Must be transferable - Both of the above requirements fall under the general Subject matter must be transferrable rule that if the subject matter is not capable of being transferred to another party as is – required when a settlor transfers property to a trustee on behalf of a beneficiary(s) then it – typically cannot form the subject matter of a trust. This is not an absolute rule in its entirety and as with all aspects of law there are always exceptions. An item which is not transferable generally cannot be Not transferrable, cant be subject - declared as the subject matter of an trust if the holder of the item does not have the inter vivos right to transfer it or declare themselves as the trustee. The Court will always look to the nature of the item being transferred and determine the legal validity of transferring the property. For example, an item may be thought to be transferrable but be Trusts by Transfer - made non-transferrable under general law. In [1995] 1 Qd R 492 an equitable assignment of benefits was Re Bruynius held to be invalid because of legislation which directed it was so. Separately, the item may also be untransferable because of a valid restraint clause attached to the property which prohibits it from being so. In these circumstances, it is impossible to create a trust because it is not possible to transfer inter vivos title. However, this poses a potential issue in trusts created by Trusts by Declaration - declaration since the property not’ have to be transferred. ‘does In types of trusts it will depend on the construction of the instrument being transferred and whether only legal title is being restricted from transfer or whether both legal and equitable title are being restricted. If there is no intention to restrict an equitable interest by declaration or the subsequent transfer then it may be possible that such a trust is still valid. See Don King [2000] Ch 291; [1999] All ER 218 for an example of Products Inc v Warren this.
Must be transferable Subject matter must be transferrable - Both of the above requirements fall under the general rule that if the subject matter is not capable of being transferred to another party – as is required when a settlor transfers property to a trustee on behalf of a beneficiary(s) – then it typically cannot form the subject matter of a trust. This is not an absolute rule in its entirety and as with all aspects of law there are always exceptions. Not transferrable, cant be subject - An item which is not transferable generally cannot be declared as the subject matter of an inter vivos trust if the holder of the item does not have the right to transfer it or declare themselves as the trustee. The Court will always look to the nature of the item being transferred and determine the legal validity of transferring the property. Trusts by Transfer - For example, an item may be thought to be transferrable but be made non-transferrable under general law. In Re Bruynius [1995] 1 Qd R 492 an equitable assignment of benefits was held to be invalid because of legislation which directed it was so. Separately, the item may also be untransferable because of a valid restraint clause attached to the property which prohibits it from being so. In these circumstances, it is impossible to create a trust inter vivos because it is not possible to transfer title. Trusts by Declaration - However, this poses a potential issue in trusts created by declaration since the property ‘does not’ have to be transferred. In types of trusts it will depend on the construction of the instrument being transferred and whether only legal title is being restricted from transfer or whether both legal and equitable title are being restricted. If there is no intention to restrict an equitable interest by declaration or the subsequent transfer then it may be possible that such a trust is still valid. See Don King Products Inc v Warren [2000] Ch 291; [1999] All ER 218 for an example of this.
Trusts_Summary.docx