5. Constitution of trusts

This chapter covers the constitution of trusts. A trust can be created in two ways: by the owner of property becoming a trustee himself or herself or by transferring property to someone else, and, at the same time, imposing a trust on them. In the first instance, a trust will be created if the person who holds the legal title to property free of any existing trust effectively declares themselves trustee of it in favour of specified beneficiaries. On the other hand, if the legal owner of property, the settlor, wishes to subject it to a trust in favour of beneficiaries, but does not wish to serve as trustee themselves, they can create a trust by transferring the property to someone else. In such circumstances, the original owner ceases to have any interest in the property, and the transferee of the property receives it as trustee subject to the trust obligations.