4. Effective disposition of benefit: constitution of trusts

Abstract

This chapter explains the reasons why a trust must be completely constituted in order to be valid and discusses the steps that must be taken in order to constitute a trust. Constitution matters because the beneficiaries of an incompletely constituted trust are ‘mere volunteers’ and therefore will not be assisted by equity. In other words, they do not have any rights in the trust property and thus cannot enforce the trust in court. Following the law, equity ‘will not assist a volunteer’ and ‘will not perfect an imperfected gift’. In order to have a ‘perfect’ gift, the donor must actually complete the disposition of the subject matter in favour of the intended donee or execute a formal ‘deed of gift’. The chapter also considers various modes of constitution of trusts, the court ruling in Strong v. Bird, and gifts made in contemplation of death.