Trust disputes—establishment and avoidance of trusts
Trust disputes—establishment and avoidance of trusts

The following Private Client practice note provides comprehensive and up to date legal information covering:

  • Trust disputes—establishment and avoidance of trusts
  • Establishment
  • Avoidance

There is no possibility of claiming a breach of trust or asking for an administration order in respect of a trust if it cannot be proved that one actually exists. On the other side of the coin, from a potential defendant's point of view, the proof that there is not a trust will let them off the hook.

Establishment

A trust may be created by a settlor in one of two ways:

  1. by a declaration that they (as trustees) hold particular property absolutely for another or

  2. by a transfer of assets to independent trustees on the basis that they will hold the property for specific individuals

No matter what route is chosen, the declaration must be irrevocable and the trust must be fully constituted. In practical terms, as soon as the settlor has done everything to effect a transfer of the property then the settlement will be irrevocable. The test is whether anything remains to be done by the settlor and not by the beneficiaries or trustees.

A basic formulation of the main principles of the establishment of a trust can be shown thus:

Declaration of trustTransfer to trustees
Settlor declares that they hold property for others absolutelyTrustees agree that they hold property on trust for others
The declaration or transfer is irrevocable unless a power of revocation is reserved
Settlor must be unequivocal

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