LAW OF TRUSTS

 Definition of a Trust
• “A trust is an obligation imposed by an owner of property known as a settler on a
person known as a trustee the duty of dealing with the property over which he has
control known as the trust property for persons called beneficiaries or cestuis que
trust.’’
 A trust therefore arises where property is conveyed from one person to another
person for the benefit of others.
 The legal interest vests in the holder of the property and he holds the interest for the
benefit of others.
 A trust may arise though there might not have been a formal conveyance.
 However the legal interest holder may still be holding the property for the benefit of
another thus creating an equitable interest for the other.
 The holder of the trust property is the trustee and the person on whose benefit he
holds the property is the beneficiary.
 The settlor may also constitute himself as the trustee.
 Types of beneficiaries under a Trust

• The beneficiaries may be companies, institutions and natural objects.

• The beneficiaries have an equitable interest and can therefore enforce the trust
especially against the trustee and even the whole world as circumstances
permit.

 Categories of Beneficiaries

 Where the beneficiaries are objects of the public in general, it is a public trust
and usually it is only the A.G. who can enforce the trust.

 Where the trust is for a private individual or individuals it is a private trust and
any one, some or all of the beneficiaries may enforce the trust.

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 Subject Matter of a Trust

• Any property be it movable or immovable property may be held in trust and this
may be land, shares, stocks and money. Pensions and salaries however can never be
a subject of a Trust.

 Essence and Why Trusts?

• The essence of Trust is ‘trust and confidence’ placed in a trustee by the settlor or
creator of the Trust.
• In modern times trusts are used for protecting the interest of those who due to legal
or physical incapacity are unable to maintain themselves or manage their affairs.

 Feature of Trusts

• One distinct feature of trusts is duality of ownership. Ownership is vested in two

persons. The trustee as the legal owner or owner in law and the beneficiary as the
owner in equity or equitable owner.
 What is the Nature of a Beneficiary’s Equitable interest in Trust? Is it a right in
rem as against the whole world or a right in personam as against a person i.e.
the trustee?
 There are three schools of thought, that is the Traditional, Realist and Hybrid
Schools.

• The Traditional School holds the view that it is a right in personam as an

equitable interest cannot prevail against a bona fide purchaser for value of the
legal interest without notice of the trust.- Pilcher v. Rawlins supra. Maitland
belongs to this school.

• The contrary view is the Realist school which holds the view that it is a right in
rem since a beneficiary by virtue of the concept of tracing can trace and follow
the trust property into the hands of a trustee or any person receiving the
property from the trustee other than a bona fide purchaser for value without
notice. Thus it is an exercise of a property right.
• The Hybrid School opines that the interest partakes of both, that is a right in
rem and a right in personam.
TRUST DISTINGUISHED FROM SIMILAR CONCEPTS

 Distinction between Trust and Agency (Principal /Agent Relationship)

• In the principal/agent relationship a person appoints another as his agent, a

relationship arising out of contract and usually possession of property may be
vested in an agent on behalf of the principal and he may incur liabilities for the
principal.
• Firstly agency is recognizable at Common Law but trust/beneficiary relationship is
recognizable at Equity.
• Secondly Agency arise from a contractual relationship but Trust does not arise from
a contractual relationship. The parties to a trust may not know each other.
• Thirdly under trust the beneficiary cannot incur liability for the trustee but an agent
can incur liability for his principal.
• In trust the legal interest is vested in the trustee and the equitable interest in the
beneficiary unlike agency where the agent is not an owner in equity but merely a
caretaker unless a contrary intention is expressed.
 Trust distinguished from Administration of an Estate

• An administrator or Executor is a person in whom property is vested during an

interim period before the property is transferred to and vested in those
entitled to the property under a Will or Intestate Succession Law PNDC Law
111, after the death of the owner.

• The position of an administrator is for a relatively short time whilst a trust is

perpetual and subsists so long as the trust exist.

• The administrator or executor sees to the distribution of the property and

those entitled to the property under the rules of testacy and intestacy will only
have a legal interest when the property is vested.
• Until all liabilities are met from the estate and it is vested a beneficiary has no
distinct interest in any portion of the property. Okyere (D’ced.) v. Appenteng &
Anor.[2012] 1 SCGLR 65
• Administration of Estates is originally not cognizable at equity but at the
Ecclesiastical Courts.
 Powers of Attorney distinguished from Trusts

• Where someone appoints a person as his Attorney he confers rights on the

Attorney and gives him power to deal with property on his behalf.

