Creation and Requirements of Express Trusts Flashcards
Which of the following is NOT a method of creating an express trust?
A) Self-declaration of trust
B) Transfer on trust
C) Resulting trust
D) Testamentary trust
(C):
A resulting trust is not an express trust; it arises by operation of law.
Explanation:
Resulting trusts occur when there is a failure of an express trust or where property is transferred without clear beneficial ownership.
What happens to legal title in a self-declaration of trust?
A) The settlor transfers legal title to a trustee
B) The settlor retains legal title but holds it in a different capacity
C) The settlor loses all rights in the property
D) The trustee gains both legal and beneficial title
(B):
The settlor retains legal title but holds it in a different capacity as trustee.
Explanation:
In a self-declaration, the settlor remains the legal owner but now holds the property in trust for the beneficiary.
Which of the following is NOT required for the creation of an express trust?
A) Certainty of intention
B) Certainty of subject matter
C) Registration with HMRC in all cases
D) Certainty of objects
(C):
Registration with HMRC is only required for certain trusts (e.g., taxable trusts), not all express trusts.
Explanation:
The three certainties (intention, subject matter, and objects) are fundamental to all express trusts.
What is the main purpose of the “beneficiary principle” in trust law?
A) To ensure the trust is created for a valid charitable purpose
B) To provide trustees with complete discretion over trust property
C) To ensure there is someone who can enforce the trust
D) To allow non-charitable purpose trusts to exist freely
(C):
To ensure there is someone who can enforce the trust.
Explanation:
A trust without identifiable beneficiaries (except charitable trusts) may be invalid because there is no one to enforce its terms.
Alex declares, “I hold my house on trust for my son, Ben.” What type of trust has Alex created?
A) A resulting trust
B) A constructive trust
C) A self-declaration of trust
D) A transfer on trust
(C):
A self-declaration of trust, as Alex retains legal title but holds it in trust for Ben.
Explanation:
Since Alex still holds legal title but has separated equitable ownership for Ben, this is a self-declaration.
Sophie transfers shares to Tom, instructing him to hold them for Lisa. Which method of trust creation is this?
A) Self-declaration of trust
B) Transfer on trust
C) Resulting trust
D) Constructive trust
(B):
Transfer on trust, as legal title is transferred to a third-party trustee (Tom).
Explanation:
In a transfer on trust, the settlor (Sophie) transfers legal title to a trustee (Tom) for a beneficiary (Lisa).
James writes in his will, “I leave my house to my brother on trust for my children.” What type of trust is this?
A) Inter vivos express trust
B) Testamentary trust
C) Constructive trust
D) Resulting trust
(B):
A testamentary trust, as it is created through a will.
Explanation:
Trusts in wills take effect upon the settlor’s death and must comply with the Wills Act 1837.
Emily intends to transfer land into trust for charity but fails to use a deed. What is the legal consequence?
A) The trust is valid
B) The trust is void for lack of proper formality
C) The trust will be upheld under equity
D) The trust is automatically registered
(B):
The trust is void for lack of proper formality, as land must be transferred by deed.
Explanation:
Under s52(1) LPA 1925, land transfers require a deed to be valid.
Which case established that “equity will not perfect an imperfect gift”?
A) Jones v Lock
B) Milroy v Lord
C) Paul v Constance
D) Richards v Delbridge
(B):
Milroy v Lord established the principle that equity will not perfect an imperfect gift.
Explanation:
This case confirmed that a trust must be fully constituted, and equity will not step in to complete a defective transfer.
A valid express trust requires certainty of intention. Which statement best describes this requirement?
A) The settlor must make an explicit statement of their wishes
B) The settlor’s words or conduct must indicate an intent to create a trust
C) The trust document must always be in writing
D) The settlor must sign a formal trust deed
(B):
The settlor’s words or conduct must indicate an intent to create a trust.
Explanation:
Certainty of intention does not require a written document in all cases but must clearly show an intent to separate legal and equitable ownership.
Which type of trust is automatically constituted upon its creation?
