1. Express Trusts: Declaration of Trust

Question 1

DEF: Express Trust

Answer 1

A trust that the settlor expressly intends to create

Question 2

2 conditions for an express trust to be enforceable:

Answer 2

(1) valid declaration of trust
(2) put assets in the trust (ie. put title of property to be held in trust in the hands of the trustee)

Question 3

Crucial Components of a valid declaration of trust

Answer 3

(a) identifies trustees
(b) identifies property held in trust
(c) identifies beneficiaries (by name or description)
(d) identify powers and duties trustees have in running trust and administering trust property

Question 4

DEF: Fixed Interest Trust

Answer 4

Under a fixed interest trust, the trustees have no discretion as to how the trust property is to
be distributed between the beneficiaries. The settlor has stipulated once and for all who the
beneficiaries are and the proportions in which they will share the trust property

Question 5

DEF: Discretionary Trust

Answer 5

gives the trustees a discretion as to the amounts any person may receive
and/or whether particular people receive anything at all.

Question 6

The three certainties:

Answer 6

(1) Certainty of intention (or words)
(2) certainty of subject matter
(3) certainty is objects

Question 7

DEF: Certainty of intention

Answer 7

Clear that the person making the declaration intended to create a trust
- Words used must impose duty on trustee to hold property for someone

Question 8

DEF: Certainty of Subject Matter

Answer 8

Clear which property is being held on trust and also what the individual interests of the beneficiaries are (how property shared)

Question 9

DEF: Certainty of Objects

Answer 9

Clearly identifies beneficiaries

Question 10

What type of trusts need to have these ‘three certainties’

Answer 10

(1) Express Trusts
- Lifetime Trusts
- Will Trusts

Question 11

Necessary components to demonstrate certainty of intention:

Answer 11

(1) Words imposing duty on someone to hold property for the benefit of someone else (need not be ‘trust’)
(2) Must not be precatory words

Question 12

DEF: Precatory words

Answer 12

Words that express a wish, hope or expectation

Question 13

What happens if someone transfers property to another using precatory wording?

Answer 13

Likely that this is a gift

Question 14

What must be certain to prove certainty of subject matter?

Answer 14

(1) trust property is described with certainty
(2) the settlor must define the beneficiaries’ interests with certainty

Question 15

Trust property is described with certainty: Conditions

Answer 15

• property must be identifiable (specifics)
• thing on trust must constitute ‘property’
• must be something the settlor currently owns
• must be clear what items are specifically on trust (unclear to say ‘some of my silver’),

Question 16

Can you ever create a trust over a ‘part’ of a collection of items? Or is this too uncertain?

Answer 16

If the items in the collection are identical, and the exact amount of the ‘part’ is specified, this is valid

Question 17

What will happen if the beneficiaries’ shares or interests in the trust are not defined with enough certainty?

Answer 17

The trust will fail

Question 18

Scenario: If the settlor intended to create a trust with themselves as trustee, but there is no certainty
of trust property…

Answer 18

Trust will fail, settlor is outright owner

Question 19

Scenario: If settlor transfers property to 3rd party and declares that person will be a trustee over ‘some of it’ and that a gift is intended over the rest….

Answer 19

No trust is created. 3rd party takes entire property absolutely, free of any trust.

Question 20

Test for certainty of objects in Fixed-Interest Trusts:

Answer 20

Complete list test

Question 21

Test for certainty of objects in Discretionary Trusts:

Answer 21

‘Given Postulant’ test (or given individual test)

Question 22

Complete List Test

Answer 22

It must be possible to draw up a complete list of each and every beneficiary, we need:
(1) Conceptual Certainty: description of class clear and objective
(2) Evidential certainty: do we have evidence to identify all the beneficiaries that will benefit under the trust?
IF NO TO EITHER 1 or 2, TRUST FAILS

Question 23

Given Postulant Test

Answer 23

Can it be said with certainty whether any person IS or IS NOT a member of the class of objects?
(1) conceptual certainty: sufficient clear and objective criteria from settlor
(2) do not need evidential certainty

Question 24

Once a discretionary trust passes the given postulant test, what other test is required (1)?

Answer 24

Test for administrative unworkability
= invalid if class is SO hopelessly wide that it does not form ‘anything like a class’
- Trustees will spend so much time and money thinking about who gets what etc.
- will depend on size of the class relative to the size of the fund

Question 25

Is administrative unworkability relevant for fixed-interest trusts?

Answer 25

NO

Question 26

Capriciousness Requirement: which trusts does it apply to? What is it?

Answer 26

(1) applies to discretionary trusts
(2) If there is absolutely no rational reason for the trust or no rational basis on which trustees can exercise their discretion to distribute
(ie. Trust would require trustees to consider a random grouping of people who have no discernible link to settlor)

Question 27

What happens if a trust has no certainty of objects?

Answer 27

Resulting trust in favour of the settlor (because express trust cannot be created)

Question 28

DEF: Beneficiary Principle

Answer 28

To be valid, a trust must be for the benefit of individuals

Question 29

Rules against perpetuity: how do these apply for trusts for individuals?

Answer 29

Rule: Rule against remoteness of vesting
- interests must vest within relevant perpetuity period
- trusts created on or after 1 April 2010 (125 years)

Question 30

Do lifetime trusts have be in writing?

Answer 30

No, they can be made orally, but should be made in writing.

Question 31

Requirements for Valid Oral Declaration of trust (lifetime trust)

Answer 31

a. Person A has to prove what b said (Question of fact)
b. A has to show that this demonstrated an intention to declare trust (Question of Fact)

Question 32

What formalities are there for trusts created over LAND?

Answer 32

s 53(1)(b) LPA 1925:
- the declaration of trust must be evidenced in SIGNED WRITING by the settlor (can be said orally and written later)
- If not, trust is unenforceable

Question 33

Trusts over land: can emails suffice as written evidence?

Answer 33

Yes, if they are signed off by typing (name, initials, nickname which they are known by etc.)
- OR if there is a signature block in email settings for all outgoing mail (esp when there is a salutation at the end)

Question 34

If someone makes an oral declaration of trust over property, what should they do to ensure their declaration is valid

Answer 34

Copy down the terms and sign this. Need not be sent to beneficiary
- Must contain all terms material to the trust