This Practice Note written by Yvonne Evans, Law Lecturer, University of Dundee, summarises how trusts arise under Scottish law. It considers both the express creation of trusts, as well as trusts arising by operation of law.
Express creation of trusts
A trust is constituted expressly where the owner of property (the truster) transfers property to trustees to hold for defined purposes on behalf of the beneficiaries. Constitution of the trust is completed by delivery of the trust property or trust deed to the trustee.
‘Trust deed’ is defined by the Trusts (Scotland) Act 1921 (T(S)A 1921) as meaning:
- any deed or other writing, private or local Act of Parliament, royal charter, or resolution of any corporation or ecclesiastical body, constituting any trust, and
- any decree, deed, or other writing appointing a judicial factor
A trust is usually expressly constituted inter vivos by a declaration of trust or mortis causa by a trust disposition and settlement or Will. A Will or a written lifetime trust must be subscribed by the granter at the end of the last page in order to be formally valid.
A trust could be created orally, but that may create evidential difficulties. Writing is required for a transfer of land or where a person declares themselves to be the trustee of their own property.
No particular form of words is required to create a trust. It is not necessary that the word ‘trust’ should be used, but there must be sufficient evidence of intention on the part of the truster to create a trust.
The essentials of creating a validly constituted trust are:
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