Part 4: The Idea Of Emerging Validity

This article is part of a mini series that explores the relationship between sham trusts and illusory trusts.

The New Zealand Supreme Court in Clayton speculated that an illusory trust may become a valid trust when the settlor's role in relation to the trust changes. In particular, it was suggested that the fact that a trust is illusory 'does not deny the possibility that a valid trust may come into existence at some time in the future, for example, if [the settlor] were to be replaced by a new Trustee who was not the Principal Family Member and/or a beneficiary.'¹ This notion has been described by one writer as "emerging validity", and its converse (where a previously valid trust may become invalid as a consequence of a change in the people holding the powers) as "emerging invalidity".²