While three certainties are the hallmarks of an express trust, valid creation requires much more. Even where intention, subject matter, and objects are perfectly certain, defects in formality, constitution, proprietary interest, or decisional capacity can render the purposed arrangement void. This entry exposes the often-overlooked requirements that ultimately determine whether a trust is legally operative.
Introduction
In Part I of this mini-series,[1] we examined the typology within express trusts with particular emphasis on the three certainties as the central markers of a valid express trust. As observed there, the valid creation of an express trust requires that the three certainties be present at the moment of creation. [2] A trust devoid of any one of them is legally inoperative.
This entry serves as a direct corollary to Part I. It proceeds on the assumption that the three certainties have been satisfied and asks: what else must be present? The answer, as this entry will demonstrate, is that there are several underlying or ancillary requirements which are simultaneously necessary but frequently overlooked. For an express trust to be validly created, the following must also be present:
- Formalities;
- Constitution;
- The Rule Against Settling Future Property; and
- Capacity.
Each of these elements will be examined in turn below. Given the complexity inherent to Constitution and Capacity, these topics will be treated in overview only, with whole entries to be dedicated to each.
Formalities
An inter vivos express trust that does not deal with land or an interest in land has no formality requirements and it may be made orally or in writing.[3]
Pursuant to the Statute of Frauds,[4] all declarations or creations of trusts or confidences of any lands, tenements or hereditaments shall be manifested and proved by a writing signed by the party who is by law enabled to declare such trust.
Although beyond the scope of valid express trust formation, for the purpose of rounding out the formalities discussion, it is worth mentioning that there is an exception to this formalities for trusts arising by implication or construction of law as provided by section 10 of the Statute of Frauds.[5] Further, and as confirmed by the Ontario Court of Appeal in 2730453 Ontario Inc. v. 2380673 Ontario Inc.,[6] the doctrine of part performance is a recognized exception to this general rule.[7]
As a practical matter, however, notwithstanding the fact that express trusts and the three certainties can be established through the examination of conduct, the age-old adage that an oral agreement (in this case trust) is as good as the paper its written on tends to apply.
Constitution
The requirement that a trust be properly constituted, is a complex element necessary for the valid creation of an express trust. Accordingly, an entire entry will be devoted to examining the ins-and-outs of constitution.
As a broad oversimplification, however, constitution of trust requires that the settlor transfer or convey the subject matter of the trust to the trustee.[8] Should the subject matter of the trust be subject to statutory formalities, the settlor must ensure that the transfer is compliant.
The Rule Against Settling Future Property
The valid creation of an express trust requires that the settlor holds a proprietary interest in the property that will be subject to the trust.[9] In other words, an express trust cannot be settled with property that one does not own, regardless of whether it has been sufficiently described to satisfy the certainty of subject. While this is frequently repeated in academic literature and relevant caselaw alike, said authorities have yet to introduce a formalized/ unified term for the requirement of present proprietary interest. Accordingly, for the sake of analytical convenience and leveraging the equitable maxim of Nemo Dat Quod Non Habet,[10] I will refer to the requirement of present proprietary interest as the rule against settling future property.
Typically, caselaw analysis examining the rule against settling future property emerges where a would-be settlor attempts to form an express trust with property they expect to own, but do not hold any proprietary interest at the time of the purported creation.[11] Where a would-be settlor has attempted to form an express trust with property they either expect to own, or mistakenly believed they hold a proprietary interest, Courts invalid the creation by referring to the settlor’s inability to satisfy the certainty of subject matter or improper constitution.
Assessing whether the rule against settling future property may logically flow from the certainty of subject matter or the requirement that a trust be properly constituted deserves a fulsome reply and goes beyond the scope of this entry. Nonetheless, in my view, the rule against settling future property cannot flow from the certainty of subject matter as a result of Re Brooks’ Settlement Trusts.[12] In Re Brooks’, the would-be settlor formally executed a declaration of trust identifying the subject matter with sufficient certainty; however, because declaration identified property he did not yet own at the time of execution, the Court found that the trust failed and treated the purported disposition as void.[13]
Capacity
The law surrounding the capacity required to create a valid express trust is extremely complex and intricate. Accordingly, one should bear in mind that the below is a high-level overview in its simplest terms. Part of the difficulty in assessing the requisite level of decision-making ability and appreciation necessary to create a valid express trust flows from the fact there is no singularly agreed upon common law authority or codified test.
