Unlocking Legal Clarity: The New Definition of 'Express Trust' in the Trustee (Amendment) Act 2025
Following the passing of the Trustee (Amendment) Bill 2024 and the Trustees (Incorporation) (Amendment) Bill 2024 by the Dewan Rakyat and the Dewan Negara in December 2024, both Bills received Royal Assent on 7th February 2025 and were published in the Gazette on 17th February 2025. While the date of operation has not yet been appointed, the coming into force of the Trustee (Amendment) Act 2025 ("the Act") is imminent. This article delves into one of the key aspects introduced in the Act: the definition of "express trust," which brings much-needed clarity to the said concept within Malaysian law.
New "Express Trust" Provisions
Previously, the term "express trust" was not explicitly defined in the Trustee Act 1949 ("the Principal Act"). Instead, it was included under the broader, more general definition of "trust" in Section 3 (Interpretation), creating ambiguity around its precise meaning. The Act addresses this by clearly defining "express trust" in Part IVA Section 44B:
“express trust” means a trust created by the settlor, usually in the form of a document, which includes a written deed of trust;
The Act further clarifies the characteristics of an express trust under Section 44c, emphasizing the key points of:
(a) Fiduciary Relationship: A trustee must hold or manage trust property for the benefit of beneficiaries or a lawful purpose.
(b) Accountability: The trustee is accountable for their duties as prescribed by written law.
(c) Creation by Settlor: A trust can be created when a settlor indicates an intention to create a trust, identifies the beneficiaries or the lawful purpose of the trust, and identifies the trust property.
Additionally, the Act prevents conflicts of interest by stipulating that a sole trustee cannot also be the sole beneficiary of the trust, ensuring the integrity of the fiduciary relationship.
Before The Act
Before these amendments, Section 3 of the Principal Act did not provide a specific definition for "express trust" leading to confusion. The term "trust" was broadly defined, encompassing express, implied, resulting and/or constructive trusts, often leading to reliance on case law for clarification (Tan Hwa Ling @ Tan Siew Leng & Ors v Tan Keng Yong @ Tan Keng Hong & Anor [2020] MLJU 373). Section 3 is worded as follows:
Section 3 – Interpretation
“trust” does not include the duties of chargee, but with this exception the expressions “trust” and “trustee” extend to implied and constructive trusts, and to cases where the trustee has a beneficial interest in the trust property, and to the duties incidental to the office of a personal representative and “trustee”, where the context admits, includes a personal representative, and “new trustee” includes an additional trustee;
Worded in such a broad definition, the Courts relied on judicial interpretation to determine whether a trust was express. In Yeong Ah Chee v Lee Chong Hai & Anor[1994] 2 MLJ 614, the Supreme Court outlined the three essentials of a valid trust: (a) certainty of words; (b) certainty of subject; and (c) certainty of object.
All three essentials would have to be proven on a balance of probabilities by looking into whether there was clear proof of an intention to create a trust which was expressed in clear language. This intention is to be gathered from the totality of the particular circumstances of the case, including the words written or spoken and the conduct of the parties (ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2005] 2 MLJ 422; Perman Sdn Bhd & Ors v European Commodities Sdn Bhd & Anor[2006] 1 MLJ 97).
Conclusion
The amendments in the Trustee (Amendment) Act 2025 bring clarity and legal certainty to the creation and administration of express trusts. By clearly defining "express trust" and setting out the requirements for its creation, the Act eliminates previous ambiguities and reduces reliance on case law for basic definitions. This enhances the predictability of trust law in Malaysia, supporting a more transparent and efficient legal framework for trustees, beneficiaries, and legal practitioners alike.
Authored by: Joycelyn Teoh Hooi Cheng & How Chen Hee
Should you have any queries or wish to find out more, please contact our partner in charge, Joycelyn Teoh Hooi Cheng.