A) Testamentary trust
B) Self-declaration of trust
C) Transfer on trust
D) Resulting trust
(B):
Self-declaration of trust, as legal title does not need to move.
Explanation:
Because the settlor is already the legal owner, the trust is valid as soon as they declare themselves trustee.
Which statutory rule limits the maximum duration of a private trust?
A) The Rule Against Perpetuities
B) The Charities Act 2011
C) The Trustee Act 2000
D) The Wills Act 1837
The Rule Against Perpetuities limits private trusts to 125 years.
Explanation:
This rule ensures that private trusts do not last indefinitely.
In Paul v Constance, which principle was upheld?
A) Equity will not assist a volunteer
B) A trust can be created without formal language if intention is clear
C) A failed gift cannot be treated as a self-declared trust
D) A secret trust must be proved by clear evidence
(B):
A trust can be created without formal language if intention is clear.
Explanation:
In Paul v Constance, the phrase “this money is as much yours as mine” showed an intention to create a trust.
Which type of trust does NOT require identifiable human beneficiaries?
A) Private express trust
B) Charitable trust
C) Bare trust
D) Discretionary trust
(B):
Charitable trusts do not require identifiable human beneficiaries.
Explanation:
Charitable trusts are enforced by the Charity Commission rather than individual beneficiaries.
Which of the following would most likely indicate a valid self-declaration of trust?
A) “I promise to give my sister £5,000 next year.”
B) “I am holding this property for my brother.”
C) “I will think about creating a trust for my nephew.”
D) “I wish to create a trust in the future for my parents.”
(B):
“I am holding this property for my brother” is a valid self-declaration of trust because it indicates present intent and separates legal and beneficial ownership.
Explanation:
For a valid self-declaration of trust, the settlor must show certainty of intention to hold property as a trustee. Future promises (A, C, D) do not create a trust, as a trust mus
What is the key distinction between express trusts and trusts arising by operation of law?
A) Express trusts arise through judicial intervention, while trusts arising by operation of law require settlor intent
B) Express trusts are intentionally created, while trusts arising by operation of law are imposed by the courts
C) Express trusts are created only in writing, whereas trusts arising by operation of law require oral evidence
D) Express trusts can be revoked at will, while trusts arising by operation of law are always permanent
(B): Express trusts are intentionally created by a settlor, whereas trusts arising by operation of law (resulting and constructive trusts) are imposed by courts in response to certain circumstances.
Which of the following is NOT a type of trust arising by operation of law?
A) Resulting trust
B) Constructive trust
C) Express trust
D) Statutory trust
(C): Express trusts are deliberately created by a settlor, whereas resulting, constructive, and statutory trusts arise by law.
What is the main function of an automatic resulting trust?
A) To ensure a trustee cannot benefit from the trust
B) To return beneficial ownership to the settlor if a trust fails
C) To impose fiduciary duties on the donee
D) To allow for secret trusts
(B): Automatic resulting trusts occur when a trust fails (e.g., due to lack of certainty of objects), ensuring the property returns to the settlor.
Amy transfers £50,000 to Brian, stating that she is “keeping the money safe” for herself. Later, Amy argues that Brian is holding the money on trust for her, while Brian claims it was an outright gift.
What type of trust is most likely to arise?
A) Express trust
B) Resulting trust
C) Constructive trust
D) Statutory trust
(B): This is a presumed resulting trust because there was no consideration given, and Brian has not rebutted the presumption that the property is held on trust for Amy.
John purchases a house but registers it in his son Mark’s name. There is no express trust declared. Later, John and Mark dispute whether Mark owns the house outright or holds it on trust for John.
What principle applies here?
A) The presumption of advancement
B) The rule in Milroy v Lord
C) The Saunders v Vautier principle
D) The beneficiary principle
(A): The presumption of advancement applies to parent-child transfers, meaning Mark is presumed to have received the house as a gift unless John proves otherwise.
Olivia transfers £20,000 to her friend Peter with no evidence that she intended a gift. What is the default presumption in equity?
