UNIT 5

ORIGIN AND NATURE OF TRUSTS

Trusts have a deep-rooted history in the legal systems of many countries, originating from English common law. The concept of a trust arose during the medieval period when landowners would leave their estates to friends or family members, known as "trustees," to manage for the benefit of others, known as "beneficiaries." Trusts were initially used to bypass feudal duties and taxes, providing a flexible means of managing property. In Nigeria, the principles of trusts were introduced through the reception of English law, including the common law, doctrines of equity, and statutes of general application. The Nigerian legal system has since adopted and adapted these principles to suit its unique legal and cultural context. The nature of a trust involves a fiduciary relationship where one party, the trustee, holds legal title to property for the benefit of another party, the beneficiary. The trustee has the responsibility to manage the property in accordance with the terms of the trust and the best interests of the beneficiaries.

CLASSIFICATION OF TRUSTS

Trusts can be classified into several categories, each with distinct characteristics and they include;

1. Express trusts: this is created intentionally by the settlor, either through a written document or verbally, expressing the intention to create a trust.
2. Implied trusts: this type of trust arise by operation of law, based on the circumstances or conduct of the parties involved. These also includes:
   
   1. Resulting trusts: this arise where the intention to create a trust is inferred by law from the conduct of the parties.
   2. Constructive trusts: this type of trust is imposed by the court to prevent unjust enrichment or fraud.
3. Private trusts: this type of trust is created for the benefit of specific individuals or a definite class of persons.
4. Charitable trusts: this type of trust is established for public charitable purposes, such as education, relief of poverty, or other community benefits.

REQUIREMENTS FOR CREATION OF TRUSTS

For a trust to be validly created, certain essential requirements must be met and they includes:

1. Intention: this is where the settlor must have a clear intention to create a trust. This intention must be expressed unequivocally, either in writing or verbally.
2. Subject matter: this is where the property to be held in trust must be clearly defined and identifiable.
3. Objects: this is where the beneficiaries of the trust must be identifiable. In the case of charitable trusts, the purpose must be clearly defined.
4. Formalities: this is where trusts involving land must comply with formalities, such as being in writing and signed, to be enforceable. See the Statute of Frauds and the Property and Conveyancing Law and the case of Re Kayford Ltd [1975] 1 WLR 279.

CONSTITUTION OF TRUSTS AND THE EXCEPTIONS

The constitution of a trust refers to the proper transfer of the trust property to the trustee. This involves ensuring that the trustee holds the legal title to the property. However, the exceptions to the rule of proper constitution include Donatio Mortis Causa which is a gift made in contemplation of imminent death, which does not require formalities and Proprietary Estoppel which is where the conduct of the parties prevents one from denying the existence of a trust. See the case of Milroy v Lord (1862) 4 De G F & J 264. The constitution of trusts includes;

1. Transfer of legal title: this is where the settlor must transfer the legal title of the trust property to the trustee. This is crucial for the trust to be fully constituted.
2. Declaration of trust: Alternatively, the settlor can declare themselves as the trustee of the property, effectively constituting the trust without transferring the legal title.

EXPRESS PRIVATE TRUSTS

Express private trusts are deliberately created by the settlor, usually through a written document, to benefit specific individuals or classes of individuals. These trusts are governed by the terms set out by the settlor, who specifies how the trust property should be managed and distributed. See the case of Knight v Knight (1840) 3 Beav 148. Key features of express private trusts includes the following:

1. Settlor's intention: there must be clear intention to create a trust.
2. Identifiable beneficiaries: there must be specific individuals or groups who will benefit.
3. Defined property: this is where the trust property must be clearly described.

CHARITABLE TRUSTS

Charitable trusts are established for purposes beneficial to the public, such as education, relief of poverty, advancement of religion, or other community benefits. These trusts are subject to less stringent rules compared to private trusts and enjoy certain legal and tax advantages. See The Charitable and Religious Trusts Act, Cap C8 LFN 2004 and the case of Attorney General v National Provincial Bank [1924] AC 262. The characteristics of charitable trusts includes the following:

1. Public benefit: this is where the trust must benefit the public or a significant portion of it.
2. Charitable purpose: this is where the trust's purpose must fall within the recognized categories of charity.
3. Perpetuity: this is where charitable trusts are not subject to the rule against perpetuities, allowing them to last indefinitely.

CONCLUSION

These classifications, requirements, and specific rules ensure the proper creation, management, and enforcement of trusts, balancing the interests of settlors, trustees, and beneficiaries within the Nigerian legal framework.