Beneficial Entitlement Flashcards
What is the difference between capital and income of a trust?
Capital is the market value of the property, or the balance in the account
Income is the profit which arises out of the property - rent, dividends, interest etc.
What is an absolute and limited beneficiary interest?
Absolute interest - beneficiary interests in the CAPITAL
Limited interest : beneficiary with only an interest in the income of the property
What is a vested interest?
Beneficiary exists and does not have to satisfy any conditions imposed by the trust, before becoming entitled to trust property
Unconditional.
If beneficiary is minor, Trustees will hold property until they reach 18, but they are still vested. Trsutees hold it under a “bare trust”
What is a contingent interest?
If the interest is CONDITIONAL upon the happening of some future event, or if the beneficiary is not yet in existence.
Once beneficiary satisfied condition, the beneficial interest VESTS in them ,and they have a vested interest.
If beneficiary dies BEFORE THIS, then their interest returns to the settlor, unless it is stated that it goes to somene else.
Is still a FIXED TRUST.
What are successive interests?
Trusts can be used to distribute property over successive generations: hold on trust for wife for life, then remainder to son.
Wife has vested, limited interest - life tenant. In possession
Son has vested interest in capital, remainderman, and interest is in “remainder”
What is the rules n Saunders v Vautier?
The principle that a beneficiary can in some situations require the trustees to convey trust property and baring trust to an end, is extended BEYOND a single beneficiary.
What are bare trusts?
A trust for a sole adult that gives beneficiary a vested interest. This is said to be absolutely entitled.
Unusual, because trustees must handle property as beneficiary DICTATES.
What is the extended rule of Saunders v Vautier?
Includes trusts that have more than one beneficiary. Beneficiaries can end the trust by calling for a transfer of trust property to themselves or other trustees,
AS LONG AS ALL the beneficiaires under the trust are:
In existence and ascertained
Are age 18 or over
Agree to what is being proposed
