Trusts of land and settlements in Ireland

The principle

Irish land law once ran two regimes for land held by way of succession: the strict settlement policed by the Settled Land Acts, and the ordinary trust. Part 4 collapsed both into one device with one set of trustee powers and one overreaching rule.

When Part 4 applies

Section 18 of the Land and Conveyancing Law Reform Act 2009 creates a trust of land in three situations: where land is limited by an instrument, whenever executed, to persons by way of succession without the interposition of a trust (a strict settlement); where land is held on a trust, whenever it arises and of whatever kind; and where land is vested in a minor, who cannot hold a legal estate and so takes an equitable interest.

A strict settlement also exists where a reversion or remainder is left undisposed of and reverts to the settlor or the testator's successors in title, but not where a person owns a fee simple in possession. “Trust” expressly includes express, implied, resulting, constructive and bare trusts and a trust for sale. Part 4 does not reach land held directly for a charity unless the charity holds only a remainder.

Who the trustees are

Section 19 identifies them. For a strict settlement existing at commencement, they are the tenant for life within the meaning of the Settled Land Act 1882 together with any trustees of the settlement. For an express trust the order runs: the trustee nominated by the instrument; then any person on whom it confers a power of sale; then any person with power to appoint a trustee; and failing those, the settlor or the testator's personal representative. Where the trust is implied, resulting, constructive or bare, the trustee is whoever holds the legal title.

What the trustees may do

Section 20 gives a trustee of land the full power of an owner to convey or otherwise deal with it, subject to the duties of a trustee and to any restriction imposed by statute, by the general law of trusts, or by an instrument or court order relating to the land. It expressly includes power to permit a beneficiary to occupy the land on such terms as the trustee thinks fit, and power to sell and reinvest the proceeds in land. Trustees remain fiduciaries: no personal profit, no delegation, an even hand between beneficiaries.

Overreaching and the purchaser

Under section 21, a conveyance of a legal estate to a purchaser overreaches any equitable interest in the land, whether or not the purchaser has notice of it, and the interest attaches instead to the proceeds. Numbers matter: where the land is a strict settlement, a trust held for persons by way of succession, or held for a minor, the conveyance must be by at least two trustees or a trust corporation. For any other trust of land a single trustee is enough.

Overreaching fails where the conveyance is fraudulent and the purchaser knows of that or is a party to it; where the conveyance is expressly made subject to the interest; where the interest is protected by deposit of title documents; and, in the single-trustee category, where one is protected by prior registration or takes effect as a burden within section 72(1)(j) of the Registration of Title Act 1964, the interest of a person in actual occupation. The Family Home Protection Act 1976 is unaffected.

Disputes and variation

Section 22 lets any person having an interest in a trust of land apply to court in a summary manner to resolve a dispute between trustees, between beneficiaries, or between the two, about the performance of the trustees' functions, the extent of a beneficial interest, or any other operation of the trust. The court weighs the beneficiaries' interests as a whole, then the purposes the trust is meant to achieve, any minor or incapacitated beneficiary, and any secured creditor.

Section 24 supplies a general jurisdiction to vary trusts, on the application of a trustee, a beneficiary or another appropriate person. Written notice must go to the Revenue Commissioners at least two weeks before the hearing, and the court must refuse where they satisfy it that the application is substantially motivated by a wish to reduce tax.

The Settled Land Acts, and why they still appear

A strict settlement used the fee tail to keep land within a family. It made land practically inalienable: at common law settled land could be sold only with the consent of everyone interested, including the unborn. Section 13 of the 2009 Act prohibits the creation of a fee tail and vests a fee simple in the grantee, which shuts off any new strict settlement.

The Acts answered inalienability by conferring the dealing powers on the tenant for life and leaving the trustees of the settlement in a supervisory role. Section 53 of the Settled Land Act 1882 stopped short of making the tenant for life a trustee but fixed him with a trustee's duties and liabilities towards all those entitled. Section 50 made the powers unassignable, section 45 required a month's written notice to the trustees before a sale, and section 39 required the capital money to be paid to two trustees rather than to the tenant for life.