Incapacities
Before moving to a substantive analysis of decision-making capabilities, it must be recognized that separate and apart from one’s decision-making abilities, there are several statutes which may preclude an otherwise capable individual from creating a valid express trust, regardless of whether they benefit from the presumption of capacity.[14]
For example, an individual who has not attained the age of majority lacks the legal capacity to deal with property, and may not create a valid express trust without court approval.[15] While beyond the scope of express trust formation, it is notable that section 8 of the Succession Law Reform Act,[16] carves out certain circumstances where individuals under the age of eighteen may execute a valid will.[17]
Further, regardless of an individual’s decisional capacity, those who have declared or filed for bankruptcy and remain undischarged are otherwise incapable of creating a valid express trust by virtue of the Bankruptcy and Insolvency Act [18]
Capacity as Effective Distribution
While it is widely acknowledged that the relevant parties must retain a certain level of decisional capacity in order to create a valid trust,[19] there has yet to be a comprehensive caselaw authority detailing the standard and/ or assessment criteria.
Silver Estate v Silver,[20] appears to be one of the few cases where the Court contemplates invalidation of an inter vivos trust by lack of capacity.[21] While the analysis in this regard is limited, as the issue at bar was focused on variation, ultimately Court premised the validity of the purported trusts on its constitution which entails the effective disposition by a competent donor.[22] The relevant holding for our purposes being: where a would-be settlor lacks the degree of decisional capacity necessary for effective disposition of their property, they lack the decisional capacity necessary to create a valid trust.
While Re Beaney,[23] is routinely treated as the governing authority on the capacity required for inter vivos dispositions, it does not, strictly speaking, articulate a standalone or tailored test for the specific capacity required to create an express trust. Re Beaney establishes a contextual transaction-specific standard: the degree of understanding required is calibrated to the nature and effect of the disposition in question.[24] The test asks whether the donor was capable of understanding the effect of the transaction. The requisite level of capacity is thus variable.
Where the subject matter of the disposition is trivial, as assessed relative to the whole of the donor’s proprietary interests, only a modest degree of understanding is required.[25] Conversely, where the disposition is substantial, as assessed relative to the whole of the donor’s proprietary interests, the threshold rises to one approaching testamentary capacity.[26]
Final Remarks
Ultimately, the creation of a valid express trust demands more than the mechanical satisfaction of the three certainties at the moment of formation. As this entry demonstrates, formal compliance, proper constitution, the existence of a present proprietary interest, and the settlor’s capacity to effect a legally operative disposition are all indispensable components of validity. Each operates as an independent constraint capable of defeating an otherwise well-structured trust.
—
[1] Express Trust Mini-Series Pt 1: Foundations, Classifications, and the Three Certainties | WEL Partners Blog.
[2] Relevant authorities as it pertains to the three certainties include Knight v Knight (1840), 3 Beav 148, 49 ER 58 (Ch); Duca Financial Services Credit Union Ltd. v. Bozzo, 2011 ONCA 455 (CanLII), at para 2; Elliott Estate (Re), 2008 CanLII 63993 (ON SC), at para 24, (“Elliott Estate”); Tillsonburg Scout Association v. Scouts Canada, 2020 ONSC 747 (CanLII), at para 22, (“Tillsonburg Scout Association”).
[3] Paul v Constance [1977] 1 WLR 527 (CA), at p 531.
[4] Statute of Frauds, RSO 1990, c S.19, at sections 1 and 4, (“Statute of Frauds”); see also Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, at section 9.
[5] Statute of Frauds, at section 10.
[6] 2730453 Ontario Inc. v. 2380673 Ontario Inc., 2025 ONCA 112 (CanLII).
[7] Ibid., at para 2.
[8] Milroy v Lord (1862), 4 De G F & J 264, 45 ER 1185 (Ch).
[9] Tillsonburg Scout Association, at para 25.
[10] Nemo Dat Quod Non Habet, as translated from Latin to “no one gives what they do not have”.
[11] See Tillsonburg Scout Association, at paras 10 and 23-24.
[12] Re Brooks’ Settlement Trusts [1939] Ch 993.
[13] Ibid., at 996–997.
[14] Substitute Decisions Act, 1992, S.O. 1992, c. 30, at section 2; and Health Care Consent Act, 1996, S.O. 1996, c. 2, Sched. A, at section 4(2).
[15] Children’s Law Reform Act, R.S.O. 1990, c. C.12, at section 59.
[16] Succession Law Reform Act, R.S.O. 1990, c. S.26.
[17]Ibid., at section 8.
[18] Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, at sections 67 and 71.
[19] See Elliott Estate, at para 24, citing from A.H. Oosterhoff et al., Oosterhoff on Trusts: Text, Commentary and Materials, 6th ed. (Toronto: Thomson Canada Limited, 2004) at 161.
[20] Silver Estate v Silver, 2000 CarswellOnt 3259.
[21] Ibid., at para 6.
[22] Ibid., at paras 7-8.
[23] Re Beaney (Deceased), [1978] 2 All E.R. 595.
[24] Ibid., at p. 601.
[25] Ibid.
[26] Ibid.
