English Trusts Law - Express Trust Formation

Express Trust Formation

See also: Express trusts, Creation of express trusts in English law, and English contract law

In its essence the word "trust" applies to any situation where one person holds property on behalf of another, and the law recognises obligations to use the property for the other's benefit. The primary situation in which a trust is formed is through the express intentions of a person, who "settles" property. In the most common sense, a settlor will give property to someone he trusts (a "trustee") to use it for someone he cares about (a "beneficiary"). The law's basic requirement in this arrangement is that a trust was truly "intended", and that a gift, bailment or agency relationship was not. In addition to requiring certainty about the settlor's intention, the courts suggest the terms of the trust should be sufficiently certain particularly regarding the property and who is to benefit. The courts also have a rule that a trust must ultimately be for people, and not for a purpose, so that if all beneficiaries are in agreement and of full age they may decide how to use the property themselves. The historical trend of construction of trusts is to find a way to enforce them. If, however, the trust is construed as being for a charitable purpose, then public policy is to always ensure it is enforced. Charitable trusts are one of a number of specific trust types, which have special regulation, under the Charities Act 2006. Very detailed rules also exist for pension trusts, for instance with the Pensions Act 1995, where people save for retirement, particularly to make compulsory the duties owed by pension trustees, and requiring minimum funding in advance of payouts. Investment trusts also attract detailed regulation, for instance under the Financial Services and Markets Act 2000, especially to ensure that investors have full information about the financial products they buy.