1. LAWS20059 Corporations and Business Structures
Dr Peter Robinson
CQUniversity, Brisbane Campus

2. Module 2 Trusts

3. Today’s Overview 1 2 3 The trust relationship Creation of a trust
Types of trust 3

4. Today’s Overview (continued)
Trustee’s liability / duties 4
Rights of the parties 5
Termination of a trust 6

5. The trust relationship
Trust property
Legal and equitable ownership separated
Trustee (legal owner) has burdens
Beneficiary (equitable owner) has benefits
Equitable title also called beneficial title
A trust is not a legal entity.
The trustee has unlimited personal liability.

6. Creation of trust Intentional Constructive Express Implied
Trust deed (inter vivos) or will (testamentary)
Implied
Constructive
By order of court

7. The 3 required certainties
Intention to create a trust
Identity of trust property
Identity of beneficiaries
or charitable objects
NOTE: The rule against perpetuities
– Trusts cannot last forever.

8. Workshop Questions
Questions 1 to 5

9. Types of trust
We have already seen types of intentional (express or implied) and constructive trusts
Trusts can be classified in another way:
Fixed trusts and unit trusts
Discretionary trusts

10. The trustee and outsiders – title
As legal owner, the trustee’s name appears on title documents for the trust property.
The trust itself is NOT a legal entity.
The trustee is the relevant legal entity.
If trust property is sold (or purchased), the trustee appears as vendor (or purchaser).
The 3rd party mightn’t even know of the trust.

11. Liability to outsiders (3rd parties)
As the legal owner (and entity), the trustee has unlimited personal liability to outsiders.
The trustee will enter into the contracts.
E.g. leases, insurances on the property
The trustee is liable for the safety of the property – e.g. a shopping centre or factory.
For this reason, the trustee will often be a limited liability company.

12. Workshop Questions
Question 6
Question 7
Question 8
Question 9

13. Trustee’s fiduciary duties
To act for the beneficiaries, not for self
To avoid conflicts of interest
To be impartial between beneficiaries
To keep separate accounts
To act personally (not delegate)

14. Trustee’s other duties
To carry out the terms of the trust
Terms laid down in trust deed or will
Duties of care
To exercise due care
To invest
These duties combine to require trustees to invest trust funds prudently.

15. Trustee’s powers and rights
All powers of a legal owner
Commercial and professional trustees can charge usual fees, otherwise need remuneration clause in deed or order of the court – Trusts Act 1973 (Qld.), s101.
Indemnity out of trust funds
Indemnity from beneficiaries of fixed trust
Limited indemnity in discretionary trust

16. Beneficiaries’ rights
To require trustee to comply with trust
Adult beneficiaries may:-
Terminate the trust
Remove or appoint a trustee

17. Termination of trust Decision by adult beneficiaries
Transfer or destruction of all trust property
Terms of trust fully carried out
Court order

18. Workshop Questions
Questions 10 to 12

19. Conclusions
A trust is a relationship between a trustee and beneficiaries in relation to trust property.
The trustee bears the burdens of the trust property and acts as a fiduciary.
The beneficiaries get the benefits, and no liability to outsiders.

20. Microsoft Engineering Excellence
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