A trust exists where a person (called a trustee) holds, as owner or has vested in him property under an obligation to deal with that property for the benefit of persons (called the beneficiaries), whether or not yet ascertained or in existence, which is not for the benefit only of the trustee, or for a charitable purpose, or for both such benefit and purpose aforesaid.
A very important feature of a trust is that the trust property constitutes a separate fund from that owned by the trustee, which is distinct and separate from his personal property and from any other property held by the trustee under any other trust. The TTA states that the holding of property under trusts has the following legal effects:
(a) That personal creditors of the trustee shall have no recourse against the trust property;
(b) That the trust property shall not form part of the trustee‘s personal estate upon his insolvency or bankruptcy; and
(c) That the trust property shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustee‘s estate upon his death.
Upon settlement in trust the trustee acquires all rights in the property and inter alia becomes entitled to appear or act in his capacity as trustee before any court, any notary or any person acting in an official capacity. Where the trustee desires to register property, movable or immovable, or documents of title to them, he is entitled to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed.
Trusts create fiduciary obligations upon the trustee in favour of the beneficiary of the trusts. The settlor of trusts shall have no rights in relation to trust property except as provided by the Trusts and Trustees Act.
To create a trust the settlor must hold all of the rights to be settled on trust before that trust can be declared. Before the trust is created, there is simply absolute property vested in the settlor. Once the trust is created, the trustee acquires ‘legal title‘ in the trust fund and the beneficiaries acquire ‘equitable title‘ in the trust fund in accordance with the terms of the trust. This equitable interest is the ultimate interest in the trust fund, the beneficiary acquires equitable proprietary rights against the trust fund and also a set of personal claims against the trustee to ensure that the trustee carries out his duties in the terms of the trust.