Express Private Trusts Flashcards
What three things must be certain to create a valid express private trust?
- Intention
- Subject matter
- Objects
Are precatory words (expressing a wish or hope), usually sufficient to create valid intention?
No
What happens to the property if the trust is void for uncertainty of intention?
It passes as an outright gift to the person who would have been the trustee
________ phrases, such as most or a bulk of an estate are not sufficiently certain _______ ______ to create a trust
Subjective, subject matter
A ________ share of subject matter e.g. 20% of shares in ABC ltd can be sufficient. But “20 bottles of my wine collection” isn’t because it doesn’t ______ which bottles
fractional, specify
What happens to property if the trust is void for uncertainty of subject matter?
It reverts back to the settlor
The beneficiaries under a trust can be identified by their ______ or by reference to a concept which defines the _____ of beneficiaries (e.g. my nephews and nieces)
names, class
If a concept of beneficiaries is used, it must be capable of what to be sufficient?
Objective determination
(e.g. ‘my siblings’ would have this, but ‘my friends’ typically wouldn’t)
What is the complete list test and what type of trusts does it apply to?
Where the beneficiaries must be named or described sufficiently to enable the trustee to draw up a complete list of beneficiaries
This applies to fixed trusts
If it’s not possible to make a complete list of all the beneficiaries under a fixed trust, what happens to the fixed trust?
It will fail for lack of certainty of objects
What is the postulant test and what type of trusts does it apply to?
Where the description of a class is sufficient, the Ts can determine whether any given person is a member of the class
This applies to discretionary trusts
Under the postulant test, does the description need to be so sufficient that it tracks down every member of the class?
No
When will a discretionary trust fail due to its class?
When the class is too wide that it’s rendered administratively unworkable
What happens to the property if a trust is void for uncertainty of objects?
Resulting trust in favour of the Settlor or their successors is presumed
Once established, a trust will not fail because the trustee ____, refuses to accept __________, or _______
dies, appointment, resigns
How many trustees are required to give a valid receipt when land subject to a trust is sold?
2
By statute, was is the maximum no. of trustees for a trust of land?
4
What is the perpetuity period for the time in which an interest in a trust must be vested?
125 years
What is the perpetuity period for a non-charitable purpose trust? (aka the inalienability rule)
21 years/life in being + 21 years
What are 3 requirements for creating a trust of land that transfers to a trustee?
- Declaration of trust
- That’s signed and in writing
- Execution of a deed
How are shares transferred to the trustee?
Completion of a Stock transfer form which is lodged to the company
How are chattels transferred to a trustee?
Intention to transfer and delivery
How is legal title to a bank account transferred to a trustee?
Signed written notice of the transfer to the bank
What is the relevance of ‘equity will not perfect an imperfect gift’ to the formation of a trust?
If an intending settlor fails to make the necessary transfer to a third party as trustee, equity will generally not enforce the trust and it will fail
What are four exceptions to “equity will not perfect an imperfect gift”?
- Every effort test (Re Rose)
- Strong v Bird
- Proprietary estoppel
- Gift mortis causa
What is the every effort test (Re Rose)?
If the settlor has made every reasonable effort to complete the transfer to a trustee, but the transfer is incomplete due to a failure of a third party (e.g. Trustee hasn’t registered the transfer with HMLR) the trust will not fail
For the every effort (Re Rose) test to apply, the settlor must have done everything required of them to transfer the legal title put the property _______ _____ _______
beyond their control
What is the rule in Strong v Bird?
If the intending S dies before the transfer is completed, and the intended T becomes S’s Personal representative, the transfer is complete in law and the trust is enforceable
What two things must T prove for proprietary estoppel apply to an imperfect gift?
- Assurance from S that gift would be made
- T reasonably relied on this assurance to their detriment
What are the three requirements for ‘gift mortis causa’ to apply for a trust to be enforced?
- Gift is delivered while in contemplation of imminent death
- Gift is conditional on death
- Donor does actually die
Will gift mortis causa apply if the Donor had no reason to believe their death was imminent but died anyway?
No - the gift will fail
What is the difference between an inter vivos trust and a testamentary trust?
Inter vivos - trust takes effect during S’s lifetime
Testamentary - set out in S’s will to take effect on their death
What is a half secret trust?
Where terms of the trust are revealed in S’s will, but the beneficiary is not named
The beneficiary under a half secret trust can enforce it if their identity was communicated to T __ __ _______ the making of the will
The wording of the will must be _________ with the communication
at or before
consistent
What is a fully secret trust?
Where neither the terms or the identity of the beneficiary is in the will, appearing as an outright gift to the nominated person
Under a fully secret trust, the communication describing the terms of the trust can be made _____ __ ____ the will is executed, but must be before T’s ______
before or after, death
What happens if the nominated person in a fully secret trust refuses it or doesn’t know about it until after S’s death?
The trust will fail and the nominee takes the gift outright
What is a vested interest for a beneficiary?
Where no conditions are attached to the gift in a fixed trust
What is contingent interest for a beneficiary?
Where there are conditions B must fulfil before being entitled to an interest under a fixed trust
What is a limited interest?
Where B’s interest does not give them the right to capital in a fund (income only)
What is an absolute interest?
Where B is entitled to the capital and income of a trust
What does the rule in Saunders v Vautier allow?
The beneficiaries of a trust to terminate a trust, directing the trustees to transfer the trust property to Bs
What are the three requirements for Saunders v Vautier to apply?
- Bs are all adults and of sound mind
- Bs all agree
- Between them, Bs are wholly entitled to the property