A) The money is held on a presumed resulting trust for Olivia
B) The money is Peter’s absolutely
C) The money is held on an express trust
D) The money is subject to a discretionary trust
(A): Equity presumes a resulting trust unless Peter can provide evidence that Olivia intended a gift.
Which of the following scenarios would most likely give rise to a common intention constructive trust?
A) A father transfers money to his son for university fees
B) A married couple declares a trust over their property in writing
C) An unmarried couple purchases a home together, but only one partner is listed on the title
D) A trustee misuses trust funds and is ordered to return them
(C): Common intention constructive trusts often arise when cohabiting couples dispute beneficial ownership of property.
A fiduciary makes an unauthorized profit while managing a trust. What type of trust arises over the profits?
A) Presumed resulting trust
B) Automatic resulting trust
C) Common intention constructive trust
D) Institutional constructive trust
(D): Institutional constructive trusts arise automatically when a fiduciary profits from their position.
A testator’s will leaves £100,000 to an unregistered charity. The will fails to meet charitable trust requirements, so what happens to the money?
A) The trustee can keep it
B) It forms an automatic resulting trust for the testator’s estate
C) The trustee can distribute it to any charity of their choosing
D) The intended charity receives the money anyway
(B): If a trust fails (e.g., due to failure to meet charitable trust requirements), the funds return to the estate under an automatic resulting trust.
In Lloyds Bank v Rosset [1991], what factor was considered crucial for establishing a common intention constructive trust?
A) An express trust declaration
B) Direct financial contributions to the property
C) Evidence of fraudulent misrepresentation
D) A lack of fiduciary duties
(B): In Rosset, the court ruled that direct financial contributions (e.g., mortgage payments) are strong evidence of common intention in property disputes.
What distinguishes an institutional constructive trust from a remedial constructive trust?
A) Institutional constructive trusts require a court order
B) Remedial constructive trusts arise automatically
C) Institutional constructive trusts arise automatically, whereas remedial constructive trusts require court discretion
D) There is no distinction between them
(C): Institutional constructive trusts arise automatically when legal owners act unconscionably, while remedial constructive trusts are imposed at the court’s discretion.
Under a purchase money resulting trust, if A pays for property but B is the registered owner, who holds the beneficial interest?
A) A holds a resulting trust over B’s share
B) B holds a resulting trust for A
C) The property is held on an express trust
D) The property automatically belongs to B
(B): Equity presumes that B holds the property on a resulting trust for A unless A intended a gift.
Rachel agrees to sell land to Tom. Before the transfer is completed, Rachel refuses to proceed. Tom seeks a remedy in equity. What will the court likely impose?
A) A resulting trust
B) A constructive trust
C) A discretionary trust
D) A charitable trust
(B): Courts impose constructive trusts to enforce specifically enforceable contracts for land.
A trustee dies, leaving unadministered trust property. What happens under equity’s maxims?
A) The trust automatically dissolves
B) The beneficiaries inherit the property absolutely
C) A resulting trust arises in favor of the settlor’s estate
D) A new trustee is appointed to continue administration
(D): If a trustee dies, new trustees are appointed—the trust does not automatically dissolve.
Julia receives money from Mark to invest for their joint business, but she keeps the money instead. What type of trust arises?
A) A discretionary trust
B) A statutory trust
C) A remedial constructive trust
D) An automatic resulting trust
(C): Julia’s unconscionable behavior justifies a remedial constructive trust, ensuring she does not retain the funds unfairly.
Which of the following is a key requirement for creating an express trust?
A) Consideration must be provided
B) There must be certainty of intention, subject matter, and objects
C) The settlor must be a trustee
D) The trust must always be written
B) There must be certainty of intention, subject matter, and objects.
Explanation:
For an express trust to be valid, it must satisfy the three certainties: certainty of intention (to create a trust), certainty of subject matter (identifiable trust property), and certainty of objects (identifiable beneficiaries).
What happens to legal and equitable ownership when a settlor makes a self-declaration of trust?
