Proving Declaration of Trust and Effecting Disposition of Beneficiary’s Interest

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Proving declaration of trust and effecting disposition of beneficiary’s interest

Proving declaration of trust:

In order to prove declaration of trust all types of evidence are admissible.

a) Trust of land where the declaration has to be manifested and proved by some writing (Section 7 of Statute of Fraud Act 1677; Section 53(1)(b) of Law of Property Act 1925). The reason for this rule is to prevent fraud (Youdan). The written evidence can antedates or postdate the declaration of trust. b) Testamentary trust/trust executed after death by will (will be discussed in the chapter of secret trust).

Consequence of oral declaration in case of trust of land:
a) An oral declaration is perfectly valid because the section 53(1)(b) is an evidential section. b) But problem arises during litigation when the declaration is challenged. c) It is often said that, though mistakenly, without written evidence a declaration of trust is valid but unenforceable. d) This is based on an analogy with the section 40(1) of LPA 1925 but this section was repealed in 1989. e) There are two reasons for this analogy to be false:

i) Section 53(1)(b) is concerned about proof and section 40(1) was concerned about enforceability as apparent from the wordings of the sections. ii) Section 40(1) had been overruled back in 1989.

f) Subject guide is of the view that if a declaration of trust cannot be proved by evidence then there is no trust at all, not a valid but unenforceable one.

Exceptions to section 53(1)(b):

a) Common Law exception: Oral evidence can be admissible in order to prevent a fraud. For example, a trustee himself would commit a fraud if he were allowed to shelter behind the statutory provision and deny the declaration of trust (Rochefoucauld). b) This exception is only applicable in case of express trust. c) Statutory exception: The section 53(1)(b) is not applicable in case of resulting, implied or constructive...