Basics Flashcards
1
Q
Trusts are a creation of….
A
Equity!
2
Q
What is equity?
A
A law system developed to ameliorate harshness of common law
3
Q
What is common law derived from?
A
Judicial decisions and conventions
4
Q
What is statute law derived from?
A
Acts of Parliament
5
Q
Which acts reformed the court system in England and Wales?
A
Judicature Acts of 1873 and 1875
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)
7
Q
What is the standard common law remedy for breach of contract?
A
Damages
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)
9
Q
What is a right /in rem/?
A
A property right
10
Q
Who is bound by rights /in rem/?
A
Everyone! “Against the whole world”
11
Q
Which law system recognizes rights /in rem/?
A
Common law
12
Q
What is a right /in personam/?
A
A personal right
13
Q
Who is bound by rights /in personam/?
A
Individuals
14
Q
Which law system recognizes rights /in personam/?
A
Equity law
15
Q
Equity will not suffer…
A
A wrong to be without a remedy
16
Q
Equity follows the…
A
law. But not always. Or slavishly.
17
Q
Between equal equities…
A
the law shall prevail OR the first shall prevail
18
Q
He who seeks equity must…
A
do equity
19
Q
He who seeks equity must come…
A
with clean hands
20
Q
What is the doctrine of laches?
A
Assumed acquiesence
21
Q
Which maxim of equity describes laches?
A
Delay defeats equities
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
23
Q
Equity looks to intent rather…
A
than form
24
Q
Equity looks on that as done which…
A
ought to be done
25
Equity imputes an intention to...
fulfil an obligation
26
Equity acts...
/in personam/
27
What is a trust?
A relationship between individuals relating to property
28
What is a person under an equitable obligation?
Trustee
29
What is property controlled by trustee?
Trust property
30
Who does trustee hold property for the benefit of
Beneficiary
31
What interest does a beneficiary have in a trust?
Equitable
32
What interest does a trustee hold in a trust?
Legal
33
What can a beneficiary do legally?
Enforce the trustee's obligations
34
What is control almost always synonymous with?
Legal ownership
35
What is absolute ownership?
You own a property in law and equity
36
Can a legal owner of a trust benefit from the property?
No, but it can claim expenses
37
Does an equitable interest take priority over a legal interest?
Yes (equity prevails over common law where they conflict)
38
What happens to ownership of property when you create a trust?
It fragments the ownership
39
What are popular applications for trusts?
Providing for minors, providing for others secretly, protecting property from relatives, co-ownership of land, pension funds, investments, ownership of businesses and share management
40
What's the difference between a gift and a trust?
A trust imposes an obligation on the part of the trustee, and it fragments the title.
41
What's the difference between a trust and a contract?
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
42
What's a power?
An authorisation to do certain things which affect property
43
What are some examples of express trusts?
Bare, fixed, discretionary
44
What are some examples of implied trusts?
Resulting, constructive
45
What's a statutory trust?
Legislative provisions that provide trust in certain circumstances
46
What's a public trust?
Charitable trust for the benefit of society
47
What's an inter vivos settlement?
A settlement between the living. Goes into effect immediately.
48
What's a testamentary trust?
A trust that goes into effect upon death.
49
What is interest in capital?
The trust property itself
50
What's an interest in income?
Money generated by capital (not the capital itself)
51
What's an absolute interest?
Entitled to capital *AND* income (income must be present)
52
What's a life interest?
An interest in property for life. Equitable interest in property during lifetime. Interest in posession. Life tenant.
53
What's an interest in remainder?
Interest in property after the life tenant has died. Remainder. Also known as a future interest.
54
When does an interest vest?
If the beneficiary is known, if the beneficiary's share is known, and there are no strings attached
55
What's a contingent interest?
The interest is contingent upon some condition being satisfied. Can be for life or in remainder.
56
What's the rule against perpetuities?
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
Can one inherit an absolute trust?
Yup
58
How long can life interests or interests in succession go on for?
125 years
59
Which case underlines beneficiary supremacy?
Sanders v Vautier 1841
60
Beneficiaries' rights supercede...
