Equity and Trusts- Formalities Flashcards
What can make you do bad with formalities?
Can do bad if do not understand link btw formalities and conditions
What about formalities?
Hard area- but if understand issues = can do very well
What do formalities deal with?
Deals with how a trust is created in property, creating eq interest
When we talk about form =
Requirement of writing
Next challenge to establish trust after 3 cert
Formalities
Formalities necc create ?
Testamentory trust (made by a will) & inter vivid
What do formalities depend on
Diff formalities depending on type of prop
Intro- a person who wishes to create trust must look at?
Must look at formality req imposed by statute
There are diff requirements for what ?
Interviews trusts Testamentry trusts
What are intervibos trusts
Trusts set up during a settlors life time - set out on face of will (trust)
What are testamentry trusts
Set up by testator will which comes into effect on the testator death once probate = granted which is backdated to time of ts death
Types of trust prop dealing with?
Trust of personalty Trust of land Disposition of an equitable interest
What is need for formalities
2 create certainty of transactions and prevent fraud Need to be clear from outset who has benefit of an equitable interest Certainty created by formalizes has advantages for several parties
In regards to several parties what about trustee
Trustee - need to be certain who benefited are Trustees have duties and powers in relation tot he trust property If these powers and duties are performed incorrectly trustee may be held personally liable for breach
In regards to several parties- for beneficiary ?
Additionally Ben must be certain his / her actual interest in prop. This will prevent fraud by the trustee The clearer the allocation of prop rights, the easier for trustee, beneficiary and ultimately CT’s to allocate the correct interest to parties
In regards to several parties- for the CT’s?
Certain circum CT’s may need to intervene with trust Eg in its variation or excercise of powers The ct will need to ensure it acts correctly in relation to competing interests
Several parties - for revenue and customs?
Needs to be clear for the purpose of tax The trustee would hold the legal title and would appear to be the person who should pay tax any income the test produces. Rev and customs will seek to recover tax due which is why so many cases involve hm revenue and customs commission - emeeey irc ??
What about trusts of personalty ?
Where in inter vivid one of personal prop sets out to .. a trust of such prop - not obliged to comply with any form of req - Come back to
Info to types of trust - testamentry trusts?
Many trusts created by will. A few of all wills is that they must comply with req of wills act 1837 to be valid- s.9 states:
What does s.9 state?
In writing Signed by the testor or someone acting At the testator direction in his or her presence : and In the presence of 2 witnesses who sign and attest the will in test sites presence
Reason for these requirements is bc?
Req writing helps this and CT’s will not allow it to be used as an.. of fraud - rouchefaul boosted - 2 prevent fraud and corcion - all test docs must comply as must any amendments by codicil. These req will satisfy any need for the evidence of transfer of equit interests or the creation of trusts - The main purpose of s.53 1 b lap in evidential & wills aft 1837 req satisfy this
Creation of intervivos trust in prop other than land?
The creation of this = no formalities - requires none - other than 3 certainties for the creation of trust
Applies to which prop
Apply to prop eg shares. Money paintings - most important thing that must be established in cert of intention to create a trust- this is q of fact - must be esrav in case by case basis
Certainty of intention can be determined by ?
Words , written statements or conduct - Paul v Constance - in established cert if I , ct look whole sit
Hw if CT’s fail to look suff cert required for trust -
The y? Will not Josie a trust to achieve justice - Jones v locke This is clear e.g of maxims that equity will not perfect on imperfect gift & equity will not assist a volunteer
What should you remember?
Creating a trust is cruel kindness - as it creates overseas obligations for trustee CT’s are happy to create a trust an informal statements but these must be clear that this is the intention of the settlor
Back 2 trusts of personalty what can they be created
Can be created orally- Paul v Constance = money in bank account
General rule trust is personalty
No need writing - no form req
Req of writing dependant on?
Subject matter of trus t
What in regards to trust of land?
Creation of intervibos interest trust of an interest in land
Where subject matter land?
Must be evidenced in writing - signed by person declaring at time Been the case since - stat of frauds 1677
Trust of land can be
Declared orally or in writing but until it is in writing = unenforceable
What about land
Land always treated differently - perosjnofnorop intr no form just 3 certain items whereas need writing
What is the rule now set out in
S.53 1 b lap
Quote a.53 lpa
A decl of trust respecting land must be mandifest and proved by some writing signed by some person able to declare the trust
2 formalities must be satisfied here
1 must be evidenced in writing 2 evidence must be signed by settlor
What will be the interests affected?
Applies to freehold , leasehold and eq interest in land - look dealing with eq interest
What should we note here:
S.53 1b only deals with creation of trust over an int in land not transfer of legal title and only deals with creation - land nothing else!
What is meant by evidenced in writing?
So if have trust of land = enforceable cod ev in writing - able to sue and enforce in any shape / fashion but must satisfy 2 req
While valid trust?
Come into exist once declared until 2 req satisif = not enforceable
Valid momen de suff cert =
Important tax implications for settlor and Ben claimant
What does this also mean?
Once trustee excercise his her proves under trusts he / she will not breach
Although valid not enforceable ?
Ben can not enforce trust ie using his : her powers to vary trust = gap btw validity and enforceability
Evidence when written-?
Must contain all relevant terms of trust = 3 cert
Writing extras?
Does not need to be form of deed Written evidence signed by settlor = suffice Can be better / other informal doc Written and signed evi can be produced at later date - gardener v rowe
Point to notes about s.53 1b
1- 3 cert2 - actual deck need to be in writing A doc acknowledging a prior oral decl will suffice - Oral - trust but no enforceable
Cases for no. 2?
