What is required to make a property trust? I am considering creating a trust. A property, funds and shares will be held under the trust, what are the legal requirements needed for a property to be held under a trust by trustee’s for a group of beneficiaries.
The Answer from Solicitors Online
For a property trust to be created, there must be three requirements that are fulfilled.
1) The intention to create a trust known as Certainty of Intention.
2) The clear identification of the property that is held under the trust known as Certainty of Subject Matter.
3) A clear identification of who the property on the trust is being held for known as Certainty of Objects.
Certainty of Intention
Certainty of Intention must exist for a trust to be legally valid. This means that intention of a property owner to create a property trust must be clear. In deciding whether there was a clear intention by a property owner to create a trust, a court can look at not only the words but also the actions of the property owner.
Certainty of Intention
The person for whom the property is being held for will be regarded as a beneficiary. While the person who is holding the property on the owner’s behalf will be regarded as a trustee.
Certainty of Subject Matter
For a trust to be legally valid there must be Certainty of Subject Matter. This means it must be clear what piece of land or property is actually held by the trust.
Difficulties can arise when the trust is for several properties, which the trustees controls under a trust fund.
If the fund is comprised of various types of properties, and the trustees are given the power to sell property from trust and buy other property to add to the trust. In this case confusion can arise over which piece of property is part of the trust, and which is not.
Certainty of Objects
For a trust to be legally valid there must be Certainty of Objects, this means certainty of the identification of the beneficiaries of the trust.
If a trust is for one person, then there is unlikely to be any doubts in regards to identity of the beneficiary. Difficulties can arise when there are several people who can qualify as beneficiaries of a trust. This is called a class of beneficiaries.
If the person who is creating the trust desires that each person in the class of beneficiaries has a definite share of the trust of the property. It will be advisable that a fixed trust is created, in a fixed trust each beneficiary will have a definite share of the trust.
For a fixed trust to exist the class of beneficiaries in the trust must be defined with enough precision that a complete list of members of the class can be drawn up.
Another option is for a discretionary trust to be created. In a discretionary trust the trustees decide who gets a share of the trust’s property. For a discretionary trust to exist it must be possible to say of any given person whether they are a member of the class of beneficiaries or not.
If you need advice on property trusts, you can speak to one of our Solicitors online right now.