Creating express trusts

Question 1

Gifts and Trusts - Milroy v Lord

Answer 1

Types of giving:
1) Outright gift
2) Transfer to trustees to hold on trust for the person to be benefitted

Question 2

Gifts and Trusts - Milroy v Lord - Outright gift

Answer 2

Donor passes over the money or gift and the donee now has absolute ownership of the money and can do whatever they want with it

Question 3

Gifts and Trusts - Milroy v Lord - Trust

Answer 3

Settlor transfers the money to the chosen trustee and direct him to hold the money on trust for the beneficiary

Question 4

Gifts and Trusts - Milroy v Lord - Difference between the two types

Answer 4

Intention of the donor - in a gift the donor intends the donee to take the benefit. There are no strings attached to the gift. In the case of a gift the transferor intends the donee to have complete control over the property

Question 5

Requirements for a valid gift

Answer 5

1) Donor must have necessary mental capacity
2) Donor must have intention
3) Donor must ensure there is certainty of subject matter
4) Property must be transferred in correct manner

Question 6

Requirements for a valid gift - Mental capacity

Answer 6

Donor must be able to understand nature of the transaction and its consequences. Degree of understanding varies with the nature of the gift. A gift of small value relative to the rest of the donor’s assets will require a low degree of understanding

Question 7

Requirements for a valid gift - Intention to make the gift

Answer 7

Can usually infer from the circumstances - if the transaction takes place between relatives or friends and at Christmas or any other religious festivals at which gifts are common - no need for express words or gifts

Question 8

Requirements for a valid gift - Certainty of subject matter and objects

Answer 8

What the gift is must be certain - must be expressly stated in the deed. Donee or object of the gift must also be certain - ‘my old friends’ is not certain

Question 9

Requirements for a valid gift - Property must be transferred in the correct way

Answer 9

Property must be transferred using method appropriate to that type of property

Question 10

Requirements for a valid gift - Property must be transferred in the correct way - Land or any legal interest in land

Answer 10

Transferor must execute a deed S. 52(1). A deed needs to satisfy S. 1:
- The document is stated to be a deed or is stated to be signed as a deed
- The person making the deed signs the document in the presence of a witness who also signs it

Question 11

Requirements for a valid gift - Property must be transferred in the correct way - Shares in a company

Answer 11

• Transferor signs stock transfer form
• Transferor hands completed stock transfer form and share certificate to transferee
• Transferee sends both documents to the company to be registered

Question 12

Requirements for a valid gift - Property must be transferred in the correct way - Money

Answer 12

Transfer is effect by delivery of the note to the transferee

Question 13

Requirements for a valid gift - Property must be transferred in the correct way - Chattels

Answer 13

Transfer is the physical delivery of the asset to the transferee or by a deed

Question 14

Requirements for a valid gift - Property must be transferred in the correct way - Digital assets

Answer 14

Crypto assets should be treated as property

Question 15

Invalid gifts - Defective transfers and role of equity - General rule

Answer 15

Invalid gift = purported gift which fails if it’s not been transferred properly. The court will not ‘save’ an invalid gift by categorising a failed gift as a successfully created trust. There can be no pretence that instead of trying to make a gift, the intended donor meant to create a trust in favour of the disappointed intended receipt. The latter cannot sue for the intended present

Question 16

Invalid gifts - Defective transfers and role of equity - Exception - Every effort test

Answer 16

Where the donor has failed to transfer legal title the transfer may be regarded as complete in equity if the donor has put the property beyond his recall ie. he has done everything in his power to transfer the legal ownership to the donee the only outstanding matters are the actions of 3rd parties whose involvement in transfer process is required. This consists of a signed stock transfer form and the share certificate enabling the donee to apply for registration as new legal owner

Question 17

Invalid gifts - Defective transfers and role of equity - Exception - The rule in Strong v Bird

Answer 17

Applies on the death on the intended donor, the gift becomes a perfect gift the donee can claim property in priority to those entitled to the rest of the estate which the donor has left on death.

Question 18

Invalid gifts - Defective transfers and role of equity - Exception - The rule in Strong v Bird - Conditions

Answer 18

1) The donor intends to make an immediate gift to the donee but the gift is invalid because he fails to comply with the appropriate formality for transferring the legal title to the relevant property
2) The intention must be to make an immediate gift, not one conditional on an event in the future
3) The intention to give must continue unchanged until the donor’s death
4) The donor dies and the trustee is appointed the donor’s executor or administrator

Question 19

Strong v Bird - person who is supposed to hold the thing on trust is made as executor

Answer 19

They will automatically take the legal estate of the gift so the trust will be valid

Question 20

Every effort test

Answer 20

But have put it beyond his recall. Beyond his possession

Question 21

Sending shares

Answer 21

Send executed form and share certificate to the solicitor or company

Question 22

Come and pick it up

Answer 22

These are insufficient words to transfer a chattle.