SUB TRUST When it happens?
(prof.Mauro Norton Rosati di Monteprandone)
Sometimes the trustee may hold the equitable interest on behalf of a beneficiary.
This would be the case where a beneficiary, who enjoys an equitable interest under a subsisting trust, creates a trust of his interest in favour of another, ie a beneficiary under a trust creates a sub-trust of hi sentire interest in favour of a sub-beneficiary.
The effect of this arrangement is that the benficiary under the original trust assigns his interest to the new beneficiary by way of a trust.
In this situation the original beneficiary adopts the role of the settlor and the trustee for the benefit of another.
T (legal owner) --------B ( orginal equitable owner)----C( sub-beneficiary or new equitable owner)
Inteed, it’s possible for the original equitable owner to create a sub-trust and, at the same time, remain an equitable owner of trust property.
This would be the positio where the original equitable owner declars a trust of part of his equitable interest.
For example, T ( legal owner) holds on trust for B absolutely (equitable owner).
B retains a life interest in the property and declares himself a trustee of the remainder for C absolutely.
The new arrangemenbt may be illustrated as follows:
B(life interest) - C( remainder interest)
T ( legal owner)----------------------------------------------------------
( equitable owners)
It should be noted that in respect of the sub.trust, B will have active duties to perform on
Behalf of his new beneficary C.
