The Creation of Express Trusts

• Author: EILEEN E. GILLESE
• Pages: 39-58

39

CHA PTER 3

THE CREATION

OF EXPRESS TRUSTS

A. INTRODUC TION

An express tr ust is one that is created intentionally; it is the conscious

act of a person to transfer property to one par ty, with the stipulation

that the property is to b e held for the benef‌it of another. It is to be con-

trasted with re sulting and constructive trust s, which arise by operation

of la w.

Express tr usts can be made in favour of persons or purpo ses. In this

chapter, we will consider the four requirements th at all valid express

private trusts h ave to meet. First, the requirements related to capacit y

of the parties. Second, the need for three certainties: certainty of inten-

tion to create a trust, certainty of subject matter, and certainty of ob-

jects. Third, the requirement th at the trust must be constituted — that

the trust propert y must be transferred to the t rustees. And, fourth, the

requirement that all the requisite formalities must be met. The chapter

concludes with a discus sion of the legal limits to the creation of tr usts.

B. C A PACIT Y

In discussing capacity, it is useful to consider separately the positions

of the creator of the trust, the trustee, and the benef‌iciar y.

THE LAW OF TRUSTS40

There are three potential inc apacities for the creator of a trust: m inor-

ity, mental incompetency, and bankruptcy. In the Canadian common law

jurisdictions, minors may not make valid will s unless they fall w ithin

certain statutor y exceptions, such as where the minor is or has been

married, is contemplating marriage and the marriage subsequently oc-

curs, is a member of the Canadian Forces, or is a mariner or sea man in

the course of a voyage. A minor who cannot make a valid will cannot

create a valid testament ary trust. Fur ther, any inter vivos settleme nt

made by a minor is voidable at his option. In most Canadi an jurisdic-

tions, however, minors are permitted, with t he court’s approval, to en-

ter into ma rriage settlements.

A person found to be mentally incompetent cannot make a valid

will or inter v ivos settlement except as permitted by statute. Ban krupt

persons are subject to a number of statutory controls on their ability to

alienate their assets. Accordingly, a bankrupt cannot make a valid inte r

vivos settlement .

Anyone capable of holding property in his or her own right is ca-

pable of holding property as a trustee. Thus, any capacitated individual

or lim ited company can be a trustee. Because uni ncorporated associat ions

have no separate legal personality, they are incapable of holding title to

property and are incapable of acting as trustees. As we have seen, a t rust

is a relationship. Like an unincorporated association, it does not have a

separate legal personal ity so is incapable of holding title to propert y. It is

the trustee, and not the trust, that holds title to the trust property.1 It

is unwise to appoint a minor as trustee because a m inor is incapable of

making a valid conveyance of the trust property. Canadian common law

courts have the authority, under various provincia l statutes, to replace

trustees who are minors.

All persons, including minors, mentally incapacitated persons, bank-

rupts, and corporations, can be the benef‌ici aries of a trust. A t rust may

even benef‌it unborn or unascert ained persons. Incapacitated benef‌ici-

aries are usua lly represented by an off‌icial, such as the Public Trustee,

the Off‌icial Guardian, or the Guardian of Minors. Again, bec ause un-

incorporated associations have no separate legal personality, they are

incapable of being benef‌iciarie s of a trust. As we will see in Chapter

4, however, it is possible to transfer property to the trustees of an un-

incorpor ated association.

Trust benef‌iciaries may b e persons or purposes. When the object of

a trust is a pur pose, the purpose may be charitable or non-charitable;

1 Foo v Yakimetz, [2002] OJ No 3958 at para 72 (SCJ); Canon v Funds for Cana da

Foun dati on, 2010 ONSC 4517 at para 65.