CLASSIFICATION OF TRUSTS

Trusts can be divided into three primary categories: those expressly created; those where an intention to create can be inferred from the facts; and those that are imposed by the courts on the basis of fairness.

The express trust arises when the settlor expresses a clear intention to establish a trust and complies with all of the relevant formalities and procedures for properly creating the trust. The express trust can only exist when the settlor expressly intends it. The Express Trust is further subdivided into an express trust by transfer and an express trust by declaration. An express trust by transfer will arise where the settlor expresses an intention to create a trust by transferring trust property to a third- party trustee for the benefit of a named beneficiary. A declaration of trust will arise where the settlor declares herself to be trustee of the trust property for the benefit of a named beneficiary. For an express trust by transfer, the settlor must legally transfer the trust property into the name of the trustee, with proper compliance of the necessary legal requirements for a valid transfer of the property. On the other hand, a declaration of trust will arise where the requisite intention to transform an owner into a trustee of property can be established. Essentially, as the property is already vested in the owner, there is no need for a transfer in a declaration trust. Nonetheless, the owner must sufficiently prove, through words or conduct, his intent to declare a trust. Where an express trust exists, the settlor must clearly state who the trustee will be, the trust property and the beneficiaries. If the trust is vague or unclear on any of these issues, the trust will not be enforceable.

A resulting trust will arise where an intention to create an express trust can be found but the settlor has not carried out the requisite acts for the valid enforcement of such a trust. These types of Trusts are further sub divided into the automatic resulting trust and the presumed resulting trust. The automatic resulting trust arises where an express trust was intended, but has failed for some reason. For example, where property is transferred into the name of a trustee and the settlor sets out that the beneficiary is to hold a life interest in the trust property, but does not set out what is to happen after this, a resulting trust may arise over the future reversion so that the trustee holds it under a resulting trust back for the benefit of the settlor. The presumed resulting trust will arise where the intention to create an express trust is inferred and the presumption is not rebutted. The most common situation where such a presumption may arise is where one party has paid the full purchase price, or a contribution of the purchase price, without having this payment reflected on the legal title. In such a case, the court will generally presume that the legal title holder retains the title on resulting trust to the extent of the contribution. Presumptive resulting trusts are based upon inferred intention from the circumstances but may be rebutted by proof of an intention to advance a benefit.

A constructive trust is imposed by a court in situations where it would be against the conscience of the court to deny the existence of a beneficial interest. Constructive trusts will apply irrespective of intention. The constructive trust has both an institutional and a remedial perspective because, once established, it resembles the institutional features of a trust. However, it cannot arise until a court, exercising a primarily remedial focus, determines that it should apply on the facts.