Written by: Grant Swedak
Posted on: May 8, 2026
Categories: Commentary, Express Trust Series
While three certainties are the hallmarks of an express trust, valid creation requires much more. Even where intention, subject matter, and objects are perfectly certain, defects in formality, constitution, proprietary interest, or decisional capacity can render the purposed arrangement void. This entry exposes the often-overlooked requirements that ultimately determine whether a trust is legally operative.
Introduction
In Part I of this mini-series,[1] we examined the typology within express trusts with particular emphasis on the three certainties as the central markers of a valid express trust. As observed there, the valid creation of an express trust requires that the three certainties be present at the moment of creation. [2] A trust devoid of any one of them is legally inoperative.
This entry serves as a direct corollary to Part I. It proceeds on the assumption that the three certainties have been satisfied and asks: what else must be present? The answer, as this entry will demonstrate, is that there are several underlying or ancillary requirements which are simultaneously necessary but frequently overlooked. For an express trust to be validly created, the following must also be present:
Each of these elements will be examined in turn below. Given the complexity inherent to Constitution and Capacity, these topics will be treated in overview only, with whole entries to be dedicated to each.
Formalities
An inter vivos express trust that does not deal with land or an interest in land has no formality requirements and it may be made orally or in writing.[3]
Pursuant to the Statute of Frauds,[4] all declarations or creations of trusts or confidences of any lands, tenements or hereditaments shall be manifested and proved by a writing signed by the party who is by law enabled to declare such trust.
Although beyond the scope of valid express trust formation, for the purpose of rounding out the formalities discussion, it is worth mentioning that there is an exception to this formalities for trusts arising by implication or construction of law as provided by section 10 of the Statute of Frauds.[5] Further, and as confirmed by the Ontario Court of Appeal in 2730453 Ontario Inc. v. 2380673 Ontario Inc.,[6] the doctrine of part performance is a recognized exception to this general rule.[7]
As a practical matter, however, notwithstanding the fact that express trusts and the three certainties can be established through the examination of conduct, the age-old adage that an oral agreement (in this case trust) is as good as the paper its written on tends to apply.
Constitution
The requirement that a trust be properly constituted, is a complex element necessary for the valid creation of an express trust. Accordingly, an entire entry will be devoted to examining the ins-and-outs of constitution.
As a broad oversimplification, however, constitution of trust requires that the settlor transfer or convey the subject matter of the trust to the trustee.[8] Should the subject matter of the trust be subject to statutory formalities, the settlor must ensure that the transfer is compliant.
The Rule Against Settling Future Property
The valid creation of an express trust requires that the settlor holds a proprietary interest in the property that will be subject to the trust.[9] In other words, an express trust cannot be settled with property that one does not own, regardless of whether it has been sufficiently described to satisfy the certainty of subject. While this is frequently repeated in academic literature and relevant caselaw alike, said authorities have yet to introduce a formalized/ unified term for the requirement of present proprietary interest. Accordingly, for the sake of analytical convenience and leveraging the equitable maxim of Nemo Dat Quod Non Habet,[10] I will refer to the requirement of present proprietary interest as the rule against settling future property.
Typically, caselaw analysis examining the rule against settling future property emerges where a would-be settlor attempts to form an express trust with property they expect to own, but do not hold any proprietary interest at the time of the purported creation.[11] Where a would-be settlor has attempted to form an express trust with property they either expect to own, or mistakenly believed they hold a proprietary interest, Courts invalid the creation by referring to the settlor’s inability to satisfy the certainty of subject matter or improper constitution.
Assessing whether the rule against settling future property may logically flow from the certainty of subject matter or the requirement that a trust be properly constituted deserves a fulsome reply and goes beyond the scope of this entry. Nonetheless, in my view, the rule against settling future property cannot flow from the certainty of subject matter as a result of Re Brooks’ Settlement Trusts.[12] In Re Brooks’, the would-be settlor formally executed a declaration of trust identifying the subject matter with sufficient certainty; however, because declaration identified property he did not yet own at the time of execution, the Court found that the trust failed and treated the purported disposition as void.[13]
Capacity
The law surrounding the capacity required to create a valid express trust is extremely complex and intricate. Accordingly, one should bear in mind that the below is a high-level overview in its simplest terms. Part of the difficulty in assessing the requisite level of decision-making ability and appreciation necessary to create a valid express trust flows from the fact there is no singularly agreed upon common law authority or codified test.
