Equity And Trusts Sussex University

2751 words - 12 pages

Can imperfect gifts or incomplete declaration of trusts can be validated?
To form a valid trust, it is a necessary that the gift or the trust property be completely constituted. This requires the conferring of the trust property in the trustees for the benefit of the beneficiaries. This problem question deals with incomplete formalities, imperfect constituted gifts and incomplete declaration gift of trusts. Through case laws, I will identify Lord Marchmain imperfect gifts and declaration of trusts and will demonstrate the most effective method of assessing such gifts and trusts and to determine whether the gifts or declaration of trusts can be held valid in equity and in law.
Part (A)
To begin with, Lord Marchmain forgoing of his debt to Charles deals with defective execution of inter vivos “imperfect gift”[footnoteRef:1] of personal property. Lord Marchmain being the donor of the gift did not follow the required formalities in forgoing of debt to Charles, which must take place for it to be enforceable in law. Whereas, in law of equity, to provide an individual with a gift without any consideration is perceived as voluntarily, and the potential beneficiaries or the donee will be regarded as a volunteer[footnoteRef:2]. Similarly, waiving Charles debt perhaps could be declared valid, however, the gift will not be enforceable or regarded as fully constituted until the donor effectively transfer the subject matter to the trustees or declare itself to be the trustee. As Turner LJ in Milroy v. Lord[footnoteRef:3], which concerns about unsuccessful shares stated ,“in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him”[footnoteRef:4]. In other words, it is necessary for the donor to do all the legal requirements for the gift of trust to be valid. Furthermore, Turner LJ establishes that a voluntary settlement may occur by a) an outright transfer by way of gift, b) by way of a transfer to trustees to hold on trust or c) by a declaration of trust[footnoteRef:5]. Therefore, Lord Marchmain forgoing of his loan to Charles without following the required formalities set out in Milroy v. Lord will not be enforceable in law and “equity will not assist a volunteer nor will it perfect an imperfect gift”. Lord Marchmain just by stating that he forgoes Charles debt will be deemed imperfect gift unless he fully constitutes the gift as required by the law and equity. [1: Luxton, P. (2012) noted that Arden L.J. in Pennington stated “…treat a gift as imperfect if it is not effective (or not yet effective) at law; but a gift can be perfect in equity before legal title is transferred”. p.2] [2: Pettit, P, H. in Equity and the Law of Trusts. Noted “a beneficiary under a trust is a volunteer unless either he has provided valuable consideration in...

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