Trusteeship involves onerous obligations, where a donor retains no responsibility for the property once the gift has been made.
Difficulty has been found in providing a comprehensive definition of a trust but various authors have made attempts to define the term trust.
A trust is a relationship which subsists when a person called the trustee is compelled by a court of Equity to hold property, whether real or personal, and whether by legal or equitable title for the benefit of some persons, of whom the trustee himself may be one and who are called cestui que trust or beneficiaries, or for some object permitted by law; in such a way that the real benefit of the property accrues not to the trustee, as such, but to the beneficiaries or other objects of the trust.
1. Lord Coke’s Definition
Lord Coke defined a trust as “a confidence reposed in some other, not issuing out of the land but as a thing collateral thereto, annexed in privity to the estate of the land, and to the person touching the land, for which cestui que trust has no remedy but by subpoena in the Chancery.”
2. SIR ARTHUR UNDERHILL’S DEFINITION
Sir Arthur Underhill, the original author of the leading practitioners’ work which is now known as Underhill and Hayton, Law of Trusts and Trustees, described a trust as “an equitable obligation binding a person (who is called a trustee) to deal with property over which he has control (which is called trust property), for the benefit of persons (who are called beneficiaries or cestuis que trust) of whom he may himself be one and any one of whom may enforce the obligation.
This is not satisfactory, for it is not wide enough to cover trusts for purposes rather than persons. Trust for charitable purposes (e.g. for the repair of a church or the prevention of cruelty to animals) may lack human beneficiaries and yet be valid as trusts and there may also be other trusts which lack beneficiaries who can enforce them.
1. There is a person called a Trustee
2. Trust Property
Underhill’s definition does not cover
- Charitable trusts.
- Trusts of imperfect obligation- such as a trust “for the maintenance and support of my dog Tigger” –this may well amount to a valid trust but is a trust of imperfect obligation because Tigger cannot enforce it.
The Successive editors of what is now Underhill and Hayton have, however, pointed out that, even though charitable trusts are outside the scope of the work, they are in any event covered by the definition, simply because such a trust is for the benefit of persons, namely the public, on whose behalf the Attorney General may intervene.
3. Lewin’s Definition
Lewin on Trusts adopts a rather more comprehensive definition, which is based on a definition given by Mayo J. in Re Scott.
“the word ‘trust’ refers to the duty or aggregate accumulation of obligations that rest upon a person described as trustee. The responsibilities are in relation to property held by him, or under his control. That property he will be compelled by a court in its equitable jurisdiction to administer in the manner lawfully prescribed by the trust instrument, or where there be no specific provision written or oral, or to the extent that such provision is invalid or lacking, in accordance with equitable principles. As a consequence the administration will be in such a manner that the consequential benefits and advantages accrue, not to the trustee, but to the persons called cestui que trust, or beneficiaries, if there be any; if not, for some purpose which the law will recognise and enforce.”
This definition is an improvement on Underhill’s definition.
1. Duties and obligations are clearly expressed;
2. Trust Instrument;
3. Beneficiaries do not have to be persons –purpose which takes care of charities etc.
A trustee may be a beneficiary, in which case advantages will accrue in his favour to the extent of his beneficial interest.
4. Definition in Hague Convention on Law of Trusts:
This has been incorporated into English Law by the UK Recognition of Trusts Act 1987 and under Article 2 of that convention, a trust is defined as follows:-
For the purpose of this convention, the word ‘trust’ refers to the legal relationships created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust has the following characteristics—
(a) the assets constitute a separate fund and are not part of the trustee’s own estate;
(b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;
(c) The trustee has the power and duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law.
The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.
The PURPOSE OF THE CONVENTION was twofold:
(i) to provide rules by which the courts of signatory states can uniformly determine the jurisdiction by rules of trust law trusts with international dimensions are;
(ii) to provide some means of dealing with trusts in jurisdiction where the trust concept is unknown. When property situated in such jurisdictions becomes the subject matter of a trust, problems potentially arise because it can be extremely difficult to convince the authorities of the jurisdiction in question that the trustees are not the beneficial owners of the trust property.
The definition has added the following to the previous definitions:
The characteristics of a trust;
the trust can be created during the lifetime of the settlor or after his death.
it touches on the powers and duties or the trustee.
Main elements of a trust
1. Equity/equitable jurisdiction. It is a creature of equity rather than common law.
2. There is an equitable obligation – an imperative duty.
3. There is a trustee-beneficiary relationship.
4. There is property constituting the subject matter.
5. There is duality of ownership – the trust separates legal ownership of trust property from its equitable or beneficial ownership.
5. Keeton in his book Keeton Law of Trust defines trust as
“the relationship which arises whenever a person called the trustee is compelled in equity to hold property for the benefit of some persons or for some object in such a way that the real benefit of the property accrues not to the Trustee but to the beneficiaries or other objects of the trust.
Snell is of the opinion that Keeton definition is the more satisfactory because it encompasses a wider area in which objects are confined.
6. The Trustee Act Cap 167 Laws of Kenya does not contain any definition of the word Trust but its attempt is a negative and inclusive definition which seeks to show the types of transactions to which the Act applies and does not apply.
Section 2 of Trustee Act Cap 167 – contains words that:
Trust does not include the duties incidents to an estate conveyed by way of mortgage but with this exception the expressions trust and trustee extend to implied or constructive trusts and to cases where the trustee has a beneficial interest in the trust property and to the duties incident to the office of a personal representative and Trustee where the context admits includes a personal representative.