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Trusts > Basics > Flashcards

Basics Flashcards

1
Q

Trusts are a creation of….

A

Equity!

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2
Q

What is equity?

A

A law system developed to ameliorate harshness of common law

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3
Q

What is common law derived from?

A

Judicial decisions and conventions

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4
Q

What is statute law derived from?

A

Acts of Parliament

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5
Q

Which acts reformed the court system in England and Wales?

A

Judicature Acts of 1873 and 1875

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6
Q

What did the Judicature Acts of 1873 and 1875 create?

A

Supreme Court of Judicature and the High Court (King’s Bench, Chancery, Family)

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7
Q

What is the standard common law remedy for breach of contract?

A

Damages

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8
Q

What is the standard equity remedy for breach of contract?

A

Rectification (getting the term in the contract changed) or specific performance (make the other party hold up their side of the bargain)

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9
Q

What is a right /in rem/?

A

A property right

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10
Q

Who is bound by rights /in rem/?

A

Everyone! “Against the whole world”

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11
Q

Which law system recognizes rights /in rem/?

A

Common law

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12
Q

What is a right /in personam/?

A

A personal right

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13
Q

Who is bound by rights /in personam/?

A

Individuals

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14
Q

Which law system recognizes rights /in personam/?

A

Equity law

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15
Q

Equity will not suffer…

A

A wrong to be without a remedy

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16
Q

Equity follows the…

A

law. But not always. Or slavishly.

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17
Q

Between equal equities…

A

the law shall prevail OR the first shall prevail

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18
Q

He who seeks equity must…

A

do equity

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19
Q

He who seeks equity must come…

A

with clean hands

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20
Q

What is the doctrine of laches?

A

Assumed acquiesence

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21
Q

Which maxim of equity describes laches?

A

Delay defeats equities

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22
Q

Which maxim of equity do you use if there is no sufficient reason for taking a particular course of action?

A

Equality is equity

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23
Q

Equity looks to intent rather…

A

than form

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24
Q

Equity looks on that as done which…

A

ought to be done

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25
Q

Equity imputes an intention to…

A

fulfil an obligation

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26
Q

Equity acts…

A

/in personam/

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27
Q

What is a trust?

A

A relationship between individuals relating to property

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28
Q

What is a person under an equitable obligation?

A

Trustee

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29
Q

What is property controlled by trustee?

A

Trust property

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30
Q

Who does trustee hold property for the benefit of

A

Beneficiary

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31
Q

What interest does a beneficiary have in a trust?

A

Equitable

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32
Q

What interest does a trustee hold in a trust?

A

Legal

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33
Q

What can a beneficiary do legally?

A

Enforce the trustee’s obligations

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34
Q

What is control almost always synonymous with?

A

Legal ownership

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35
Q

What is absolute ownership?

A

You own a property in law and equity

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36
Q

Can a legal owner of a trust benefit from the property?

A

No, but it can claim expenses

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37
Q

Does an equitable interest take priority over a legal interest?

A

Yes (equity prevails over common law where they conflict)

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38
Q

What happens to ownership of property when you create a trust?

A

It fragments the ownership

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39
Q

What are popular applications for trusts?

A

Providing for minors, providing for others secretly, protecting property from relatives, co-ownership of land, pension funds, investments, ownership of businesses and share management

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40
Q

What’s the difference between a gift and a trust?

A

A trust imposes an obligation on the part of the trustee, and it fragments the title.

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41
Q

What’s the difference between a trust and a contract?

A

Basically the only thing they have in common is they both impose an obligation. Contracts are mutually enforceable (trusts are one way), a trustee doesn’t have legal rights the way parties to a contract do, there’s no consideration for a trust

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42
Q

What’s a power?

A

An authorisation to do certain things which affect property

43
Q

What are some examples of express trusts?

A

Bare, fixed, discretionary

44
Q

What are some examples of implied trusts?

A

Resulting, constructive

45
Q

What’s a statutory trust?

A

Legislative provisions that provide trust in certain circumstances

46
Q

What’s a public trust?

A

Charitable trust for the benefit of society

47
Q

What’s an inter vivos settlement?

A

A settlement between the living. Goes into effect immediately.

48
Q

What’s a testamentary trust?

A

A trust that goes into effect upon death.

49
Q

What is interest in capital?

A

The trust property itself

50
Q

What’s an interest in income?

A

Money generated by capital (not the capital itself)

51
Q

What’s an absolute interest?

A

Entitled to capital AND income (income must be present)

52
Q

What’s a life interest?

A

An interest in property for life. Equitable interest in property during lifetime. Interest in posession. Life tenant.

53
Q

What’s an interest in remainder?

A

Interest in property after the life tenant has died. Remainder. Also known as a future interest.

54
Q

When does an interest vest?

A

If the beneficiary is known, if the beneficiary’s share is known, and there are no strings attached

55
Q

What’s a contingent interest?

A

The interest is contingent upon some condition being satisfied. Can be for life or in remainder.

56
Q

What’s the rule against perpetuities?

A

There’s a perpetuity period of 125 years from the date the trust is created. Everything needs to be vested by that 125 year date.

57
Q

Can one inherit an absolute trust?

A

Yup

58
Q

How long can life interests or interests in succession go on for?

