‘The Nature of Trusts (Our first task sto form general idea of what rusts are! 1.1 A DEFINITION ‘Ths zest basic legal eoncepts are often not etsy to define wich complete precision, and trusts are no exception, ‘The difficulty arses pardy because, aaah lay macy ofthe concepts (including tras ar developed te tbchadgesrather than being enabishedby Actof Parliament sother or, thane ea were alogsther to vanquish its rival this would ao perag the emergence ofa cler-cut definition. But that doesnot norway hap- Ben For on thing, human afr re to complicated and comprenined toa only for clean answar For another, the definition Gcserg ofthe doctrine of precedent toe assembled fom judicial wtescnce ne fron Years: some from periods when one policy slant dominated, athere fom periods when another view had come tothe fore? So no definition of « trust can be given whichis beyond contention, fie interms ofits technics St wth the substance ofthelavor nea of is freedom from politcal controversy. It would thereon be entirely BE not Coffer a definition, but co move directly intosdisewsley, Fra aus points which might feature in eny definition and one Aifferent possible accounts of them. Such a discussion, certainly eannot‘The Nature of Trusts Probably easier to follow, and more rewarding, it something having the look of a definition, to situation in which property is vested in someone (trustee), who ie blgations, a 1,2 AN EXAMPLE Many ofthe ves of the ‘definition’ just offered are abstract or not mat- ters of ordinary usage. Si concrete example of «trust. ius undertaking, however. benoted thatthe ‘definition’ ofers two ara masin in which atrustcan arise: ‘either asa result ofthe conscio tions, or because some other logally significant c ‘The reference to ‘some other legally significan cific, hin jons and be made to doa wide range of work. Uwetakean example, however, we immediately focus upon the particular kind of situation, and upon illustrates, And we thereby hopefully to go some ents, the usefulness of giving an example vimother wants to give £100,000 to her bby grandson Adam. Ashe isso young, howeve, she doesnot want him simply to have all the money straight away. she might have kept it herself and paid ic over to him in amounts, and at times, of her own choosing. Bat, given her age, this is not astisfactory 19. The Ways in Which Trusts Can Come About 3 ‘option for her. So she makes 2 trust for him. She does so by transferring ‘the £100,000 toa trustee (aclose friend, maybe, or her bank) withinstruc- i income, to pay “umulated income on his eighteenth birthday, but xy out anything thac might be needed to give him a good ‘education, plus an annual allowance of £1,000 once he reaches his teens, that, 2saresult of the conscious creat mother, property is vested in at 8 defined way, ie to provide the we can also see that there are many respects ws For trusts which do not follow the pattern of the example. snow needs to be explored. Noother example would have avoided the danger of privileging its con- tenteny betterthan theexample us given, Butit ey nevertheless be asked ‘why the particular kindof situation inherent in that example should have been singled out for attention. This situation features an effort at structur- ing ofthe use of wealth between generations of family. This situation and characteristic of the principal use made of trusts as a matter of (though the example of Adam end his grandmother is much sim- ‘most real parallels) The trust concept was thus predominantly loped against the pol effort. Beginning from material such as the example should help us, there- fore, to understand and appraise many of the concept's features 1.3 THE WAYS IN WHICH TRUSTS CAN COME ABOUT ‘The grandmother in the example may have established her trust by pay- ing the money over to the trustee during her oven lifetime. If she did, essential to the idea of a trust. Trusts are also found in cases where they arenot consciously made in this way, but for one reason or another the cir- ‘cumstances demand that the holder of some property should nevertheless4 The Nature of Trasis as a trustee and subjected to duties concerning its handling . Trusts that arise because they are consciously made, lke the « these various circumstances in which constructive trusts ‘conscious actions ofa sectlorin the case of express trusts are ‘reasons for coming to the conclusion that someone who holdssome prop erty should be under a duty as to its handling. (There also exist ‘resulting ‘rusts’. These are truss in which the trustee, receiving the property from ‘nother person, holds iton trust for that very person. They are customar- idditional to express and constractive trusts, iow, however, they add nothing, for although st’ is left without explication, and thus read a8 an invitation to judges co impose such a trust whenever their own individual notions course that does not preclude innovation and developm ‘The contrast between the two positions, andthe bases 7 17, and 18. But few examples uwn from that discussion, may be transferred to someone on theunderstand- but a rule requiring such an theless to hold the property ‘on the agreed terms. Where property belongs to one person, buthe and another member of his family have operated on the und should be shared with the latter, a constructive