6.1 Creations and Requirements of an Express trust Flashcards
Express Trusts are created by?
Created through the express intention of the settlor
Name the types of express trusts
bare trusts, fixed trusts, discretionary trusts and interest in possession / life interest trusts
How are implied trusts created?
Arise by the operation of law, not the express intention of the settlor unlike an express trust
What are the main types of implied trusts?
statutory trusts, resulting trusts and constructive trusts
Inter vivos trust means
type of trust that was created during the settlors lifetime
Testamentary trust
trust that is contained in the will of the testator and takes effect upon their death
What three elements to express trusts require to be valid?
- certainty of intention
- certainty of object
- certainty of subject matter
If there is no certainty of intention, what will be created?
The trustee can take the property as a gift free from the trust
Certainty of subject matter?
Object within the trust
Tangibles are
physical objects
For certainty of subject matter, tangibles must be
Segregated from other property of the same type
Intangibles such as shares do not need to be (to achieve certainty of subject matter)
Segregated from the other shares where each share is of equal value
Certainty of objects
The beneficiaries within the trust
Would a trust identifying ‘my friends’ as the object fail for lack of certainty?
Yes. It must always be possible to identify whether a particular person or individual is a member of the class
The test for certainty of objects with a fixed trust
Complete list test. Trustees must be able to identify all potential beneficiaries
The test for certainty of objects with a discretionary trust
Any given postulant test
Trustee must be able to say with certainty whether a particular person is a member of the class of objects
A class of objects must be (in terms of size)
Administratively workable. Cannot be too large that it cannot be worked
Where the intention and subject matter is certain but the objects are uncertain, what is the result?
A resulting trust back to the settlor
What is an income in possession trust?
Where the beneficiary has entitlement to the net income produced by the trust property or has immediate use of the trust property
When the beneficiary enjoys a interest in possession trust for their own life, they are known as
a life tenant and the interest in possession is known as a ‘life interest’
Remainderman of interest in possession trust
the residual beneficiary when an interest in possession trust comes to an end
What is a discretionary trust?
Trustees are given discretion
What is a fixed interest trust?
Trustees have no discretion, the settlor determines precisely the shares and beneficiaries
When does a trust become constituted?
When the legal title is transferred to the trustees and becomes vested
Equity will not
Assist a volunteer or perfect an imperfect gift
An estate in land trust will be created by
a deed
A trust based on shares will be created by
A stock transfer form which must be sent to the company’s registrar along with the relevant share certificates
Exceptions to the rule that equity will not assist the volunteer (4 in total)
- transferor has done everything in their power to effect the transfer
- fortitous vesting
- proprietary estoppel applies
- there is a gift in contemplation of death (donatio mortis causa)
The requirements for the exception to the rule equity will not perfect an imperfect gift: transferor has done everything in their power
- the settlor must have used the correct method to transfer their property to the trustees
- the settlor must have done all that they can for the trust to take effect and the failure to complete the transfer is on the part of a third party
Unconscionability is another
exception to the rule that equity will not perfect an imperfect gift, where the transferee has acted in reliance
Fortious vesting is
an exception to the rule that equity will not perfect an imperfect gift
failure to complete the transfer but the transferor holds the legal title
Gift in completion of death
donatio mortis causa
deathbed gifts are an exception to the rule that equity will not perfect an imperfect gift
The settlor is the
Person who creates the trust
Inter vivos trust
Translates as in their lifetime
is reasonable income a sufficiently certain subject matter
Yes. It is possible to objectively determine a “reasonable income” based on the cost of living and the courts are capable of making an objective determination.
