nature and classification of trusts

Trust refers to the legal relationship that is created inter vivos or upon death by a person, the settlor, when assets have been placed under a trustee for the benefit or a beneficiary or for a particular purpose. It is an equitable obligation binding on a person known as the trustee to deal with property over which he has control known as the trust property for the benefit of persons known as the beneficiaries or cestui que trust, of whom the trustee himself may be one.

A trust may be created inter vivos, that is, during the lifetime of the settlor, or at the death of a settlor by will or by intestacy. A trust may be created inter vivos by deed or in writing other than by way of a deed, orally or by conduct. Irrespective of the form which the trust takes, the trust becomes effective from the date of the execution of the document or statement. On the other hand, trusts created by wills or on intestacies take effect on the death of the testator or person dying intestate.

The three certainties in the law of trusts are certainty of intention, certainty of subject matter and certainty of objects. Knight v. Knight (1840) 3 Beav. 148.

The following are the characteristics of a trust:

• 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 another person on the 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 following are the uses of trust:

• a. Trust is used as a means of financial support and life insurance for a settlor who is incapacitated or having some disabilities or as a security during old age.
• b. A trust can also be used to support a spouse in the event of one of the spouse dying before the other,
• c. A trust can be set up for the education endowment of settlor’s children or other persons who may be underage at the time of the settlor’s death.
• d. Trust may also be used to as a means of giving out gifts or transferring property to loved ones, family members or other objects.
• e. A trust can equally be used to benefit or improve a definite section of the society or such a section of the general public capable of being made certain.

A distinctive feature of classification of trusts is according to use or object. Hence, most names of trusts are reflective of their purposes or objects. A first and major classification of trusts is into private, public or charitable trusts. Trusts are further divided into other compartments of express, constructive, implied, resulting trusts, ministerial or instrumental trusts and discretionary trusts.