Express trusts 

A trust separates the legal title to property, held by the trustee, from the beneficial interest, enjoyed by the beneficiary, and binds the trustee's conscience to hold the one for the other. It is equity's most important invention and the paradigm of the exclusive jurisdiction.

Distinguish it from neighbouring arrangements. A trustee is not an agent, because the trustee holds title and is not subject to the beneficiary's control. A trust is not a debt, because the beneficiary has a proprietary interest in identified property rather than a personal claim for a sum — which is why the beneficiary is protected on the trustee's insolvency and the creditor is not. A trust is not a contract, though a contract may create one.

Creating a trust

Two routes, and they are complete at different moments:

• Declaration. The owner declares themselves trustee of their own property. No transfer is needed; the trust is complete on declaration, provided the intention is manifested clearly. Nothing turns on the word "trust" being used, and using it does not by itself create one. Once validly declared, the trust stands: Byrnes v Kendle (2011) 243 CLR 253¹ holds that a trustee's own later conduct inconsistent with the trust does not retrospectively show it was never really intended.
• Transfer. The settlor transfers property to a trustee to hold on the trusts declared. The trust is complete only when the property is vested in the trustee, according to the rules for transferring that kind of property — registration for Torrens land and for shares, delivery for chattels, assignment for choses in action.

The three certainties

A valid express trust requires certainty of intention, of subject matter and of objects. They carry enough weight to be treated separately; see the article devoted to them.

Constitution, and the volunteer

Where a settlor intends to transfer property to a trustee but does not complete the transfer, the trust is incompletely constituted. Because equity will not assist a volunteer or perfect an imperfect gift, a beneficiary who gave no consideration cannot compel completion.

The exceptions matter as much as the rule:

• the settlor has done everything necessary to be done by them to effect the transfer, leaving only acts a third party must perform, such as registration;
• the intended trustee acquires the legal title in another capacity, for instance as the settlor's executor;
• a covenant to settle given for value, enforceable by those within the marriage consideration or who provided consideration;
• an unconscionable resiling from the transaction may found an estoppel.

An imperfect gift is not saved by construing it as a self-declaration of trust: the two are different intentions and the court will not substitute one for the other.

Formalities

Statute intervenes in three places, and the detail differs by jurisdiction:

• Land. Declarations of trust respecting land must be manifested and proved in writing signed by the person able to declare the trust. The requirement is evidentiary — an oral declaration is not void, but it is unenforceable until evidenced — and the statute will not be used as an instrument of fraud.
• Subsisting equitable interests. A disposition must be in writing signed by the disponor or their agent.
• Testamentary trusts. A trust taking effect on death must satisfy the will formalities of the jurisdiction. Secret and half-secret trusts are the recognised qualification, enforced against a conscience bound by the arrangement.

Resulting, implied and constructive trusts are expressly excepted from the writing requirements.

The beneficiary principle

A trust requires someone in whose favour the court can decree performance. A private trust for a purpose therefore fails for want of a beneficiary, subject to a small class of anomalous exceptions of long standing, such as trusts for the maintenance of particular animals or graves, which are tolerated rather than encouraged.

Charitable trusts are the substantial exception. They may be purpose trusts, need not have certain objects, may last indefinitely, and are enforced by the Attorney-General. The purpose must fall within a recognised head of charity and must be for the public benefit, with the heads now supplemented by Commonwealth charities legislation for regulatory purposes.

Applying this in a problem question

1. Identify the property, the intended trustee and the intended beneficiaries.
2. Ask whether the trust was created by declaration or transfer, and whether it is constituted.
3. Work through the three certainties.
4. Check the formalities for the kind of property and for the mode of creation.
5. If the trust fails, say what happens to the property — usually a resulting trust to the settlor or their estate.

Where the authority sits

Case law, with the trustee legislation and the property or conveyancing legislation of each jurisdiction supplying formalities, trustee powers and the statutory framework, and Commonwealth legislation governing charity registration.