What is a Trust?

What is a Trust? Types of Trusts | Disinherited Estate Litigation

“A trust is the relationship, which is arises whenever a person called the trustee is compelled in equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons of whom he may be one, and who are turned beneficiaries, or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustees, but to the beneficiaries or other objects of the trust”. Donovan Waters –The Law of Trusts In Canada

A trust is not a separate legal entity such as a corporation, but is instead a relationship that depends on trust property to exist. Bronson v Hewitt 2013 BCCA 367.

A trust is not an entity capable of holding property or commencing proceedings, such must be instead done in the name of the trustee. The Vincent Taylor Family trust 2005 BCSC 11 at paras. 53-55

This relationship between the trustee, having duties and powers, and the beneficiary or purpose, having rights to compel performance of the trusts were obligations upon which the trustee holds, is the traditional way in which the trust is being analyzed.

The trust originated in the 1600s as a way of avoiding the statute of frauds, by creating what was then called a” use” of the asset or object.

Implied Trusts

The term “implied trust” is commonly used for two situations. The first occurs where the intention to create a trust is not clearly expressed, but has to be discovered from indirect and ambiguous language. This is all that distinguishes such an implied trust from the express trust. A second common use is where one person has gratuitously transferred his property to another, or paid for property and had the property put into another’s name. The intention of the transferor or purchaser is implied to be that the transferee is to hold the property on trust for the transferor or purchaser. The implication arises out of the fact that Equity assumes bargains, not gifts, and requires the donee to prove that a gift was intended.

Intentional Trusts

To demonstrate the creation of an intentional trust, the evidence must establish three certainties:

  • certainty of intention to create the trust,
  • certainty of the subject of the trust,
  • and certainty of the trust object: Waters at p 140 and following; Tozer v Bank of Nova Scotia, 2012 NBCA 57 at paras 10-12.

It is not necessary that the trust be set out fully in a document. It may be construed from conduct, or from documents and conduct taken together. See, for instance, Elliott (Litigation Guardian of) v Elliott Estate, [2008] OJ No 4941 (SCJ):

13 Technical words are not required.

As Waters put it at p 141:

There is no need for any technical words or expressions for the creation of the trust. Equity is concerned with discovering the intention to create a trust; provided it can be established that the transferor had such an intention, a trust is set up.

14 This is so whether the intentional trust is created by the settlement of property upon a trustee, or by declaration by the owner of property of an intention to constitute himself or herself a trustee of that property. Again, it is not necessary that the donor use the words, “I declare myself a trustee”. Words of any kind and even conduct are sufficient provided it is satisfactorily shown that the donor did in fact intend to constitute himself or herself a trustee: Waters at p 204.