ABSTRACT
This chapter considers how equity treats the creation of trusts and it will explore some of the main reasons why trusts are used at all by settlors. The parent acting as settlor might express the child’s equitable interest as being subject to a power held by the settlor to terminate the trust in the event that the child performed one of a specified type of action. The settlor must constitute the trust, which means that legal title in the trust property must be vested in the trustee(s) by the settlor. A trust is particularly useful in commercial situations to guard against the insolvency of the other party to a contract. In the trusts context, the importance of a covenant would be an obligation entered into by a person to settle specified property on trust for the benefit of other people.
