1. Creation of Express Trusts

Question 1

What are the formalities to declare an express trust of land?

Answer 1

Manifested and proved
- In writing (evidence of intention and its terms)
- Signed (usually be the settlor, arguably by the trustee)
- OR by will, complying with those formalities

Question 2

What is the consequence of a declaration of an express trust over land which does not satisfy the formality requirements?

Answer 2

The trust will be valid but unenforceable.

The requirements are evidential only.

If the trust later becomes enforceable (is manifested and proved) it will be dated as starting from the flawed declaration.

Question 3

Which types of trusts over land must be made according to the formality rules in s.53(1)(b) LPA?

Answer 3

Express trusts only.
Not trusts arising by law (resulting or constructive).

Question 4

What formalities are there to create an express trust over personal property (not land)?

Answer 4

No formalities.

Question 5

Can a beneficiary enforce a trust which does not comply with the formalities to create a trust in land?

Answer 5

Renders the trust unenforceable (not void): beneficiary can’t enforce rights until requirements are satisfied & when they are, can enforce rights in respect of period before

Question 6

Will a trust over land declare without the requisite formalities ever be enforceable?

Answer 6

• Trust remains unenforceable subject to anything rendering it unconscionable for settlor to deny the trust.

Question 7

What is constitution?

Answer 7

Transfer of legal title

Question 8

How is constitution achieved for registered land, shares, choses in action, chattels and cheques?

Answer 8

• Registered Land: valid deed, registration
• Shares: sign stock transfer form & send to company; title passes when named entered in register
• Choses in Action: notice in writing to debtor/bank
• Chattels: by deed or gift; deliver with evidence of intention
• Cheques: endorsing cheque by signing on back

Question 9

What is effect of constitution?

Answer 9

Disposition is irrevocable - settlor ceases to have any legal or beneficial interest in property

Question 10

When will constitution fail for trust property? And for gifts?

Answer 10

Trust: if not vested in trustees
Gift: if legal title hasn’t passed

Question 11

Is a trust valid/enforceable if the transferor does not constitute the transfer?

Answer 11

For a gratuitous transfer on trust, if settlor makes no attempt to constitute, the trust will be both unenforceable (for non-compliance) and void (for lack of consitution) subject to unconscionability.

Question 12

What is the doctrine ‘equity will not assist a volunteer’?

Answer 12

Equity won’t compel a settlor to transfer legal title i.e. won’t perfect an imperfect gift (with unconsionability exception)
OR
treat it as a self-declaration of trust if constitution fails

Question 13

What are the exceptions to principle of equity won’t assist a volunteer?

Answer 13

1. Principle in Re Rose
2. Fortuitous Vesting (Strong v Bird)
3. Donatio Mortis Causa

Question 14

What is the principle in Re Rose?

Answer 14

Transfer of shares/land effective in equity once transferor has done everything in their power to effect transfer
a) Correct method of transfer used
b) Transferor done everything w/in their power
c) Documentation in hands of person capable of effecting transfer/transferor has put matter beyond their own control
Sending it to solicitor is not doing everything as solicitor agent of transferor

Question 15

What is the principle of unconscionability in relation to Re Rose?

Answer 15

Might also apply where unconscionable not to do so - proprietary estoppel
1) Assurance
2) Reliance
3) Detriment
Must be unconscionable to go back on assurance

Question 16

What is fortuitous vesting?
(Strong v Bird)

Answer 16

The intended recipient of a gift is also the PR of transferor’s estate, so gift is perfected on death
1. Intention to make immediate gift
2. Intention must continue until donor’s death
3. Intended donee becomes executor of donor’s estate
Must relate to existing property, not future

Question 17

What is a DMC?

Answer 17

Gift made in contemplation of death
Gift:
- made in contemplation of imminent death
- conditional on death
- Delivery of property (not necessarily transfer of legal title, just part with control - can be constructive e.g. keys to a locked box containing deeds)

Note: unlike fortuitous vesting DMC does not require the gift to be immediate, just IF dies.

Question 18

To make a trust of land, does the declaration and writing have to be contemporaneous?

Answer 18

No, just need evidenced in writing.

Question 19

If a trust in land is later recognised in writing, can the beneficiary sue in respect of the time between declaration and the written evidence of that declaration?

Answer 19

Yes. The declaration acts retroactively.

Question 20

Does an imperfect gift or trust create a valid trust

Answer 20

No,
- an imperfect gift does not make a trust (I.e. not taking a step required to transfer ownership) and
- if title doesn’t move to the trustees then the trust is imperfect and void.

Question 21

What is necessary for the creation of an express transfer on trust?

Answer 21

1. Valid declaration
2. Constitution

Question 22

What is necessary to consitute a valid inter vivos transfer on trust?

