Express Private Trusts

Question 1

What three things must be certain to create a valid express private trust?

Answer 1

1. Intention
2. Subject matter
3. Objects

Question 2

Are precatory words (expressing a wish or hope), usually sufficient to create valid intention?

Answer 2

No

Question 3

What happens to the property if the trust is void for uncertainty of intention?

Answer 3

It passes as an outright gift to the person who would have been the trustee

Question 4

________ phrases, such as most or a bulk of an estate are not sufficiently certain _______ ______ to create a trust

Answer 4

Subjective, subject matter

Question 5

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

Answer 5

fractional, specify

Question 6

What happens to property if the trust is void for uncertainty of subject matter?

Answer 6

It reverts back to the settlor

Question 7

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)

Answer 7

names, class

Question 8

If a concept of beneficiaries is used, it must be capable of what to be sufficient?

Answer 8

Objective determination

(e.g. ‘my siblings’ would have this, but ‘my friends’ typically wouldn’t)

Question 9

What is the complete list test and what type of trusts does it apply to?

Answer 9

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

Question 10

If it’s not possible to make a complete list of all the beneficiaries under a fixed trust, what happens to the fixed trust?

Answer 10

It will fail for lack of certainty of objects

Question 11

What is the postulant test and what type of trusts does it apply to?

Answer 11

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

Question 12

Under the postulant test, does the description need to be so sufficient that it tracks down every member of the class?

Answer 12

No

Question 13

When will a discretionary trust fail due to its class?

Answer 13

When the class is too wide that it’s rendered administratively unworkable

Question 14

What happens to the property if a trust is void for uncertainty of objects?

Answer 14

Resulting trust in favour of the Settlor or their successors is presumed

Question 15

Once established, a trust will not fail because the trustee ____, refuses to accept __________, or _______

Answer 15

dies, appointment, resigns

Question 16

How many trustees are required to give a valid receipt when land subject to a trust is sold?

Answer 16

2

Question 17

By statute, was is the maximum no. of trustees for a trust of land?

Answer 17

4

Question 18

What is the perpetuity period for the time in which an interest in a trust must be vested?

Answer 18

125 years

Question 19

What is the perpetuity period for a non-charitable purpose trust? (aka the inalienability rule)

Answer 19

21 years/life in being + 21 years

Question 20

What are 3 requirements for creating a trust of land that transfers to a trustee?

Answer 20

1. Declaration of trust
2. That’s signed and in writing
3. Execution of a deed

Question 21

How are shares transferred to the trustee?

Answer 21

Completion of a Stock transfer form which is lodged to the company

Question 22

How are chattels transferred to a trustee?

Answer 22

Intention to transfer and delivery

Question 23

How is legal title to a bank account transferred to a trustee?

Answer 23

Signed written notice of the transfer to the bank

Question 24

What is the relevance of ‘equity will not perfect an imperfect gift’ to the formation of a trust?

Answer 24

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

Question 25

What are four exceptions to “equity will not perfect an imperfect gift”?

Answer 25

1. Every effort test (Re Rose)
2. Strong v Bird
3. Proprietary estoppel
4. Gift mortis causa

Question 26

What is the every effort test (Re Rose)?

Answer 26

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

Question 27

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 _______ _____ _______

Answer 27

beyond their control

Question 28

What is the rule in Strong v Bird?

Answer 28

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

Question 29

What two things must T prove for proprietary estoppel apply to an imperfect gift?

Answer 29

1. Assurance from S that gift would be made
2. T reasonably relied on this assurance to their detriment

Question 30

What are the three requirements for ‘gift mortis causa’ to apply for a trust to be enforced?

Answer 30

1. Gift is delivered while in contemplation of imminent death
2. Gift is conditional on death
3. Donor does actually die

Question 31

Will gift mortis causa apply if the Donor had no reason to believe their death was imminent but died anyway?

Answer 31

No - the gift will fail

Question 32

What is the difference between an inter vivos trust and a testamentary trust?

Answer 32

Inter vivos - trust takes effect during S’s lifetime
Testamentary - set out in S’s will to take effect on their death

Question 33

What is a half secret trust?

Answer 33

Where terms of the trust are revealed in S’s will, but the beneficiary is not named

Question 34

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

Answer 34

at or before

consistent

Question 35

What is a fully secret trust?

Answer 35

Where neither the terms or the identity of the beneficiary is in the will, appearing as an outright gift to the nominated person

Question 36

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 ______

Answer 36

before or after, death

Question 37

What happens if the nominated person in a fully secret trust refuses it or doesn’t know about it until after S’s death?

Answer 37

The trust will fail and the nominee takes the gift outright

Question 38

What is a vested interest for a beneficiary?

Answer 38

Where no conditions are attached to the gift in a fixed trust

Question 39

What is contingent interest for a beneficiary?

Answer 39

Where there are conditions B must fulfil before being entitled to an interest under a fixed trust

Question 40

What is a limited interest?

Answer 40

Where B’s interest does not give them the right to capital in a fund (income only)

Question 41

What is an absolute interest?

Answer 41

Where B is entitled to the capital and income of a trust

Question 42

What does the rule in Saunders v Vautier allow?

Answer 42

The beneficiaries of a trust to terminate a trust, directing the trustees to transfer the trust property to Bs

Question 43

What are the three requirements for Saunders v Vautier to apply?

Answer 43

1. Bs are all adults and of sound mind
2. Bs all agree
3. Between them, Bs are wholly entitled to the property