Chapter 17 Flashcards
Are tax practitioners allowed to draft trust documents for payment?
No
In order to create an enforceable express private trust, the “three certainties” have to be present - what are they?
A certainty of:
• Intention - doesn’t need to be formal but words have to be imperative & not precatory
- Subject matter - the property has to be identified precisely & has to be ascertainable
- Objects - Objects = the beneficiaries who benefit from it (must be identified)
How can express private trusts be created?
Usually by writing by deed, but also orally
When land is involved - must by evidenced in writing & signed by settlor / by declaration of trust signed by trustees
What is the law against perpetuities do?
It doesn’t allow non-charitable trusts to run indefinitely
Can a person who is not resident in the UK be a trustee?
Yes
How many trustees do you need (minimum) if land is settled in the trust?
2 unless the trustee is a trust corporation
Can existing trustees appoint new or additional trustees?
Yes they have the statutory power to do so.
Can beneficiaries appoint new or additional trustees?
Yes only where no person is expressly nominated in the trust deed to appoint trustees and all beneficiaries are of full capacity
Can the court appoint new or additional trustees?
Yes in certain circumstances, eg can remove trustee who takes up residence abroad
What are the powers of the trustees?
- Power of maintenance - making payments out of the income of the trust for maintenance, education or benefit of the minor - remaining income = accumulated & added to capital
- Power of advancement - power to apply the trusts’ capital to a beneficiary of any age who is entitled to a share in capital
What are the specific duties of trustees?
- To act within scope of their powers
- To protect the trust property
- To invest the trust property
- To act impartially as between beneficiaries
- To keep true & accurate accounts
- To distribute income & capital to beneficiaries when it comes due
- Not to profit personally from the trust
- Not to purchase property from the trust
Can trustees be paid?
Yes they can received reasonable remuneration out of trust property
Is a completely constituted trust irrevocable / variable?
No - although can be varied on an application to the court
Who is liable for any loss suffered by the trust?
The trustee
When does a breach of trust arise?
Where trustees fail to carry out their duties in accordance with the terms of the trust
Where a trust suffers a loss, what are the remedies available to the beneficiaries?
- Recover the trust property that still exists (property can’t be recovered from a bona fide purchaser - good faith purchaser)
- Claim damages from the trustees
