1. Creation of Express Trusts Flashcards

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1
Q

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

A

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

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2
Q

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

A

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.

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3
Q

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

A

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

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4
Q

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

A

No formalities.

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5
Q

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

A

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

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6
Q

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

A
  • Trust remains unenforceable subject to anything rendering it unconscionable for settlor to deny the trust.
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7
Q

What is constitution?

A

Transfer of legal title

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8
Q

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

A
  • 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
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9
Q

What is effect of constitution?

A

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

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10
Q

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

A

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

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11
Q

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

A

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.

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12
Q

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

A

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

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13
Q

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

A
  1. Principle in Re Rose
  2. Fortuitous Vesting (Strong v Bird)
  3. Donatio Mortis Causa
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14
Q

What is the principle in Re Rose?

A

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

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15
Q

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

A

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

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16
Q

What is fortuitous vesting?
(Strong v Bird)

A

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

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17
Q

What is a DMC?

A

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.

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18
Q

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

A

No, just need evidenced in writing.

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19
Q

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?

A

Yes. The declaration acts retroactively.

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20
Q

Does an imperfect gift or trust create a valid trust

A

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.

21
Q

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

A
  1. Valid declaration
  2. Constitution
22
Q

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

A

Legal title must transfer from the settlor to the trustee

23
Q

How is a self-declaration of trust constituted?

A

Automatically, on declaration.

24
Q

How are gifts and trusts in a will constituted?

A

Via the will

25
Q

What is the consequence of failed constitution of a trust?

A

The trust is void

26
Q

What are the 3 certainties?

A

Intention
Subject Matter
Objects

27
Q

What is certainty to intention?

A

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

28
Q

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

A

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
29
Q

What is certainty of subject matter?

A

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

30
Q

When could certainty of subject matter fail from description?

A

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.

31
Q

When will no intention be inferred from other certainties?

A

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

32
Q

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

A

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

33
Q

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

A

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.

34
Q

What is administrative unworkability and what is its effect?

A

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.

35
Q

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

A

No!

36
Q

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

A

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

37
Q

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

A

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

38
Q

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

A

Valid generally.

39
Q

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

A

Unlikely, will turn on facts.

40
Q

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

A

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.

41
Q

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

A

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.

42
Q

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

A

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

43
Q

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

A

Yes, although its meaning has been disputed.

44
Q

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

A

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.

45
Q

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

A

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

46
Q

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

A

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

47
Q

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

A

The purported trust will be treated as a gift.

48
Q

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

A

The trust fails and the property falls into the residue.