Express and implied trusts Flashcards
What must a valid declaration of trust include?
Identify the trustees
Identify the property
Identify the beneficiaries
Identify the powers and duties of the trustees.
What is the main difference between a presumed resulting trust and a constructive trust?
Resulting trust occurs when equity presumes that the settlor would have intended a trust (or the trust fails)
Constructive trust occurs when equity thinks a trust should be imposed to achieve a fair result for the parties involved.
What is a trust?
A trust is an equitable duty relating to property. The person subject to the duty is called a trustee and the person to whom the duty is owed is called a beneficiary.
- The property to which the duty relates is called the trust property.
- The trustee is usually the legal owner of the trust property.
- The beneficiary has an equitable proprietary interest in that property
- The duty is equitable because it was created and developed by the Court of Chancery (the court which administered the equitable jurisdiction).
- The basic content of the duty is that the trustee must hold or apply the trust property for the benefit of the beneficiary.
What are equitable maxims?
Equity will not assist a volunteer.
He who comes to equity must come with clean hands.
What is an express trust?
Trusts that are made with the express intention of the settlor. They can benefit individuals or be for a purpose.
What is an implied trust?
Trusts that arise where there has been no express intention on the part of the settlor. Can be resulting or constructive trusts.
Resulting trust - where presumed that the settlor would have intended a trust.
Constructive trust - implied to achieve a fair result between the parties involved.
What is a fixed interest trust?
A trust in which trustees have no discretion as to how the trust property and to who is distributed.
What is a discretionary trust?
Gives the trustees discretion to the amounts a person may receive and or whether a person may receive anything at all.
What are the three certainties?
Certainty of intention
Certainty of subject matter
Certainty of objects
Paul states that he hopes to give his collection of Grayson Perry vases to Anna to hold on trust for her daughter. Is this a valid trust?
No because ‘hope’ is a precatory word. These words invalidate the declaration.
What are the aspects of certainty of subject?
The settlor must describe the property with certainty and define the beneficiaries interests with certainty.
There is no need to distinguish individual items however when items are similar they should be distinguished.
What is the test for certainty of objects in a fixed trust?
The complete list test.
You must be able to draw up a complete list of every beneficiary.
There must be both conceptual and evidential certainty.
What is the test for certainty of objects in a discretionary trust?
The is/is not test.
Can it be said with certainty whether someone is or isn’t a member of the class.
Require:
- Conceptual certainty
- Evidential certainty
What is administrative unworkability?
When the class is ‘so hopelessly wide as to not look anything like a class.
What formalities are required for an express declaration of trust over land?
Must comply with s53(1)(b) LPA 1925
- can be oral must be evidenced in writing
- contain the terms of the trust
- be signed by the person declaring the trust
- (doesn’t need to be a deed, just any signed document)
This can be in an email.
What formalities are required for an express declaration of trust over objects?
None - declaration can be oral.
What formalities are required to constitute a trust over land with a third party as the trustee?
The settlor must execute a deed.
Give the executed deed to the trustee or send it to the Land Registry.
The Land Registry will register the trustee as the new legal owner.
Legal title is not transferred until all steps are complete.
What formalities are required to constitute a trust over shares with a third party as the trustee?
Execute a stock transfer form and send it to the company - the company may also require the share certificate or an indemnity in respect of the transferor’s ownership as part of this process.
Legal title passes when the transferee is registered in the company’s internal register of members.
What formalities are required to constitute a trust over money with a third party as the trustee?
Legal title passes with delivery so handing over case, transfering money
With cheque, legal title passes once the cheque has been cleared.
What formalities are required to constitute a trust over chattles with a third party as the trustee?
Physical delivery of the asset.
How can the ‘every effort’ test assist when a trust has not been properly constituted?
If the settlor has passed the point of no return or put the property beyond recall then equity may regard the trust as complete.
All that must remain are the actions of third parties.
How can the rule in Pennington v Waine assist a trust that has not been properly constituted?
When it would be unconscionable to revoke the trust.
- Made the gift of her own free will
- Told the donee about the gift
- Set the wheels in motion by signing a stock transfer form and sending it to the donee, she thought she had done all that was needed
- Donor told Donee there was nothing for them to do
- Donee acted on the gift/in reliance of it (in accordance with donor’s wishes) agreed to become a director
- It was therefore unconscionable to revoke the gift even though it was an incomplete transfer
Curtis v Pullbrook - detriment is key as Pennington is an example of proprietary estoppel
What does the law say about certainty of intention
- Must be clear the person intended to make a trust
- Oral statements made on a single intention might be seen as ‘loose conversations’
- written statements can be insufficiently clear as to whether a person intended to a create a trust, the words may seen merely as a expression of a non binding wish
- It is not necessary to use the word ‘ trust’ to create one, equally the use of the word does not automatically mean that there is one
- It must be clear of intention to make a trust rather than an outright gift
What does the law say about certainty of subject matter
- subject matter should be described with accuracy
- The property which is subject to the trust must be described clearly, whether it is a sum of money or an intangible asset (eg a holding of shares), or tangible property (eg an item or items of personal property, or real property—particular land and buildings).
- Must be ascertainable
- The beneficial interests of the beneficiaries in the subject matter must also be certain. It is possible to have certainty of subject matter but not know what interests the beneficiaries have in that subject matter; that is, it is not clear who should get what.