A) Both legal and equitable ownership remain with the settlor
B) The settlor retains legal title but transfers equitable ownership to the beneficiary
C) The settlor transfers legal and equitable ownership to the beneficiary
D) The settlor loses all interest in the property
B) The settlor retains legal title but transfers equitable ownership to the beneficiary.
Explanation:
A self-declaration of trust means the settlor remains the legal owner but holds the property as trustee, while the beneficiary receives the equitable (beneficial) interest in the property.
Which legal requirement prevents an express trust from lasting indefinitely?
A) The certainty of objects rule
B) The beneficiary principle
C) The rule against perpetuities
D) The rule in Milroy v Lord
C) The rule against perpetuities.
Explanation:
Under the Perpetuities and Accumulations Act 2009, private trusts cannot last beyond 125 years. This prevents trusts from existing indefinitely.
Which of the following trusts does not require identifiable beneficiaries?
A) A fixed trust
B) A discretionary trust
C) A charitable trust
D) A private express trust
C) A charitable trust.
Explanation:
Charitable trusts are for the public benefit and are enforced by the Charity Commission, so they do not require individual beneficiaries.
What is the effect of a properly constituted express trust?
A) The settlor retains full ownership of the trust property
B) The settlor has no further interest in the trust property (unless they are a beneficiary)
C) The beneficiary can revoke the trust at any time
D) The trustee gains absolute ownership of the property
B) The settlor has no further interest in the trust property (unless they are a beneficiary).
Explanation:
Once a trust is fully constituted, the settlor loses all rights in the trust property unless they are also a beneficiary. The trustee holds legal title and the beneficiary holds equitable title.
Amira writes a letter to her friend, stating, “I want you to hold my house on trust for my nephew.” However, Amira takes no further action. Is the trust valid?
A) Yes, because the letter demonstrates Amira’s intention
B) No, because legal title has not been transferred
C) Yes, because express trusts can be created informally
D) No, because all express trusts must be in writing
B) No, because legal title has not been transferred.
Explanation:
For a trust of land, the Law of Property Act 1925 (s.53(1)(b)) requires a written declaration, but Amira must also transfer legal title for the trust to be properly constituted.
A father tells his son, “I am holding my savings account in trust for you.” However, he continues using the account for personal expenses. Is this a valid self-declaration of trust?
A) Yes, because he expressed his intention
B) No, because his actions contradict an intention to create a trust
C) Yes, because oral declarations of trust are always valid
D) No, because a trust must be in writing
B) No, because his actions contradict an intention to create a trust.
Explanation:
Under Paul v Constance [1977], the intention to create a trust must be clear. Continuing to use the money for personal expenses suggests the father did not intend to immediately create a trust.
A wealthy individual transfers £10,000 to a trustee to distribute “as they see fit” among their relatives. What type of trust has been created?
A) A fixed trust
B) A discretionary trust
C) A resulting trust
D) A constructive trust
B) A discretionary trust.
Explanation:
A discretionary trust gives the trustee power to choose which beneficiaries receive what and when. The phrase “as they see fit” indicates trustee discretion.
Which of the following statements about certainty of objects is correct?
A) A fixed trust requires objects to be ascertainable
B) A discretionary trust requires objects to be individually named
C) If there is uncertainty as to objects, the trust automatically fails
D) Certainty of objects is not required for private express trusts
A) A fixed trust requires objects to be ascertainable.
Explanation:
A fixed trust requires identifiable beneficiaries (e.g., “£5,000 each to my three children”), whereas a discretionary trust requires beneficiaries to form a class (e.g., “my grandchildren”).
Which of the following trusts would be considered invalid?
A) A trust stating “I leave my money for the maintenance of my dog”
B) A trust stating “I leave my money to my wife for life, then my son”
C) A trust stating “I leave my money to a trustee to distribute among charities”
D) A trust stating “I leave my money to my son for his education”
A) A trust stating “I leave my money for the maintenance of my dog”.
Explanation:
Under the beneficiary principle, trusts must have legal persons as beneficiaries. Animals cannot be beneficiaries, making this trust invalid unless it falls under an exception (e.g., trusts for pet maintenance under anomalous exceptions).
