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WHAT IS IT? A trust is a device which enables you to give property to someone together with your instructions about what to do with it, trusting that the person will carry out your instructions. The person who holds the property can be compelled to follow the instructions you give.
The person to whom property is given in trust is called the trustee. 163 The instructions the creator of the trust gives the trustee are called the terms of the trust. And the duties which the trustees must carry out in relation to the trust property are called fiduciary duties.
Trusts can be established for the benefit of a person or people. For example, you might give property to a trustee for the benefit of a child so he or she can go to university. The person benefited by a trust is called the beneficiary. In this instance the child could, for example, receive the interest from the trust fund for support while in university.
Perhaps the most familiar kind of trust is a financial trust, where the trustee holds the capital of a trust fund and pays the interest to a beneficiary. While any kind of property can be held in trust, in this chapter we are concerned with trusts involving land. 164
In this report we are concerned only with express trusts which are deliberately created by landowners with respect to land. Landowners can create such trusts either during their lifetime or when they die. The creator of a trust is called the settlor, if the trust is set up during the property owner's lifetime, or the testator, if the property is set up in a will. 165 Although other types of trust exist, we will discuss only those trusts which are expressly created by a settlor. 166
The law concerning trusts is complex and, therefore, anyone wishing to explore the use of a trust for protecting private land should obtain legal advice very early in the process. Go to: an example of a legal trust for conservation purposes.>
POSSIBLE APPLICATIONS. There are at least two types of situations in which a landowner might consider using a trust for conservation purposes. The first is where a landowner wishes to give land to a portion of a community, such as a community organization, and wishes a conservation organization to act as the trustee of the land to ensure that the land is protected over time according to the intentions of the landowner.
The second is where a landowner intends that a conservation organization be the beneficiary of a gift of land, 167 but would like a trustee to manage the land for the benefit of that group. The trustee could be the landowner, another party, or even another conservation organization.
LEGAL BASIS. A trust is a particular way to divide the bundle of ownership rights in land. 168 In a trust the trustee holds title to the property: the trustee has the legal interest in the land. The trustee manages the trust property. But the trustee must manage it for the benefit of the beneficiary, and the beneficiary can enforce the terms of the trust: the beneficiary has the beneficial or equitable interest in the land.
The possibility of a trust dates back to the development of courts of equity. A landowner might convey property to someone else, on a promise by that man 169 to look after the landowner's family while he was gone. If he failed to look after the family as he had promised, there was no remedy in the courts of common law, because common law did not look behind the title to the property. But the court of equity would enforce the promise that the new landowner had made when he took title to the property. So the beneficiary could sue the new landowner in the courts of equity. That is how the trustee came to be described as having the legal interest or title in the property — it was the interest that the common law courts would enforce — and the beneficiary came to be described as having the beneficial or equitable interest — it was the interest that the courts of equity would enforce. 170
The rights and responsibilities of the trustee and the beneficiary respectively are spelled out in the trust instrument. If the trust instrument is silent, the general law applies.
The trustee holds the title and the legal interest in the land. Unless the trust deed says otherwise, it is the trustee, not the beneficiary, who is responsible to manage the lands according to the settlor's intent as expressed in the trust instrument.
The beneficiary has the beneficial interest in the land. The beneficiary is entitled to the exclusive enjoyment of the property. 171 Again, unless the trust instrument contains provisions entitling the beneficiary to manage the land, the beneficiary cannot manage the land itself. If the trustee is not managing the lands according to the provisions of the trust instrument, the beneficiary can go to court to enforce the terms of the trust.
HOW IS IT CREATED? To put a piece of land in trust, the landowner gives
title to the land to another person or body as trustee
The following elements are necessary for a trust to exist: 172
It is entirely up to the settlor what the terms of the trust are — whether, for example, the trustee can sell the trust property or permit a beneficiary to live on the property. If the trust instrument does not set out all of the powers and duties of the trustee, the Trustee Act 174 governs. Because the settlor is essentially developing a private legislative scheme which will govern the trustee and establish the rights of any beneficiary, it is essential for the settlor to address his or her mind to any questions which may arise in the future.
HOW LONG CAN IT LAST? The settlor can say, in the trust instrument, how long a trust will last. 175 First, a settlor can reserve to themselves in the trust instrument the right to revoke the trust. 176 Second, a settlor can establish a trust which ends — for example, a trust fund for a child's university education to last till the child finishes university or reaches 25 years — and then specify what happens to the property after the trust ends.
WHO MONITORS AND MAINTAINS THE LAND? The trustee is responsible for managing the trust property. The question of who actually inspects and cares for the land should be addressed in the trust instrument. The settlor may want to give the trustee(s) power, for example, to hire someone to look after the land itself.
HOW CAN THE LAND BE PROTECTED OVER TIME? If the trustee is failing or neglecting his or her duties to manage the land, the beneficiary can bring an action against the trustee to ask the court to require the trustee to fulfil his or her obligations. An action may also be brought by the person or body who will get the land once a trust is over.
HOW IS IT TERMINATED? If the settlor has reserved the right to revoke the trust, the trust can be revoked whenever the settlor decides. In that case the legal and beneficial title to the land would return to the settlor.
Otherwise, the trust ends when the settlor has established that it will end. 177
163. Settlors can be the trustees: they can give property they own to themselves as trustees for someone else.
164. A trust respecting land is not a land trust. Land trust is a term used especially in the United States to refer to conservation organizations which acquire land or interests in land for conservation purposes. See Chapter 4, Conservation Groups.
165. We will use the term settlor to refer both to settlors and to testators, to avoid having to refer to both every time.
166. There are some situations in which the law will find that a trust exists even though the settlor has not expressly created a trust, for example, resulting and constructive trusts. These trusts are beyond the scope of this report.
167. Outright gifts have no conditions; conditional gifts are subject to the rule against perpetuities. See Chapter 6 on Bequests and Donations, and Chapter 7 on Conditional Gifts.
168. See Chapter 5, Everything You Always Wanted to Know about Land ...
169. Men were the landowners in feudal society.
170. The rules governing trusts which were developed by the courts have been modified by statute.
171. Whether the beneficiary is entitled to occupy the land should be spelled out in the trust instrument.
172. Greater Vancouver Regional District Planning Department, Open Space Conservancy Manual of Legal Techniques (Vancouver: G.V.R.D., 1979).
173. A trustee can be the same person as the grantor.
174. The Trustee Act, R.S.B.C. 1979, c. 414.
175. This is subject to the rule against perpetuities where that applies. See Chapter 5, Everything You Always Wanted to Know about Land ...
176. If a settlor does not reserve the power of revocation he or she cannot revoke the trust.
177. . There are other circumstances where a trust will end but these situations are avoidable by a settlor who is planning a trust, and so are not dealt with here.