Incapacities
Before moving to a substantive analysis of decision-making capabilities, it must be recognized that separate and apart from one’s decision-making abilities, there are several statutes which may preclude an otherwise capable individual from creating a valid express trust, regardless of whether they benefit from the presumption of capacity.[14]
For example, an individual who has not attained the age of majority lacks the legal capacity to deal with property, and may not create a valid express trust without court approval.[15] While beyond the scope of express trust formation, it is notable that section 8 of the Succession Law Reform Act,[16] carves out certain circumstances where individuals under the age of eighteen may execute a valid will.[17]
Further, regardless of an individual’s decisional capacity, those who have declared or filed for bankruptcy and remain undischarged are otherwise incapable of creating a valid express trust by virtue of the Bankruptcy and Insolvency Act [18]
Capacity as Effective Distribution
While it is widely acknowledged that the relevant parties must retain a certain level of decisional capacity in order to create a valid trust,[19] there has yet to be a comprehensive caselaw authority detailing the standard and/ or assessment criteria.
Silver Estate v Silver,[20] appears to be one of the few cases where the Court contemplates invalidation of an inter vivos trust by lack of capacity.[21] While the analysis in this regard is limited, as the issue at bar was focused on variation, ultimately Court premised the validity of the purported trusts on its constitution which entails the effective disposition by a competent donor.[22] The relevant holding for our purposes being: where a would-be settlor lacks the degree of decisional capacity necessary for effective disposition of their property, they lack the decisional capacity necessary to create a valid trust.
While Re Beaney,[23] is routinely treated as the governing authority on the capacity required for inter vivos dispositions, it does not, strictly speaking, articulate a standalone or tailored test for the specific capacity required to create an express trust. Re Beaney establishes a contextual transaction-specific standard: the degree of understanding required is calibrated to the nature and effect of the disposition in question.[24] The test asks whether the donor was capable of understanding the effect of the transaction. The requisite level of capacity is thus variable.
Where the subject matter of the disposition is trivial, as assessed relative to the whole of the donor’s proprietary interests, only a modest degree of understanding is required.[25] Conversely, where the disposition is substantial, as assessed relative to the whole of the donor’s proprietary interests, the threshold rises to one approaching testamentary capacity.[26]
Final Remarks
Ultimately, the creation of a valid express trust demands more than the mechanical satisfaction of the three certainties at the moment of formation. As this entry demonstrates, formal compliance, proper constitution, the existence of a present proprietary interest, and the settlor’s capacity to effect a legally operative disposition are all indispensable components of validity. Each operates as an independent constraint capable of defeating an otherwise well-structured trust.
—
[1] Express Trust Mini-Series Pt 1: Foundations, Classifications, and the Three Certainties | WEL Partners Blog.
[2] Relevant authorities as it pertains to the three certainties include Knight v Knight (1840), 3 Beav 148, 49 ER 58 (Ch); Duca Financial Services Credit Union Ltd. v. Bozzo, 2011 ONCA 455 (CanLII), at para 2; Elliott Estate (Re), 2008 CanLII 63993 (ON SC), at para 24, (“Elliott Estate”); Tillsonburg Scout Association v. Scouts Canada, 2020 ONSC 747 (CanLII), at para 22, (“Tillsonburg Scout Association”).
[3] Paul v Constance [1977] 1 WLR 527 (CA), at p 531.
[4] Statute of Frauds, RSO 1990, c S.19, at sections 1 and 4, (“Statute of Frauds”); see also Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, at section 9.
[5] Statute of Frauds, at section 10.
[6] 2730453 Ontario Inc. v. 2380673 Ontario Inc., 2025 ONCA 112 (CanLII).
[7] Ibid., at para 2.
[8] Milroy v Lord (1862), 4 De G F & J 264, 45 ER 1185 (Ch).
[9] Tillsonburg Scout Association, at para 25.
[10] Nemo Dat Quod Non Habet, as translated from Latin to “no one gives what they do not have”.
[11] See Tillsonburg Scout Association, at paras 10 and 23-24.
[12] Re Brooks’ Settlement Trusts [1939] Ch 993.
[13] Ibid., at 996–997.
[14] Substitute Decisions Act, 1992, S.O. 1992, c. 30, at section 2; and Health Care Consent Act, 1996, S.O. 1996, c. 2, Sched. A, at section 4(2).
[15] Children’s Law Reform Act, R.S.O. 1990, c. C.12, at section 59.
[16] Succession Law Reform Act, R.S.O. 1990, c. S.26.
[17]Ibid., at section 8.
[18] Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, at sections 67 and 71.
[19] See Elliott Estate, at para 24, citing from A.H. Oosterhoff et al., Oosterhoff on Trusts: Text, Commentary and Materials, 6th ed. (Toronto: Thomson Canada Limited, 2004) at 161.
[20] Silver Estate v Silver, 2000 CarswellOnt 3259.
[21] Ibid., at para 6.
[22] Ibid., at paras 7-8.
[23] Re Beaney (Deceased), [1978] 2 All E.R. 595.
[24] Ibid., at p. 601.
[25] Ibid.
[26] Ibid.
Author