07_Trusts - Property II: Acquisitions and Dealings 3 Trusts...

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Property II: Acquisitions and Dealings 3 – Trusts Page 1 of 60 P ART III T RUSTS I Express Trusts A Definition A trust is an ownership structure, developed by courts of equity, which divides legal and beneficial rights to an object of property among two separate entities. The cestui que trust , or trustee, is said to hold legal title ‘on trust’ for the beneficiary, who holds equitable (beneficial) title. There are several kinds of trusts, which are now considered in turn: Express trust A trust arising by written declaration of the parties; Resulting trust A trust inferred by law from unequal contributions made to a purchase price, subject to contrary presumption or evidence of actual intention as to beneficial ownership; Common intention constructive trust A trust imposed by law to give effect to the expressed common intention of the parties, where it would be equitable fraud to allow a party to resile upon that intention; Unconscionability constructive trust A new species of constructive trust imposed by law regardless of the parties’ intentions, where it would be unconscionable not to take account of each party’s post-purchase contributions or other conduct. The express trust most commonly arises in a commercial context because it confers several taxation advantages (the beneficiary under a trust is said not to own the property for taxation purposes, but can still enjoy its benefits, as by occupation or usage). The other kinds of trust are more commonly associated with domestic or familial living arrangements — often arising between spouses, siblings or other cohabitees. B Formalities For an express trust to be effective in law, the declarer must comply with several formality requirements. The formal requirements for the creation of an express trust are set out in s 53(1) of the Property Law Act 1958 (Vic) (‘ PLA ’): Section 53: (1) … (a) no interest in land can be created or disposed of unless in writing and signed by person creating it (or agent); (b) declarations of trust respecting land or any interest therein must be manifested and proved by some writing and signed by the person who is able to declare the trust; and
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Property II: Acquisitions and Dealings 3 – Trusts Page 2 of 60 (c) disposition of existing equitable interest or trust must also be in writing . However, trusts that are implied by operation of law (constructive trusts) or legal presumptions (resulting trusts) do not need to be formally declared. They are, by the nature, exempt from the writing requirements: PLA s 53(2): Section 53: (2) This section shall not affect the creation or operation of resulting , implied or constructive trusts . In the case of express trusts, formality rules remain important. An oral declaration of trust is insufficient to create a trust ( Wratten v Hunter ). In such circumstances, the interest will be unenforceable in equity. Wratten v Hunter
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This note was uploaded on 08/17/2010 for the course BUSLAW 730-462 taught by Professor N/a during the Three '10 term at Melbourne Business School.

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07_Trusts - Property II: Acquisitions and Dealings 3 Trusts...

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