.
• They are enforced by the AG
• They are not affected by the rule against perpetuity
• They cannot fail by virtue of lack of any of the certainties ones the trust
shows that the intention is to devote the property to charity.
Exception: Cases are to the effect that where the object of a trust/body is
political or involves campaigning for the change of the government/law of the
community such a society is not a charitable trust for this purpose.

Creation of Trusts

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CREATION OF TRUSTS

Capacity to Create Trusts

Certainty of Words and Intention

Fully Secret Trusts:

A half secret trust is distinct from a fully secret trust.

• It is thus prudent that the particulars must be communicated to the

What is most important is the meaning of the word “Charity”. Commissioner

By virtue of their nature ,

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