Illegality and trusts: trusts-creating primary transactions and unlawful ulterior purposes

Abstract

I argue that the role illegality actually plays in the law of trusts is often exaggerated. I hypothesize that a properly constituted trust, which arises from the primary feature of a transaction between the parties, should (and would) be enforced despite some credible evidence that the trust has an illegal ulterior purpose. Similarly, a trust that arises by operation of law from a given primary feature of a transaction would be enforced notwithstanding an underlying illegality. I argue that pre-Patel, and potentially post-Patel, illegality obviated the enforcement of a trust only where the trust directly violated the law or public policy. In other words, the illegality principle or Patel’s trio of considerations can only be applied to trusts where a given trust is directly opposed to law or public policy, as distinct from the trust being merely impugned for having some ulterior unlawful motives.

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ORCID for Remigius Nwabueze: orcid.org/0000-0002-3100-6427

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