• A trustee deals with the property for the benefit of the beneficiaries.

• Powers of Attorney usually confer a discretion on the Attorney whereas a

trust imposes an obligation on the trustee. Thus the Attorney decides
whether to act or not whereas a person who asserts the trust must deal with
the trust according to the trust document.

• A beneficiary can sue for the trust property in his own right whereas a
repository of a power may sue on behalf of the donor.
 Trust distinguished from Bailment

• Bailment involves delivery of goods on a condition of it being delivered

back to the bailor by the bailee upon satisfaction of the object of the
bailment. Coggs and Barnard (1703) 2 Ld Raym 909

• Whilst trusts involves all properties, bailment involves only

personal/movable properties and not real properties.

• The Bailor who is the owner of the property delivered does not therefore
divest himself of ownership but a Settlor/owner of a property under a trust
divests himself of the ownership and may cease to have any rights thereto
unless the trust fails.
 Classification of Trusts

• Trusts can be classified as Public or Private

• The distinction is based on the object or purpose of the Trust.

• Where the object is to primarily confer the benefit on a private

individual or group of individuals then it is a private trust even if in
the process it confers an incidental benefit on the public.

• Where the object is to confer the benefit on the general public for
their welfare, it is a public trust even if it incidentally confers a benefit
on a private individual. E.g. GET FUND or Valco Trust Fund.
 Classification of Private Trusts

• Private Trusts may be classified into four. These are Express, Implied, Resulting
and Constructive Trust.

 Express Trust is where a person expressly/clearly transfers the legal interest to

another for the benefit of another.
• Where a trust involves a conveyance of land, it must comply with S33,34 & 35
of the Land Act 2020, Act 1036 un less exempted under section 36.
 Implied Trusts: Where there is an intention to convey a trust but the formalities
in Ss 33-35 have not being complied, Equity will presume an implied Trust.
 Resulting Trust: This is arises where a trust has expressly been created but the
beneficial interest is not exhausted or the beneficial interest cannot be enjoyed
by the beneficiary and as such the unenjoyable interest is said to result back to
the settlor or estate of the settler. Quartey v. Armah [1971] 2GLR 231, Cole v.
Cole [1966] GLR 177, Kwantreng v. Amassah [1962] 1 GLR 241,Fianko v. Djan
[2007-2008]SCGLR 165
 Constructive Trust: There is a constructive trust when no trust is expressly created but
a certain situation arises and equity therefore deems it unconscionable for the
trustee to enjoy the property and therefore a trust is imposed on the trustee for the
benefit of another. In Re Koranteng: Addo v. Koranteng [2005-2006] SCGLR 1039, Soon
Boon Seo v. Gateway Worship Centre [2008-2009] 1GLR 21

• Where a trustee uses his position to benefit from the trust the benefit will be
construed as being held under a constructive trust for the beneficiary. Thus the
trustee will be a constructive trustee of that benefit.
 Express trust may be Executed or Executory.
• Executed Trusts: A trust is said to be executed where the settler has marked out in
appropriate language each of the interests everyone of the beneficiaries must enjoy.
The settler is deemed to be his own conveyancer.
• Executory Trusts: A trust is executory where even though the settler has indicated
clearly that the property should be held in trust for the beneficiary the details of the
trust is left out either to be filled later by a sub-doc or by the discretion of the trustee.
• Where however the sub-doc does not indicate the interest of each in the case of many
children then the presumption is that equity is equality and as such each beneficiary has
an equal share in the property. See s40.3 of Land Act 2020 Act 1036

 Complete and Incomplete Constituted Express Trust

• This cuts across the previous classification.

1. A trust is completely constituted when the property is vested in the trustee in

accordance with S33 to S35 of the Land Act

2. A trust is incompletely constituted where even though there is an intention to convey a

trust, the trust property has not been vested in the trustee.

• Note however that technically the beneficiaries here cannot enforce the trust since
there is no trust but can apply for SP if they provided a valuable consideration.
• Where however the person creating the trust is constituting himself as the trustee, this
distinction does not arise.