What the subject covers
Trusts sits in FLK2 Session 1 with wills, land and accounts. The examinable material runs from how a trust comes into existence, through who owns what beneficially, to what happens when a trustee gets it wrong.
It is the subject candidates most often describe as abstract. The fix is to treat every question as a chain of tests applied in order: is there a valid trust, who holds the beneficial interest, what were the trustees obliged to do, and what follows from their failure.
Express trusts: certainty, formality, constitution
- The three certainties — intention, subject matter and objects — and the different tests for objects depending on whether the trust is fixed or discretionary.
- Formalities: the requirement of writing for declarations of trust over land and for dispositions of a subsisting equitable interest.
- Constitution: the trust must be properly constituted by transferring the property or declaring oneself trustee, with the limited equitable exceptions where a transfer is incomplete.
- Beneficiary principle and perpetuities in outline, and the purpose trusts the law tolerates.
A frequent question shape: a settlor who has said something ambiguous, with options offering a valid trust, a gift, a power and a failure. The certainties decide it.
Resulting and constructive trusts
Where a trust arises without anyone declaring one: a voluntary transfer or a purchase in another’s name, a failed express trust, or property held on terms it would be unconscionable to deny. Constructive trusts also catch the fiduciary who profits from their position and the third party who receives trust property or assists in a breach.
Trusts of the family home
The most heavily litigated corner of the subject and a reliable source of questions. The two starting points differ: joint legal title carries a presumption of joint beneficial ownership, while a sole name requires the claimant to establish an interest before arguing about its size.
Know what evidence counts — express discussions, direct contributions, and the wider course of dealing — and what does not, such as ordinary domestic expenditure without more. Questions here usually offer two defensible outcomes and one correct route.
Trustees: duties and powers
- Duties: to act in the beneficiaries’ interests, to act impartially between them, to take reasonable care, to act unanimously unless the trust provides otherwise, and not to profit or allow a conflict.
- Investment: the general power, the standard investment criteria, the need for advice, and periodic review.
- Delegation: what can be delegated, to whom, and the trustee’s continuing responsibility for supervision.
- Maintenance and advancement, and the beneficiaries’ power to bring the trust to an end where they are all of age and absolutely entitled.
- Appointment, retirement and removal of trustees.
Breach, remedies and tracing
The personal claim against the trustee and the measure of liability, the defences and the court’s power to relieve an honest trustee, and the position between trustees.
Then the proprietary route: following and tracing, the rules for mixed funds, and claims against third parties for knowing receipt or dishonest assistance. Tracing into a mixed bank account is examined more often than its complexity suggests, because the rules produce a definite answer.
Where the marks go
- Certainty of objects. Applying the fixed-trust test to a discretionary trust, or the reverse.
- Sole name versus joint names. The starting point decides the question, and candidates reach for the same analysis in both.
- Personal or proprietary. Options frequently offer a claim of the wrong kind against the right person.
- Overlap with land. A trust of the home is also a question about co-ownership and priority — revise it beside Land Law.
The session’s other subjects are in the FLK2 subject guide.