trust ari to the understanding. And where an agent makes a prof imself by using his employer's property, that profit wll be subject toa constructive ‘rust. * War, and (ules the contest indicts otherwise) throushoat this book, muscune pronounsareintendedo refer tbc eres. 14 The Settlor 5 tis sometimessaid thacwhi xara (ecly within ini) 1.4 THE SETTLOR ‘An express trust therefore a the setlor to make a trust of asettlor, In the example given above, the grandmother) traisferred the property to the trustee in order for the latter to hold it on trust. This ossible forthe setlor and the trustee of a decision on the part of scan express trust must have himself. If the grandmother in the not perceived lh ing period of life to be short, but ‘wished to establish a trust (perhaps valuing its structured nature isnota transfer of property from butrather forthe property tobe with the truste, and for undera duty in regard to its handling. Tin a case where a constructive trust arises, indeed, the position will always be thatthe owner of some property will come under some duty to6 ‘The Nature of Trusts the property in acertain way, je will become trustee oft. There «a settlor, ea person whose intention to place his own property effectuated by the lew. ‘The grandmother in the example was a human being, Where a trust does have a settior, tor may alterna any other entity rec- in regard to the enjoy- it mightbea ‘legal (or juristc) person’, notably an incorporated company. 1.5 THE BENEFICIARY ‘The trustin the example was constructed sos to provide, ultimately, for payments to Adam. A person who has a claim to receive payments from a trustis known 282 ‘beneficizry’! Many trusts have atleast one benficiary ‘and, of those that do, most have tore than one. The benef ‘ments may be arranged concurrent shares’) or in succession to one an for hs lifetime, then to pay the capital the two. beneficiary may be either human being lke Adama or some other legal person.” Butmany trusts donot havea beneficiary, human or otherwise, st all. A rust might instead provide for payments towards the achievement of some purpose: for eximple, to investigate whether the plays attributed to Shakespeare were really the work of Bacon, orto establish and maintain 1 dogs’ home, or to provide a public recreation ground, or to further the sims of some organization, Such trusts without beneficiaries are called ‘purpose truss’. Collectively, beneficiaries and such purposes are called ‘objects’ of trusts. Many purpose trusts have certain characteristics— ‘to pay the income to Adam ony’), or in some mixture of 15 The Beneficiary 7 charitable purpose rrusts as described in section 12.3, but cording to ; no such trusts should be valid. The argument against ally referred to as ‘the beneficiary principle’, that trusts ‘must necessarily feature not merely duties upon the trastoes, but rights ‘on the part of beneficiaries amounting to something like an interest in against purpose trusts, b law regarding trusts that in him owing an obligation purely to himself, jing: he Would remain the absolute owner of the sts beneficiary may be the same person as its ‘express trust may stipalate that he will be its8 The Nature of Trusts practice, used above al so as to avoid certsin forms of taxation, It is also ‘but you cannot prove that I did soas a gift; and arguably in ce circumstances too. The law regarding resulting trusts is discussed fur- ther in Chapter 16. 1.6 THE TRUSTEE ‘The trust created by the grandmother in our example had one trustee. A or ien subsidiaries of banks), ‘peal or hei ‘trustees of express trusts, a constructive trust or a Ifthe settlor of an express trust confines himseif ro human of between two and four are commoner. We have seen that a trust need 1s opposed to a purpose, But in that we have noticed—express anc 5, for beneficiaries and for purposes, and so on—there has always And amongst all the learning on the sul ion to handle property in 2 unless there is also a person, the trustee, who is subject not take this step and the intended tru ‘may disclaim the trusteeship, in whict (or, if the settlor was acting by will, his execu else can be appointed trustee, Moreover, ifa trustee wishes subsequently 16 The Trustee 9 not to continue to act, i will generally be possible to relinquish the role So in practical terms, the agreement ofthe trustee comes close to being 4 requirement in express trusts. But the truste’s agreement is certainly ‘ot required in the case of other kinds of trusts. constructive trust will aise where the trustee has che relevant property and the circumstances we such that the law imposes such 2 trust. Ic is irrelevant whether the rastee agreesto the trust's imposition.’ On the other hand, such trustees too can-—and indeed should—commonly rid themselves of the role, by handing the property over tothe beneficiary, Tosee the trustecas important only sos to provide a repository of the trast obligations would, however, be to capture only ‘Trustees are important to crusts also for their own qualities, whether as ‘whether that person will in 2 more positive ‘sense conduct the trust—make the choices—ina way thatthe setorfinds heart, znd whose conception of ‘Adam's best interest feels, resonates with her own.) And the law too relies heav ities make to the operatio