Ying Khai Liew, ‘“Sham Trusts” and Ascertaining Intentions to Create a Trust’

According to received wisdom, ‘sham trusts’ is a doctrine which provides an exception to the normal objective process of ascertaining intentions to create a trust by permitting courts to give effect to subjective intentions as the ‘true’ intention. This article makes three points. First, that approach does not properly reflect how courts deal with sham trusts: courts are not concerned with ascertaining subjective intentions when dealing with ‘sham trusts’. Second, ‘sham trust’ cases are but specific factual applications of a general approach, namely that an objective intention to create a trust is ascertained from any admissible evidence accepted by the court as being relevant to its inquiry. Thus, there is no separate ‘sham trust’ doctrine, and therefore no special requirements to be fulfilled (such as an intention to deceive) for legal effect to be withheld from a trust instrument. Third, the general approach can be particularised in the form of a flexible framework, which explains how courts deal with the admissible evidence. While any relevant evidence is admissible, certain types of evidence are given more weight than others.

Liew, Ying Khai, ‘Sham Trusts’ and Ascertaining Intentions to Create a Trust (2018). (2018) 12 Journal of Equity 237.

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