Settlor's wishes
61
Beneficiaries may require trustee to...
Determine the trust
62
To make a demand of the trustee, beneficiaries must first...
Be adult, have capacity, and agree
63
What is a testator?
Person who made a will
64
What is a settlor?
Person who establishes a trust
65
Which maxim of equity aligns with the Certainty of Intention
Equity looks at the intent not at the form
66
What is a precatory word
Hope, desire, 'in full confidence that' - words that ask but do not necessarily bind
67
What was the turning point for precatory words?
Lambe v Eames (1871) - estate left to a widow merely imposed moral obligation
68
What can precatory words do?
Call imperative intent into question (but not automatically negate intention)
69
Can precedent dictate outcome when determining intention?
No but remember re: Steele's Will Trusts - you can try pretty hard to mimic previously accepted language
70
Why must trusts be certain?
(1) Trustees need to understand obligations (2) Beneficiaries need to understand entitlements (3) Court needs to be able to enforce
71
Can you create a valid trust for the residue of an estate?
Yes! But NOT the "bulk"
72
What's the difference between a trust and a power
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
Which trusts matter for certainty of objects?
Fixed and discretionary
74
What is conceptual uncertainty?
When the concept of a class is unclear - could defeat a trust
75
What is evidential uncertainty?
When potential beneficiaries can't evidence their membership in a class - may not defeat a trust
76
Is a debt a chose in action or a chose in possession?
Chose in action
77
Are formalities required to create a trust?
No - equity looks to intent, not form
78
If you don't write a deed for property, what happens?
The trust is unenforceable, not void
79
If a trust created by Will is to be valid, what does the Will have to be?
Valid
80
What are the rules for a disposition of an equitable interest?
Disposition must be in writing, and settlor or their authorised agent must sign. Absence of writing makes disposition VOID.
81
What's an assignment of equitable interest?
Disposition where one person transfers equitable interest to another. Writing required.
82
What's an instruction to trustees for equitable interest?
Beneficiary instructs trustees to hold equitable interest for another; must comply with written document requirements of LPA.
83
Which case backs up that instruction to trustees for transferring equitable title needs writing?
Grey v IRC (1960)
84
What's a sub trust?
Where beneficiary declares they hold their beneficial interest on trust for another. Sub-trustee must have duties to perform.
85
What happens if the sub-trustee doesn't have any duties to perform?
It's a disposition of beneficial interest and must comply with LPA. This is a matter of fact.
86
If you make a gift but you have an option to buy it back, what happens?
You have a resulting trust (Vendervell v IRC)
87
How do you constitute a transfer for land?
Deed of conveyance or transfer (LPA 1925), and registration at HMLR (Land Registration Act 2002)
88
How do you constitute a transfer for personalty
Delivery or deed of gift
89
How do you constitute a transfer for shares?
Stock transfer form (Stock Transfer Act 1963); registration with company (Companies Act 2006)
90
How do you constitute a transfer of existing equitable interest?
Writing, signed: LPA 1925
91
Which case makes it clear that the settlor must do all that is required to make a trust valid?
Milroy v Lord
92
What is the main exception of Milroy v Lord?
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
What is the rule from Strong v Bird
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
What's a bequest
Gift of personal property left in a Will
95
What's a devise
Gift of real property in a Will
96
What's a gift
A transfer of an interest in property without receiving anything of value in return
97
What's a gift of residue
Part of an estate left after all debts and liabilities have been discharged and all specific gifts have been made
98
What's a pecuniary legacy
A gift of money left in a Will
99
What's a fixed trust
Every beneficiary has a fixed entitlement
100
What's a discretionary trust
Every beneficiary gets a distribution at the discretion of the trustees
101
What's a life tenant
Beneficiary entitled to receive lifetime benefits from a Trust
Interest in possession
102
What's a remainder
Beneficiary who receives trust assets after Life Tenant has died
103
What's a class gift
Beneficiaries of a class share a gift, and the size depends on how many members are in the class
104
What's a contingent gift
Beneficiary only gets a gift if they satisfy certain conditions
