Chapter 4 Constitution - CHAPTER 4 CONSTITUTION OF A TRUST Intro A settlor may give a gift by three methods(1 an outright transfer(2 a transfer on trust

Chapter 4 Constitution - CHAPTER 4 CONSTITUTION OF A TRUST...

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C HAPTER 4: C ONSTITUTION OF A T RUST Intro: A settlor may give a gift by three methods: (1) an outright transfer; (2) a transfer on trust to a trustee; or (3) a self-declaration of trust. An imperfect gift can only arise in the first two cases, and a gift would be imperfect if the transfer of title of the subject matter of the gift does not takes place from the settlor's name to the trustees. There can be no possibility of an imperfect gift in the third case because no formalities of transfer of rights are necessary. What is the importance of constitutive requirements? In a perfect gift, beneficiaries can enforce the trust obligations against the trustee and the settlor cannot revoke a perfectly constituted trust, irrespective of the facts that beneficiaries are still volunteers. The exact constitutive requirements of a trust depend upon the nature of the property forming the subject-matter. In case of unregistered land, execution of a deed is necessary, whereas, in registered land, the trustee will need to be registered as proprietor on the register of title. In case of chattels (including cash), it has to be conveyed by either deed or delivery. In case of chose in action, this depends upon the different types of chose in action. In case of shares, for example, they can only be transferred by the recording of the transfer in the company’s books by the company secretary. I.) Equity Will Not Assist a Volunteer: The general attitude of the courts is reflected by Turner LJ’s statement in “Milroy v. Lord” : “ …For there is no equity in this court to perfect an imperfect gift ”. In that case, a settlor passed his share to his attorney to hold them on trust for the plaintiff. But the only valid transfer of the shares, registering M as owner of the shares, was never carried out. It was held that no valid trust had been created. According to Turner LJ, in order to create a valid and effectual settlement, the settlor must have done everything which, according to the nature of the property as subject-matter of the settlement, was necessary to be done in order to transfer the property. If the settlor's chosen mode of donation fails, the court will not perfect the gift by allowing it to take effect by other modes. This case goes further to state that the beneficiary cannot allege in an imperfect gift that the settlor constituted to declare himself a trustee. In “Richard v. Delbridge ”, D decided to gift his lease of premises and business to his grandson R, who was an infant. He signed a memorandum and gave it to R’s mother, but before making a reference to the gift in his will he died. It was held that no self-declaratory trust was created: “ It is necessary to show, not only an intention to benefit someone; but an
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Constitution of a Trust 2 intention to be trustee for that person ”. According to “Choitram v.
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