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FLK 2 - Trusts > 2. Express Trusts: Constitution of Trusts > Flashcards

2. Express Trusts: Constitution of Trusts Flashcards

1
Q

What are the requirements for an express trust to be enforceable?

A

Valid declaration of trust and putting assets into the trust.

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2
Q

What happens once both steps of constituting a trust are complete?

A

The trust is constituted and the settlor cannot change their mind.

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3
Q

What happens if a trust is not constituted?

A

No trust exists and the settlor remains the absolute owner.

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4
Q

What happens when the settlor declares themselves to be trustee?

A

The settlor has taken all steps necessary to create the trust.

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5
Q

What does the settlor own prior to the declaration of trust?

A

The settlor owns the relevant property absolutely, with both legal and equitable title.

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6
Q

What happens to the settlor’s title after the declaration of trust?

A

The settlor becomes the trustee and retains legal title.

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7
Q

What needs to happen for the trust to be constituted when the settlor declares themselves as trustee?

A

The settlor must make a valid declaration of trust.

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8
Q

What needs to happen for the trust to be constituted when a third party is appointed as trustee?

A

The settlor must make a valid declaration of trust and transfer legal title to the trustee.

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9
Q

What type of document is required to transfer legal title of land to a third party trustee?

A

A deed that satisfies the requirements of the Law of Property (Miscellaneous Provisions) Act 1989.

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10
Q

What are the requirements for a document to be considered a deed?

A

It must be stated to be a deed and signed by the person making the deed in the presence of a witness who also signs it.

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11
Q

What is Form TR1 used for?

A

To register land.

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12
Q

How is legal title transferred for land?

A

By registering the trustee as the new owner.

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13
Q

How can legal title in company shares be transferred?

A

Within or outside the CREST system.

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14
Q

What is CREST?

A

A computerized share transfer system.

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15
Q

How are shares in public companies transferred within CREST?

A

Electronically and instantaneously without paperwork.

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16
Q

Who manages shares in CREST?

A

A stockbroker.

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17
Q

What is required to transfer shares outside the CREST system?

A

Paperwork.

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18
Q

How is ownership of shares in private companies confirmed?

A

By the share certificate and the company’s register of members.

19
Q

What is required to transfer private company shares to a trustee?

A

Execution of a stock transfer form and providing the share certificate.

20
Q

Who registers the trustee as the new shareholder for private company shares?

A

The company’s secretary.

21
Q

What is legal title?

A

Legal ownership of an asset.

22
Q

When is legal title to money transferred?

A

Upon delivery or arrival in trustee’s account.

23
Q

How is legal title to cash transferred?

A

Upon delivery to trustee.

24
Q

How is legal title to electronically transferred money transferred?

A

Upon arrival in trustee’s bank account.

25
Q

How is legal title to a cheque transferred?

A

Upon clearance of the cheque.

26
Q

What is the general rule regarding a settlor who does not follow the rules in creating a trust?

A

Equity will not assist a volunteer.

27
Q

Who is considered a volunteer in the context of a trust?

A

Someone who has not provided consideration for the transfer of property.

28
Q

Why can’t equity assist a volunteer?

A

Because the transfer rules must be followed to constitute a trust.

29
Q

What is the exception to the maxim ‘equity will not assist a volunteer’?

A

The ‘every effort’ test.

30
Q

What is the ‘every effort’ test?

A

If the settlor has done everything they could to transfer legal title and put the property beyond recall, equity may consider the transfer complete.

31
Q

What are the conditions of the ‘every effort’ test?

A

The settlor must have passed the point of no return, completed all required steps, and only the act of a third party remains for the transfer to be completed.

32
Q

What is the rule in Strong v Bird?

A

Appointment of executors or administrators upon death

33
Q

What happens when a person dies with a will?

A

Executors administer their estate

34
Q

What happens when a person dies intestate?

A

Administrators administer their estate

35
Q

What is legal title?

A

Ownership of assets acquired by executors or administrators

36
Q

How do executors or administrators acquire legal title?

A

Through a grant of representation

37
Q

Can a trustee also be an executor or administrator?

A

Yes, if they acquire legal title

38
Q

What conditions must be satisfied for a trust to be constituted?

A

Intention to create a trust, failure to comply with transfer rules, settlor’s intention up to death, trustee acquiring legal title

39
Q

What must a settlor do to declare themselves and a third party as trustees?

A

Transfer legal title into joint names

40
Q

What transfer rules must be complied with for shares in a private company?

A

Signing a stock transfer form

41
Q

Is there a distinction between a settlor being sole trustee or one of multiple trustees?

A

No, both cases would be unconscionable for the settlor to resile from the trust

42
Q

What is the existence requirement for a trust?

A

Existence of the trust cannot be denied.

43
Q

What must the settlor do to give effect to the trust?

A

Transfer the trust property in the names of all the trustees.

44
Q

What happens if the settlor dies before transferring the property?

A

Executor/administrator must transfer the property to surviving trustees.

FLK 2 - Trusts (11 decks)

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