sham trust

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A trust that is created for the purpose of safeguarding property from one's creditors in the event of bankruptcy or insolvency. In such a case the requisite intention to create a trust is not present if it is clear that its existence is meant only as an “insurance” and it will be considered a sham (Midland Bank v Wyatt [1995] 1 FLR 696). See also illusory trust.

Subjects: Law.

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