EQUITY AND TRUSTS Flashcards
TRUST INSTRUMENT
deed
PAUL V CONSTANCE
settlor can be a trustee or beneficiary but not all 3
TRUSTEES
legal owners
BENEFICIARIES
equitable/beneficial owners
EXPRESS TRUSTS
fixed/discretionary trust such as power/gift. eg wills
PURPOSE TRUST
trusts intended to serve specific purpose eg charitable trust
TRUSTS ARISING FROM OPERATION OF LAW
resulting/constructive/statutory trusts. Can be inter vivo
BARE/SIMPLE TRUSTS
merely holding assets for a beneficiary. SAUNDERS V VAUTIER
USE OF TRUSTS
- preserve wealth/tax avoidance
- enable property to be held by a person who can’t do it themselves
- make gift in future
VALID TRUST
1) compliance with formalities
2) effective declaration of a trust (3 certainties)
3) effective transfer of property to trustees (vesting)
EQUITABLE EXCPETIONS TO FORMALITIES
1) conveyance to minors
2) “every effort rule”
3) unconscionability
4) deathbed gifts
5) fortuitous vesting
6) proprietary estoppel
CONVEYANCE TO MINORS
TOLATA - land can be conveyed to minors but managed by trustees until adulthood
” EVERY EFFORT RULE”
RE ROSE - if a transferor has done all they can to transfer property, equity may enforce it despite incomplete formalities
UNCONSCIONABILITY
PENNINGTON V WAINE - equity will enforce a gift if its unconscionable for donor to withdraw
DEATHBED GIFTS
KING V DUBREY - gifts made in contemplation of death can be valid without formalities
FORTUITOUS VESTING
STRONG V BIRD - a failed lifetime gift can be perfected if the donee becomes executor
PROPIETARY ESTOPPEL
DILLWYN V LLEWELLYN - equity compels transfer if the transferee relies on the transferors promise and suffers detriment.
FORMALITIES FOR TRUSTS AND CONVEYANCE
1) capacity
2) perpetuity
3) wills
4) land transfers
CAPACITY
governed by MENTAL CAPACITY ACT 2005
PERPETUITY
Limited to 125 years. PERPETUITIES AND ACCUMULATIONS ACT 2009
WILLS
must meet requirements under WILLS ACT 1837
LAND TRANSFERS
must be deed - LAW OF PROPERTY ACT 1925
CERTAINTY OF INTENTION
words/actions used to create trust
CERTAINTY OF SUBJECT MATTER
property/interest being conveyed under trust and division if there are more than 1 beneficiary.
CERTAINTY OF OBJECT
person/object which trust is to benefit
FIXED INTEREST TRUST
complete list rule - IRC V BROADWAY COTTAGES TRUST
DISCRETIONARY TRUST
class test
VESTING
transferring title in the property.
SETTLOR/TESTATOR
person who transfers legal title to another.
TRUST DEFINITION
relationship in law where the holder of the property transfers legal title to a trustee. This individual holds the title to the property but only for the purpose of benefitting another.
