Introduction to Trust Law

Introduction

A **trust** is one of equity's most powerful and distinctive creations. At its heart it is a **fiduciary relationship** in which one person (the **trustee**) holds the **legal title** to property for the benefit of another (the **beneficiary**), who holds the **equitable (beneficial) title**. This first chapter introduces the **core vocabulary** of trust law — settlor, trustee, beneficiary — and the **principal classifications** you must master for SQE1 FLK2: **express v implied trusts**, **private v charitable trusts**, **fixed v discretionary trusts**, and **resulting v constructive trusts**. It also traces the **historical roots** of the trust and explains its **continuing importance** in modern asset management, estate planning and commercial practice.

Assessment focus

For the SQE1 FLK2 assessment you must apply the core principles of trust law at the level of a **competent newly qualified solicitor** to realistic client-based and ethical problems. The SRA Functioning Legal Knowledge statement for Trusts covers **express and implied trusts**, **the fiduciary relationship**, **trustees' duties, powers and liability**, and **equitable remedies**. Candidates are **not** required to demonstrate knowledge of foreign assets, foreign law or foreign taxes. Questions are **single best answer questions (SBAQs)** set in realistic scenarios; you will be expected to **classify** a trust and **apply** the rules rather than merely recite definitions. This is a **closed-book** assessment, so the terminology and distinctions in this chapter must be recalled from memory.

Study tips

1) Memorise the **three parties**: settlor (creates), trustee (holds legal title), beneficiary (holds equitable title). 2) Fix the **top-level split**: express trusts (created intentionally by the settlor) v implied trusts (arising by operation of law — resulting and constructive). 3) Within express private trusts, distinguish **fixed** (interests defined by the settlor) from **discretionary** (trustee chooses how to distribute among a class). 4) Remember that **charitable trusts are valid purpose trusts**, whereas private (non-charitable) purpose trusts generally **fail** (with limited exceptions). 5) Distinguish **inter vivos (lifetime) trusts** from **testamentary trusts** (taking effect on death). 6) Note the key statutes for orientation: **Statute of Uses 1535**, **Trustee Act 1925** and **Trustee Act 2000**.