Declaration of trust

Question 1

What is a fixed interest trust?

Answer 1

Trustees have no discretion in trust’s distribution

In discretionary trust, can decide on amount each beneficiary receives/if receives at all

Question 2

3 certainties declaration of trust must satisfy

Answer 2

1. intention
2. subject matter
3. objects

Question 3

Certainty of objects in fixed interests trust

Answer 3

Must meet complete list test (can name all beneficiaries)
- includes “conceptual certainty”, and “evidential certainty”

Question 4

Certainty of objects in discretionary trust

Answer 4

Must meet certainty of objects test
- includes conceptual certainty (must be able to identify class, but not every single beneficiary)
- can FAIL for: administrative unworkability or capriciousness

Question 5

Consequence of lack of certainty of objects

Answer 5

Resulting trust held for settlor

Question 6

Perpetuity period

Answer 6

125 years

Question 7

Formalities for will trusts

Answer 7

Declaration must be:
- in writing,
- signed by testator,
- in joint presence of 2 witnesses (who also sign in testator’s presence)

Question 8

Formalities for lifetime trusts

Answer 8

Can be made orally or in a document (document must be signed by settlor)

Question 9

Lifetime trust over land formalities

Answer 9

• signed by settlor,
• evidenced in writing (not necessarily made in writing, just confirmed- BUT: writing must contain all material terms)

Question 10

How to constitute trust over land:

Answer 10

Settlor must execute a deed:
- be clear on its face it’s a deed,
- signed by settlor + witnessed by 1 + signed by witness

Then, give deed to Land Registry- legal title passes once trustee registered as new owner

Question 11

How to constitute trust over shares:

Answer 11

Settlor must:
- execute stock transfer form,
- give form + share certificates to company

Legal title passes once trustee registered as new shareholder

Question 12

“every effort test” in trust constitution

Answer 12

Transfer considered complete if settlor did everything possible to make it happen, with only act of 3rd party remaining to be done (property put “beyond recall”)

Question 13

rule in “Strong v Bird” in trust constitution

Answer 13

If legal title not transferred to trustee during settlor’s lifetime, and the trustee is the executor, trust created if:
- settlor intended immediate trust with executor as trustee,
- trust not created due to failure to transfer,
- settlor’s intentions continued up to death, and
- intended trustee acquired legal title due to being executor/administrator

Question 14

If settlor + 3rd party are to be trustees

Answer 14

Must transfer title into joint names

If not but declaration of trust made, unconscionable to back out, so must make transfer (or executor must)

Question 15

Rule in Saunders v Vautier

Answer 15

If sole, adult beneficiary with capacity has vested interest, can end trust by requesting transfer anytime

Question 16

Extended rule in Saunders v Vautier

Answer 16

If several beneficiaries, can end the trust by requiring transfer to themselves if all beneficiaries who could possibly become entitled:
- exist + are ascertained,
- are 18/over + have mental capacity, and
- agree