The Creation of Express Trusts

• Author: Eileen E. Gillese, Martha Milczynski
• Pages: 37-55

CHAP TER 3

THE CREATION

OF EXPRESS TRUSTS

A. INT RODUCTION

An express t rust is one that is created intentionally; it is the conscious

act of a person to transfer propert y to one party, with the stipulation that

the property is to be held for the benef‌it of another. It is to be contrasted

with resulting and constructive tr usts, which arise by operation of law.

Express tr usts can be made in favour of persons or pur poses. In this

chapter, we will consider the four requirements that all valid express

private trust s have to meet. First, the requirements related to c apacity

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

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

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

the trust propert y must be transferred to the trustee s. And, fourth, the

requirement that all the requi site formalities must be met. The chapter

concludes with a discussion of the legal limits to the creation of trusts.

B. CA PACITY

In discussing capacity, it is useful to consider separ ately the positions

of the creator of the trust, t he trustee, and the benef‌iciary.

There are three potential incapacities for the creator of a trust:

minority, mental incompetency, and bankruptcy. In the Canadian com-

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THE LAW OF TRUSTS38

mon law jurisdictions, minors may not make valid wills unle ss they

fall within certain statutory exceptions, such as where the minor is or

has been mar ried, is contemplating mar riage and the ma rriage subse-

quently occurs, is a member of the Can adian Forces, or is a mariner or

seaman in t he course of a voyage. A minor who cannot make a valid

will cannot create a valid testamentary trust. Further, any inter vivos

settlement made by a minor is voidable at hi s option. In most Canadian

jurisdict ions, however, minors are perm itted, with the court’s approval,

to enter into marriage settlements.

A person found to be mentally incompetent cannot make a valid

will or inter vivos settlement except as permitted by statute. Bankrupt

persons are subject to a number of statutory controls on t heir ability to

alienate their assets. Accordingly, a bankrupt cannot make a valid inter

vivos settlement.

Anyone capable of holding property in her own r ight is capable of

holding property as a tr ustee. Thus, any capacitated individual or limited

company can be a trustee. Because unincorporated associations have no

separate legal personality, they are incapable of holding title to property

and are incapable of acting as t rustees. It is unwise to appoint a minor as

trustee because a minor is incapable of mak ing a valid conveyance of the

trust property. Canadian common law courts have t he authority, under

various provinci al statutes, to replace tr ustees who are minors.

All persons, includi ng minors, mentally incapacitated persons,

bankrupts, and corporations, can be t he benef‌iciaries of a t rust. A

trust may even benef‌it unborn or unascertained persons. Incapacitated

benef‌iciaries are u sually represented by an off‌ici al, such as the Public

Trustee, the Off‌icial Guardian, or the Guardian of Minors. Again, be-

cause unincorporated a ssociations have no separate legal personality,

they are incapable of being benef‌iciaries of a tru st. As we will see in

chapter 4, however, it is possible to transfer property to the trustees of

an uninc orporate d association.

Trust benef‌iciaries may b e persons or purpose s. When the object

of a trust is a pur pose, the purpose may be char itable or non-charit-

able; both charitable and non-charitable pur pose trusts are dealt with

in chapter 4. In this chapter, the discussion is limited to objects who

are persons.

C. THE THR EE CERTAINTIES

In order to create a trust, there must be cer tainty of intention to create

the trust, the subject matter of the trust must be desc ribed with such