Foster v Gael - childes v childes- McBlain v cross Doesn’t say deed I writing just must be evidenced in writing
Also with no. 2
Doc must show that trust was intended but need not contain all terms - re Tyler’s trust fund
Doc must be signed by the person able to
Declare the trust (land owner) on agents signature will not suffice - re north cliffe ( must be actual owner not agents signature)
What does this mean
Matter of construction -Hw if settlor declares himself trustee of an interest in land for a beneficiary, remember that the settlor will only have to declare trusts of land and complete required formalities of a.53 1b lpa- as settlor as trustee a tleast has legal title to the land- connected to consitituin
Extra marks for exam?
Exam may create trust - by email/ text . This is to stimulate discussion on the need to have decl signed . No need to conclude in this but make reason any if it would satisfy req - perhaps compare with e conceyancing of land
Requirement of writing was introduced to prevent fraud
Rouchedaul v vousread Form play important role in tracking the conduct of ownership of prop - CT’s extemelt rekebant to allow required form to be avoid
What is this case?
This case is an exception If settlor transferred legal title to trustee - understanding to be held on trust but failed to evidence in writing - CT’s will consider enforceable So if writing fraud make unconditionally result - exception Comes back
Beneficiaries disposing of equitable interests under trusts?- what is the next rule of formaility?
Next rule of formality we need to consider is differnet tule and it’s the idea of disposal of eq interests under trusts, or the disposition of eq interest under trust.
now hear what do we have?
Now here we have a rule s.53 1 c of lpa which well look at in a moment but before we do that heres is recap
What do we mean b y disposal of eq interest-
firs point remeber that an equitable property interest in the same way as lad is. It is intangible forming a chose in action, but neverthless capable of being treated in same manner as all prop. It can be mortgaged, sold, and transferred if you bear this in mind, can grasp topic easily
The owner of an equitable interest in property may confer the benefit of the interest on another person by:?
The owner of an equitable interest in property may confer the benefit of the interest on another person by:(i) assigning the interest directly to a third party;(ii) directing the trustees to hold the property in trust for a third party;(iii) contracting for valuable consideration to assign the interest to another;(iv) by declaring himself to be a trustee for another.
case for this?
Timpson’s Executors v Yerbury [1936] per Romer L.J-identified four ways to benefit another person with beneficial interest?
S.53(1)(c) LPA?
S.53(1)(c) declares that a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same or by his agent thereunto lawfully authorised in writing.
what does S.53(1)(c) LPA give us?
genral fairly strict rule of formality , certaintly in relation to eq interest under express trusts whether land or personalty doesn’t matter, tis about identifying express truts and how eq owners of property are, whatever htheir eq
so what could it be?
is so it could be ming vase held on a by trust fpr b, or could be shares held by a on trust for x for life, or could be a house held on trust for a and bon trusts for x y z tenants in common equal shares
what does the rule here concern?
The rule here cocnerns people who have eq interest under trusts certainly expressed trust-
what must it be?
MUST BE IN WRITING UNDERLINE SIGNED BY PERSON DISPOSING OR BY AGENT,
so if we have ming vase what?- example
SO IF WE HAVE A MING VASE, IF KRIS WANTS TO give away his remainder inters in iming vase e.g 1 mill quid to someeon her can do that. The rermainder interst doesn’t kick into into life interest does has died, so obvs person of remainder interest their interwst icks in .
further on example?
if its on trustee ming vse v has lfie int on m ing vase, what it means she ahs interest which is VESTED IN POSSESION shes the man or woman of moment entitled to prop and ris line when she dies get sht evase, he has the remainder in the is the remainder man.
example part 3?
,Now Kris and eq prop writing that vase, obvs doesn’t kick in until perso in possession has died and passed over, so person with remainder interest has concrete prop right in eq and is not vested in poss that only for MAN OF MOMENT its called vested in interest if have concrete prop right of sorts and they can dispose of ti assign it do what they want with it.
example part 4?
Now if Kris wants to give away his remainder interest, concrete prop e.g say hes brother he can do that for free or sell b y contract.
example part 5?
but if he just wants to give it away this is called disposition and needs to be in signed writing to comply with s.53 1c
so any q vested in poss?
SO ANY EQ WHICH IS VESTED IN POSS/INTER and if u want to give it away has to be in signed writing in accordance to s.53 1 c –
e.g of vested in poss?
so if me ad v house hold trust for ourselbes, sep shares and wanna give shar to someone else must bein writing to comply with s.53 1 c. so u need this signed writing. This is rule of formality to dispose of eq interest under trust. Pints to note, the dispos must acutall
what is meant by directly assignment og equitable interest to 3rd party?
so if me ad v house hold trust for ourselbes, sep shares and wanna give shar to someone else must bein writing to comply with s.53 1 c. so u need this signed writing. This is rule of formality to dispose of eq interest under trust. Pints to note, the dispos must acutall
What must the assignment be?
Must be if the whole interest and not just a part of the beneficial interest
what does s.136 lpa allow?
allows for direct assignmnent of a chose in action, which could include an interest under a trust - re pain
📖 example of this
If you have an absolute equitable untreated in property you cannot directly assign the life interest but retain the remainder interest
📖 looking for extra marks - what about s. 136
S.136 lpa to an interest under a trust has been doubted - see snells principles of equity endn - in developing an arg on this issue - read what is said on matter
📖What are the formalities for direct assignment are:
The assignment must be in writing
It should be signed by the assignor and
Express notice should be given to the trustee of the assignment
📖 what if formalities not complied with ?
There may still be an assignment in equity which needs no partic formalities - Williams brandts sons & co v dunlop rubber co
📖 an assignment in equity require?
A clear intention to assign, manifested by words or conduct
A clear transfer of the interest from the assignor to assignee and
In addition the interest transferred must be clearly indentifiable.