A

125 years

59
Q

Which case underlines beneficiary supremacy?

A

Sanders v Vautier 1841

60
Q

Beneficiaries’ rights supercede…

A

Settlor’s wishes

61
Q

Beneficiaries may require trustee to…

A

Determine the trust

62
Q

To make a demand of the trustee, beneficiaries must first…

A

Be adult, have capacity, and agree

63
Q

What is a testator?

A

Person who made a will

64
Q

What is a settlor?

A

Person who establishes a trust

65
Q

Which maxim of equity aligns with the Certainty of Intention

A

Equity looks at the intent not at the form

66
Q

What is a precatory word

A

Hope, desire, ‘in full confidence that’ - words that ask but do not necessarily bind

67
Q

What was the turning point for precatory words?

A

Lambe v Eames (1871) - estate left to a widow merely imposed moral obligation

68
Q

What can precatory words do?

A

Call imperative intent into question (but not automatically negate intention)

69
Q

Can precedent dictate outcome when determining intention?

A

No but remember re: Steele’s Will Trusts - you can try pretty hard to mimic previously accepted language

70
Q

Why must trusts be certain?

A

(1) Trustees need to understand obligations (2) Beneficiaries need to understand entitlements (3) Court needs to be able to enforce

71
Q

Can you create a valid trust for the residue of an estate?

A

Yes! But NOT the “bulk”

72
Q

What’s the difference between a trust and a power

A

Trust imposes obligation and is imperative. A trustee has a legal interest in the property.

Power grants a right. It is discretionary. The donee of the power may have no interest in the property at all.

73
Q

Which trusts matter for certainty of objects?

A

Fixed and discretionary

74
Q

What is conceptual uncertainty?

A

When the concept of a class is unclear - could defeat a trust

75
Q

What is evidential uncertainty?

A

When potential beneficiaries can’t evidence their membership in a class - may not defeat a trust

76
Q

Is a debt a chose in action or a chose in possession?

A

Chose in action

77
Q

Are formalities required to create a trust?

A

No - equity looks to intent, not form

78
Q

If you don’t write a deed for property, what happens?

A

The trust is unenforceable, not void

79
Q

If a trust created by Will is to be valid, what does the Will have to be?

A

Valid

80
Q

What are the rules for a disposition of an equitable interest?

A

Disposition must be in writing, and settlor or their authorised agent must sign. Absence of writing makes disposition VOID.

81
Q

What’s an assignment of equitable interest?

A

Disposition where one person transfers equitable interest to another. Writing required.

82
Q

What’s an instruction to trustees for equitable interest?

A

Beneficiary instructs trustees to hold equitable interest for another; must comply with written document requirements of LPA.

83
Q

Which case backs up that instruction to trustees for transferring equitable title needs writing?

A

Grey v IRC (1960)

84
Q

What’s a sub trust?

A

Where beneficiary declares they hold their beneficial interest on trust for another. Sub-trustee must have duties to perform.

85
Q

What happens if the sub-trustee doesn’t have any duties to perform?

A

It’s a disposition of beneficial interest and must comply with LPA. This is a matter of fact.

86
Q

If you make a gift but you have an option to buy it back, what happens?

A

You have a resulting trust (Vendervell v IRC)

87
Q

How do you constitute a transfer for land?

A

Deed of conveyance or transfer (LPA 1925), and registration at HMLR (Land Registration Act 2002)

88
Q

How do you constitute a transfer for personalty

A

Delivery or deed of gift

89
Q

How do you constitute a transfer for shares?

A

Stock transfer form (Stock Transfer Act 1963); registration with company (Companies Act 2006)

90
Q

How do you constitute a transfer of existing equitable interest?

A

Writing, signed: LPA 1925

91
Q

Which case makes it clear that the settlor must do all that is required to make a trust valid?

A

Milroy v Lord

92
Q

What is the main exception of Milroy v Lord?

A

Re Rose

If settlor does everything required of them but they are reliant on the acts of an independent third party to complete the transaction, equity sees what is done as what ought to be done

93
Q

What is the rule from Strong v Bird

A

An inter vivos gift can be perfected if the donor showed intention to make immediate inter vivos gift and there was continuing intention to death to make the gift

94
Q

What’s a bequest

A

Gift of personal property left in a Will

95
Q

What’s a devise

A

Gift of real property in a Will

96
Q

What’s a gift

A

A transfer of an interest in property without receiving anything of value in return

97
Q

What’s a gift of residue

A

Part of an estate left after all debts and liabilities have been discharged and all specific gifts have been made

98
Q

What’s a pecuniary legacy

A

A gift of money left in a Will

99
Q

What’s a fixed trust

A

Every beneficiary has a fixed entitlement

100
Q

What’s a discretionary trust

A

Every beneficiary gets a distribution at the discretion of the trustees

101
Q

What’s a life tenant

A

Beneficiary entitled to receive lifetime benefits from a Trust

Interest in possession

102
Q

What’s a remainder

A

Beneficiary who receives trust assets after Life Tenant has died

103
Q

What’s a class gift

A

Beneficiaries of a class share a gift, and the size depends on how many members are in the class

104
Q

What’s a contingent gift

A

Beneficiary only gets a gift if they satisfy certain conditions

Trusts (2 decks)

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