The 2009 Act repealed those Acts, and references to them elsewhere are read as references to the 2009 Act. Part 4 operates retrospectively, but section 27 of the Interpretation Act 2005 means it does not invalidate transactions carried out while the older regime was in force. That is why the old scheme still earns marks, and it is regularly set as a short-note question on Irish land law papers.

Resulting and constructive trusts

Because section 18(2) brings implied, resulting and constructive trusts inside Part 4, and section 19(1) makes the legal owner the trustee, a trust nobody wrote down still carries the Part 4 powers and overreaching rules. A resulting trust rests on presumed intention: where an express trust fails or does not exhaust the beneficial interest the reversion results to the settlor, and where one person supplies the purchase money for property conveyed to another, equity presumes a trust unless that is rebutted. A constructive trust arises by operation of law regardless of intention.

Powers of appointment

A power lets one person direct the destination of property that is not theirs. A power of appointment is general where the donee may appoint anyone including himself, special where the class is restricted, and hybrid where anyone but named persons may benefit. A bare power carries no obligation; a fiduciary power obliges the donee to consider the objects. Where the donor makes exercise obligatory the power is in the nature of a trust, and equity treats the objects as taking vested interests in equal shares.

An appointment by deed is valid if the instrument complies with section 64 of the 2009 Act; one made by will must satisfy the section 78 of the Succession Act 1965. Section 27 allows release, but not of a fiduciary power.

Statutory basis

• Section 18 and section 19 — what counts as a trust of land, and who the trustees are.
• Section 20 — the trustee's full power of an owner.
• Section 21 — overreaching and the two-trustee rule.
• Section 22 and section 24 — disputes, and variation of trusts.
• Section 13 — prohibition of the fee tail.
• Sections 26 to 29 — execution, release and validation of appointments.

Key authorities

• Hughes v Fanagan (1891) 30 LR Ir 111 IE · pre-1922 — a 35-year lease granted by a tenant for life without notice to the trustees of the settlement did not bind those entitled in remainder. The notice requirement was intrinsic to the power.
• Wheelwright v Walker (1883) 23 Ch D 752 (1883) 23 Ch D 752 Persuasive · England — a tenant for life may take his own interests into account in deciding whether to exercise the powers, provided regard is had to the interests of all those entitled under the settlement. That proviso is the statutory duty in section 53 of the Settled Land Act 1882, and it is what leaves an exercise that would materially harm the other beneficiaries open to challenge.
• Kelly v Cahill [2001] 1 IR 56 IE · High Court — a solicitor's error left land outside a deed meant to pass everything to the testator's wife. Barr J held the remainderman a constructive trustee for her, recognising a new model constructive trust where justice and good conscience so required.
• W v M & Anor [2010] IEHC 505 IE — the first variation application under Part 5. Laffoy J held the court may approve or refuse an arrangement but cannot approve one subject to modification, and that the Revenue Commissioners should tell the court their attitude.
• In re Scott Bayley, deceased; Brown v Gregg [1945] IR 224 IE — on a special power to appoint among the testator's Irish relatives, the Supreme Court held the donee need not be able to range in mind every possible object; it is enough that the appointee falls within the class.
• Duggan v Duggan (1880) 5 LR Ir 525 IE · pre-1922 — a tenant for life appointed a fund to those of her children who were of full age, under a prior agreement that they would buy out her life interest. Well intentioned, but a fraud on the power.

How it is examined

The cue is a limitation that splits enjoyment over time: “to A for life, remainder to B”, a gift to a minor, a trust for sale, a remainder left undisposed of, or a will letting someone choose who takes next. Each is a trust of land.

Order of attack. Classify the disposition under section 18. Identify the trustees under section 19; on pre-2010 facts that means naming the tenant for life and the settlement trustees. Test the dealing against section 20, then ask whether a purchaser is protected by section 21. If the parties are at odds, reach for section 22, or section 24 for a variation. Turn to the Settled Land Acts only for a pre-commencement transaction or a short note. Where the land is a home, see licences and the family home.

Related Land Law notes: licences and the family home · freehold estates and the fee simple · wills and succession · all free Land Law notes.