Declaration and Constitution Flashcards
What is required from a valid declaration of a trust?
That the trustees, property, beneficiaries and powers and duties of the trustees are all identified.
What is the nature of a fixed-interest trust?
It has no discretion as to how the trust property is to be distributed between beneficiaries.
The trust is declared and should be distributed following the exact wording of the trust.
What is the nature of a discretionary trust?
Gives the trustees discretion as to the amounts beneficiaries receive.
What are the three certainties?
(i) certainty of intention - must be clear that there was an intention to create a trust
(ii) certainty of subject matter - must be clear what the property in the trust is
(iii) certainty of objects - must be clear who benefits
What is required for subject matter to be certain?
The property must be specifically identified. I.e. if there are two bottles of wine, and the trust only states a bottle, this is not a certain subject matter.
If it is non-fungible, e.g. money, no specificity is required, the bulk it’s from is all that needs to be certain.
What is the test for certainty of objects in a:
(a) fixed trust; and
(b) discretionary trust?
(a) the complete list test, must be certain who does and does not benefit;
(b) the is or is not test, must be certain whether someone is or is not apart of the class of beneficiaries
What is required for certainty of intention?
The settlor must use words that impose a duty on someone to act as a trustee; no need to use the word ‘trust’, just need to describe a trust-like instrument
What is the perpetuity period of a trust?
125 years.
What formalities are needed for a trust declaration?
Except for land, no formalities are necessary; can be declared orally if it complies with all certainties.
What formalities are needed for a trust of land?
Must be declared in writing and signed by the settlor.
What does it mean to ‘constitute’ a trust?
To:
Make a valid declaration of trust; and
put assets into the trust
How is a self-declared trust constituted?
When it is declared, it is constituted, given the settlor is the trustee and already has the property.
How are the following properly constituted:
Land;
Shares;
Money;
Chattels.
(i) execute a deed and register the trustee as the new legal owner;
(ii) execute a stock transfer form and have the company register the trustee as the new legal owner;
(iii) passes with delivery;
(iv) passes with delivery
What is the maxim regarding an improperly constituted trust?
‘Equity will not assist a volunteer’.
Effectively, equity will not perfect an imperfect trust.
What are the 2 exceptions to the maxim ‘equity will not assist a volunteer’?
(i) ‘Every effort’ - If the settlor made every effort to constitute the trust, and put it out of their control, it will be deemed constituted;
(ii) Strong v Bird - If the intended trustee of a non-constituted trust becomes the PR of the settlor upon death, meaning they are the legal owner of the property, the trust will be deemed properly constituted