Answer 22

Legal title must transfer from the settlor to the trustee

Question 23

How is a self-declaration of trust constituted?

Answer 23

Automatically, on declaration.

Question 24

How are gifts and trusts in a will constituted?

Answer 24

Via the will

Question 25

What is the consequence of failed constitution of a trust?

Answer 25

The trust is void

Question 26

What are the 3 certainties?

Answer 26

Intention
Subject Matter
Objects

Question 27

What is certainty to intention?

Answer 27

Must be requisite intention to impose/assume the duties characteristic of a trust.

Question 28

What is certainty of objects? What are the tests for the two trusts?

Answer 28

Identify who is meant to benefit (and how much they are to receive for Fixed Trusts)

• Fixed Trust: complete list test with
  : conceptual (what the class is) and
  : evidential (does x fall within that class) certainty.
• Discretionary (less stringent):
  : is/is not test with
  : conceptual certainty (definition of class must be clear

Question 29

What is certainty of subject matter?

Answer 29

Must identify
- trust property and
- nature/extent of beneficial entitlement

Question 30

When could certainty of subject matter fail from description?

Answer 30

Where property can’t be ascertained from description e.g. ‘bulk’ or ‘net assets’

NOT for intangible, fungible property i.e. shares - as long as a number of shares are specified - this is the only exception.

Question 31

When will no intention be inferred from other certainties?

Answer 31

Where subject matter/objects are so vague that the only sensible inference is that there’s no intention at all

Question 32

What approach is taken by the courts to determining the intentions of parties to a purported trust?

Answer 32

An objective approach determinded by reference to the substantive rights and duties created.

This can be shown by words or conduct.

The settlor need not have knowledge of the form of the arrangement, only the substance.

Segregation of assets = key indicator

Question 33

How will the experience or character of parties influence the courts’ approach to finding intention?

Answer 33

Ordinary people are unfamiliar with the legal concept of a trust. The account holder could not be expected to use terminology he did not understand but this did not preclude a finding that he intended a trust relationship.

Question 34

What is administrative unworkability and what is its effect?

Answer 34

A discretionary trust will be unworkable if the class of beneficiaries ‘is so hopelessly wide as not to form “anything like a class” so that the trust is administratively unworkable’. The class is too wide.

Administrative Unworkability will invalidate trust.

Question 35

Is it possible to declare a trust over a specified number of tangible assets forming part of a ‘bulk’?

Answer 35

No!

Question 36

Is it possible to declare a trust over a specified number of non-fungible assets (non-identical bottles of wine) from a bulk?

Answer 36

No! In fact there is no bulk but a group of individul assets. Trust will be void for uncertainty.

Question 37

Is a trust valid if it allows the settlor to decide on subject at a later date.

Answer 37

Yes.
However, if C dies before making the selection, the trust will fail because it is no longer possible to ascertain object.

Question 38

Will a declaration of trust over a ‘reasonable amount of X’ be valid?

Answer 38

Valid generally.

Question 39

Will a trust over a ‘reasonable income from X land’ be valid?

Answer 39

Unlikely, will turn on facts.

Question 40

Will a trust in favour of ‘employees’ be valid?

Answer 40

This may be conceptually certain.
The trust deed would have to be drafted in a way to clarify whether it applied only to current employees or also extended to past/future employees of the company.

Question 41

Would a trust for ‘children of X’ be valid?

Answer 41

Yes.
This has a legal meaning so is conceptually certain. However, a settlor should ensure that this accords with their personal intention. For example, adopted children are legally the children of the adoptive parent (and are not legally the children of the biological parents). Step-children are not legally the children of their stepparents.

Question 42

Is a trust in favour of ‘friends of X’ valid?

Answer 42

No, this will fail for uncertainty of object. The term is not conceptually certain.

Question 43

Will a trust for ‘relatives of X’ be valid?

Answer 43

Yes, although its meaning has been disputed.

Question 44

What is a power of appointment, and what are the requirements for certianty?

Answer 44

The donee of a power is not required to exercise their power to distribute trust property.

No requirment for certainty of object: They therefore do not need to be able to identify all the potential objects of the power.

Requirement for certainty of subject: Apply ‘is/is not’ test

No Administrative Workability requirement.

Question 45

What is the effect of no certainty of intention on a trust, where the trust has been constituted (legal title transferred)?

Answer 45

A presumption of a resulting trust in favour of the settlor will arise

Question 46

What is the effect of uncertainty of subject matter or object, where the trust transfer has been constituted?

Answer 46

The trust fails, and an automatic resulting trust in favour of the settlor will arise.

Question 47

What is the effect of a lack of certainty of intention in a testamentary trust?

Answer 47

The purported trust will be treated as a gift.

Question 48

What is the effect of uncertainty as to subject matter of objects on a testamentary trust?

Answer 48

The trust fails and the property falls into the residue.