Creation and Requirements of Express Trusts

Question 1

what are the 3 certainties for all trusts to satisfy?

Answer 1

certainty of:

intention

subject matter

objects

Question 2

what is meant by certainty of intention?

Answer 2

it must be clear that the creator intended to create a trust

failure to do so will mean it is a gift instead.

Question 3

what are the types of words a settlor should use?

Answer 3

precatory

imperative

Question 4

explain certainty of subject matter

Answer 4

it must be clear:

what property is being held on trust

AND

what the individual interests of the beneficiaries are.

Question 5

explain description of property for certainty of subject matter

Answer 5

vague or general descriptions of trust property will render trusts void with tangible property

physical separation of the property is required.

Question 6

explain how a beneficiary’s interest should be under the certainty of subject matter requirement?

Answer 6

beneficial interests must be clear.

Question 7

explain certainty of objects

Answer 7

it must be clear who the beneficiaries of the trust are

Question 8

how does certainty of objects work for fixed trusts?

Answer 8

beneficiaries are specified

OR

it must be possible to draw up a complete list of every beneficiary

Question 9

how does certainty of objects work for discretionary trusts?

Answer 9

trustee is given discretion to choose who in a class of beneficiaries will benefit, but the following is needed:

conceptual certainty

evidential certainty

administrative workability

Question 10

after the 3 certainties, what else is required to be valid trust?

Answer 10

the beneficiary principle

the rule against perpetuities

Question 11

What is the beneficiary principle?

Answer 11

a trust must have identifiable beneficiaries or be a who can enforce the trust.

Question 12

what is the rule against perpetuities?

Answer 12

A legal rule preventing property from being tied up indefinitely by requiring future interests to vest, if at all, within a set time frame.

125 years is the timeframe

Question 13

what happens if an interest does not vest within perpetuity period?

Answer 13

interest is void from the outset

Question 14

what type of trust is an exception to the beneficiary principle?

Answer 14

charitable trusts.

Question 15

what happens if a trust does not satisfy the beneficiary principle?

Answer 15

The trust is void, and the property reverts to the settlor or their estate under a resulting trust.

Question 16

What are bare trusts?

Answer 16

Simply holding legal title

Question 17

What are the 2 methods of the transferor creating an express trust?

Answer 17

1. Self-declaration of trust: settlor becomes trustee, retaining legal title, holding their assets on trust for beneficiaries
2. Transfer on trust: settlor transfer legal title to 3rd party who holds on trust for beneficiaries

Question 18

What are the 4 requirements to create an express trust?

Answer 18

1. 3 Certainties
   - certainty of intention (creation)
   - certainty of subject matter (assets)
   - certainty of objects (bens)
2. Beneficiary Principles (must be identifiable beneficiaries save for exceptions)
3. Perpetuity Rules/Formalities (declaration & constitution of trust)
4. Registration

Question 19

how is a testamentary trust (in settlor’s lifetime) created?

Answer 19

all dispositions by will must satisfy s 9 of the wills act.