Chapter 1 - Introduction to Trusts

Question 1

List the 3 reasons a Trust may be set up?

Answer 1

Legal and administrative reasons
Protection
Tax Planning Purposes

Question 2

The main statutory rules applying to English trust law are contained in…

Answer 2

The Trust Act 1925

Question 3

The main statutory rules relating to Scottish Trust law are contained in….

Answer 3

The Trusts (Scottish Act) 1921

Question 4

Define ‘Common Law’

Answer 4

It is a legal concept, known as case law or precedent.

It is a law made in court by judges rather than legal stature.

Question 5

List and define the 3 certainties required for a valid trust?

Answer 5

Words/Intention - the intention to create a trust put in writing
Subject Matter - property that is being transferred to the trust
Objects - the beneficiaries of the trust

Question 6

What is a Trust?

Answer 6

A trust is a way of holding property for the benefit of someone else, without giving them control over it.

A Settlor creates a legal obligation over property that requires the trustees to deal with the property over which they have control, for the benefit of certain other people.

Question 7

List 3 characteristics of a trust

Answer 7

1 - the assets are separate from the trustees own estate
2 - the title of the trust assets are held by the trustee
3 - trustees have power over the assets

Question 8

Explain the division of ownership in a trust

Answer 8

Trustees have the legal ownership over assets, whilst beneficiaries have the beneficial ownership

Question 9

List the 6 types of asset in legal terms

Answer 9

Realty - (freehold interest in land)
Personalty - split into
- Chattels - Real - (leasehold interests)
- Chattels - Personal -
- - Choses in action - (intangible assets)
- - Choses in possession - (tangible assets)