Definitions relating to trusts
There is no legal definition of 'trust'. The working definition followed by HMRC1 defines a trust as an obligation binding a person (called the trustee) to hold or deal with property for the benefit of another person or class of persons (of which they may be a member). The word is often used interchangeably with 'settlement'2, although a trust is really a type of settlement. A settlement is broadly an arrangement that creates an interest in property for beneficiaries, without giving them the legal interest.
In this Division, references to a trust do not include unit trusts or venture capital trusts.
A trust is most often constituted by deed, by Will or by an order of the court. There are only a few specific circumstances where HMRC will ask to see trust deeds, such as during an enquiry3.
Express words are not necessary for a trust's creation, nor indeed any writing, though an express trust of land or any interest therein must be evidenced by writing4. The conduct of parties may give rise to the implication of a trust which will be enforced by the courts.
By operation of law there may arise a constructive trust, as where a stranger to an existing trust receives trust property in such circumstances that the courts would regard them as holding it on behalf of