BENEFICIARIES

Question 1

what is a beneficiary and what title do they own

Answer 1

the beneficiary owns the equitable title to the trust property - beneficial title

Question 2

what do the rights of particular beneficiaries depend on

Answer 2

the type of trust

Question 3

trusts can be bare or special - true or false

Answer 3

true

Question 4

what is a bare trust

Answer 4

the simplest form of trust, where the trustee holds property for a beneficiary who is absolutely entitled to the income and capital of the trust

Question 5

in a bare trust, is the trustee obliged at the beneficiarys request to transfer the trust property to the beneficiary

Answer 5

yes
or otherwise as the beneficiary directs

Question 6

does the trustee in a bare trust have to comply with the other directions of the beneficiary

Answer 6

no unless the wording of the trust instrument specifies otherwise

Question 7

in special trusts are the interests of the beneficiaries absolute

Answer 7

no they are not absolute

Question 8

what are examples of special trusts

Answer 8

life interest trust
contingent interest trust
discretionary trust

Question 9

life interest trust (interest in possession)

Answer 9

one beneficiary is entitled to the income from the trust property for life, after the beneficiaries death another beneficiary becomes entitled to the capital

Question 10

contingent interest trust

Answer 10

the beneficiaries interest is contingent (depends) on the occurrence of a particular event, such as the beneficiary reaching a certain age

Question 11

discretionary trust

Answer 11

the beneficiaries fall into a class of beneficiaries

any beneficiary who falls within that class may benefit from the trust property at the discretion of the trustee - no particular beneficiary has any right to receive income or capital

Question 12

note

Answer 12

many modern trusts are setup on a flexible basis with powers to allow trustees to alter the terms of the trust, to add or remove beneficiaries, or to terminate them at any time in favour of one or more of the beneficiaries

Question 13

the interests of the beneficiaries under these trusts would be
fixed, contingent, vested discretionary

Answer 13

fixed - set by the terms of the trusts instrument
contingent - dependent on the occurrence of a specified event
vested - a non contingent interest , the beneficiary is said to obtain a vested interest when the contingency is satisfied
discretionary - at the discretion of the trustees

Question 14

rule in saunders v vautier - beneficiaries can use this rule to collapse a trust and take the property absolutely if all the beneficiaries of the trust are -

Answer 14

• adults
  -sui juris (legally competent having the capacity to manage ones own affairs)
• entitled to the entirety of the trust property between them

Question 15

if the criteria for the rule in saunders v vautier are met, what may the beneficiaries do (provided they all agree)

Answer 15

• effect a variation of the trust by bringing the trust to an end and resettling the property on any terms they wish
  or
• consent to any act of the trustees that varies the terms of the trust - this avoids the administrative burden of dissolving the trust and resettling it, but does require the trustees to agree to the variation

Question 16

what are other ways in which a trust may come to an end

Answer 16

• action taken by the trustees either under their powers or by court approval
• following certain events envisaged in the trust deed
• by the use of a power of revocation (rarely included in modern trust instruments)
• setting aside
• elapsing of time
• rule in andrews v partington (class closing rules)
• rule in lassence v tierne - where there’s an absolute gift and an unsuccessful attempt to impose trusts on that gift
• bankruptcy of the settlor