ABSTRACT
It might be thought prudent at the start of any book on the law of trusts to attempt to define exactly what a ‘trust’ is. Unfortunately, that is not as easy as we might hope. Of course, the essential ingredients of a trust are well known: there is a ‘trustee’, who is the holder of the legal (or ‘paper’) title to property, and this person holds the trust property ‘on trust’ for the ‘beneficiary’ (or cestui que trust). The beneficiary is the equitable owner of the property and this is the person (or persons) to whom the real or ‘beneficial’ advantages of ownership will accrue. The interest enjoyed by the beneficiary is proprietary, or ‘in rem’. Thus, he is able to trace his property and recover it from any intermeddler with the exception of the bona fide transferee of the legal estate for value without notice. Further, although, as just indicated, the trustee usually holds the ‘legal’ title and the beneficiary holds the ‘equitable’ title, it is perfectly possible for an equitable owner to create a trust of that interest. In such cases, the first equitable owner is the trustee (as well as the beneficiary under the first trust!), holding an equitable interest on trust for a beneficiary. Sometimes this is known as a ‘sub-trust’. However, whatever the precise configuration of legal and equitable ownership, necessarily there is a relationship between the trustee and the beneficiary – sometimes referred to as a ‘fiduciary relationship’ – and it is clear that the former has certain responsibilities and duties to the latter. Furthermore, sometimes the property which is the subject matter of the trust – and this can be any property, tangible or intangible, real or personal – will have been provided by a ‘settlor’ or a ‘testator’ and it is they who have set up the trust either during his or her lifetime (settlor) or on death (testator). Indeed, in the case of a trust established by inter vivos gift (that is, not by will), the settlor and the trustee may be the same person and, in such cases, the settlor is said to have declared himself or herself trustee of the trust property. Finally, it should be noted that a trustee may also be a beneficiary under a trust. This quite often happens with trusts of cohabited property where the man may hold the property on trust for himself and his lover in some defined shares.
