In this mini-series of articles, we explore the
relationship between sham trusts and illusory trusts, before making
the case for dropping "illusory trusts" from the
nomenclature of the future.
It is well-established that an apparently valid trust may
nevertheless be set aside if it is a sham or an illusory trust. The
law will not allow people to hide behind a fictitious trust
structure in an attempt to avoid their liabilities, nor will it
recognise the existence of a trust if the fundamental elements of a
trust are missing, whatever the settlor might have intended.
The burden of proving that an apparently valid trust is not
valid (either because it is a sham or because it is illusory) rests
with the party asserting that all is not, in fact, as it
seems.1 But what is a sham trust? And what is an
illusory trust? Are these two different ways of describing the same
thing? Certainly, the terms are occasionally used interchangeably,
but there are actually important
