Lionel Smith (University of Oxford) recently published Black Magic Trusts, 2026. Provided below is the Abstract:
It might seem odd that a trustee in a common law jurisdiction could have the legal authority to borrow the very property that they hold in trust, bringing the trust to an end and leaving the former beneficiaries with nothing but an unsecured personal claim against the former trustee. A ‘black magic trust’ is a trust which the trustee can make disappear in this way, by the exercise of a non-fiduciary power. One contribution of this article is to show that it is actually quite common to find such powers in the law reports. A more significant contribution of this article is to bring to bear on these trusts the logic of recent case law developments relating to the proper understanding of the certainty of intention that is required to create a trust. In the light of these developments, I will argue that these ‘black magic trusts’ are probably not trusts at all. They take effect, from the very beginning, as mere loans. If this is correct, then a number of cases over the years have been wrongly decided, often due to a misunderstanding as to what certainty of intention requires. A trust always involves a particular kind of obligation: an obligation on the trustee to apply the benefit of the trust property solely towards the objects of the trust. This is why certainty of intention requires an intention that the trustee be under that obligation. I argue if the trustee can appropriate the trust property as and when it wishes, it is not under that obligation and there is no trust.