Express Trust Flashcards
what is an express trust?
- a way of splitting ownership
- One person, the trustee, who holds property for the benefit of somebody else. The trustee doesn’t get any of the benefits, the beneficiary does.
Uses of Trusts (why you want the split)
- Wealth management
- Shared ownership (e.g. of land)
- Secrecy
- Tax avoidance
- Asset shielding (against insolvency)
What is a Trust?
- Property begins with the settler (can be the trustee or the beneficiary).
- They can self-declare themselves the trustee or they can transfer legal title to somebody/ group of people so they become the trustee and then they drop out of the picture and looses control so there is a separate settlor - 3 party situation
- Common law idea
first thing to do when making a trust
constitute that trust
what are the 3 methods of constitution and the case
- A makes an outright gift of the property to B;
- A declares themselves trustee of the property, to hold on trust for B
- A transfers the property to C as trustee, to hold on trust for B (declaration still required)
- Milroy v Lord (1862)
what does the Law of Property Act 1925, s 53 do (Formalities)
- Signed writing required for:
a) Creation of interests in land
b) Declarations of trust over land
c) Transfers of pre-existing equitable interests - Exception for resulting and constructive trusts - Informal trusts do not require formalities
Jones v Lock
A cheque handed to a baby - words the father said could not be a self-declaration of trust, he meant to give a gift.
Richards v Delbridge
Transfer and declaration did not match – not a trust
Paul v Constance
‘The money is as much yours as mine’ – treated it as a joint account, meant to constitute a trust for their equal benefit.
Choithram v Pagarani
Self-declaration by one of several trustees – Lord Brown Wilkinson, ‘equity with not strive… to defeat a gift,
principle in Strong v Bird (1874) and what other cases was it applied to (2)
- ‘Fortuitous vesting’ on death of property owner - there has to be delivery
- Applied in Re Ralli’s WT (1964): Settlor died and will transferred the property to the intended trustee - executor case
- And also Re Rose (1952)
what are the Three Certainties applied to? and what they? and in which case is found in?
- gifts and trust
- Knight v Knight
1) if the words are so used, that upon the whole, they ought to be construed as imperative;
2) if the subject of the recommendation or wish be certain;
3) if the objects or persons intended to have the benefit of the recommendation or wish be also certain.
Re Hay’s ST
- Preference is to uphold trusts
what are the reasons for the 3 certainties (5)
- A trustee must obey the terms of the trust
- Personal liability for breach of trust
- Unfair on trustee to be faced with difficulties or impossibilities in managing the trust given this liability
- Court can step in as last resort if the trustee does not perform
- The court needs to know what it is doing too
what is Certainty of Intention and how should id be assessed?
- It’s the settlor’s intention
- But still an objectively construed intention
- take in the surrounding context and knowledge of the settlor
does the word “trust” matter and what cases back up your answer
- No
- Re Kayford Ltd [1975] 1 WLR 279 (Ch) 282: Trust created without use of the word ‘trust’
- Tito v Waddell (No 2) [1977] Ch 106 (Ch) 225: No trust despite the use of the word ‘trust’
what imperative words might be required
- Imperative words required: ‘on trust for’, ‘I declare’, ‘I direct’
What cases use precatory words (3)
- Lambe v Eames: gave the property to her widow, ‘in any way she may think best.’ Not a trust. Court doesn’t look at moral intentions.
- Re Adams and Kensington Vestry: gave everything to his wife. ‘in full confidence that she will do what is right’. Doesn’t create a trust
- Re Diggles: ‘it is my desire’. Loosely worded wish. Not binding.
cases for looking for the substance of the intention
- Comiskey v Bowring Hanbury
- Re Steele’s WT
why was Midland Bank v Wyatt considered a “sham”
- the declaration of trust was not what it purported to be but a pretence
- He never intended to hand over the family home to his wife and daughters
SC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017]
- Massively Discretionary Trust
- There was no certainty of intention to set up a trust
What is Certainty of Subject Matter (Property)
- Identifying the Property
- T needs to know what to manage!
what was the issue in Palmer v Simmonds (1854) and why?
- the word “bulk” was the issue.
- Subject matter wasn’t certain.
what 2 cases involved technical terms and what where the terms
- Re Kolb’s WT - ‘blue chip securities’ is not a technical term. ‘residue’ is a technical term
- Re Golay’s WT - reasonable is a technical term because it can be worked out.
cases for when the courts are Identifying the Respective Shares (3)
- Burrough v Philcox
- Boyce v Boyce
- Re Knapton
cases for property in bulk (2)
- Re London Wine Shippers (1975): Wine bottles – choses in possession
- Hunter v Moss (1994): Shares – choses in action
What is needed for Certainty of Objects (Beneficiaries)
- Conceptual certainty. E.g. Parent are certain; relative is not that certain)
- Evidential certainty. (Can it be proved. Is X a parent)
- Ascertainability. Administrative workability
what is needed for a fixed trust and what 2 cases confirm this (certainty of objects)
- No discretion [is needed]
- Complete conceptual and evidential certainty required (‘complete list’)
- IRC v Broadway Cottages (1955);
- Confirmed in OT Computers Ltd v First National Tricity Finance Ltd (2003)
give 2 case examples of where there were problem with fixed trusts (certainty of objects)
- Re Gulbenkian’s Settlements - problem with ‘Friends’
- Re Sayer - Records of (ex-)employees clearly incomplete. Trust doesn’t hold up.
What does the Trustee Act 1925, s 27 sat about missing beneficiaries and name the case?
- advertise it and inform the missing person and if they don’t show up the person can distribute the money among the beneficiaries as they wish
- Re Benjamin
what else can be done if the beneficiaries are missing
professional insurance can be taken out
what is needed for Discretionary Trusts AKA Trust Powers (certainty of objects)
- All relevant property must be appointed, but otherwise T has discretion
what is the McPhail v Doulton, Re Baden’s Deed Trusts (No 1) test
Can one ascertain if any given postulant (protentional beneficiary) is in the class or not (‘individual ascertainability’ or the ‘in or out test’)
What did Sachs LJ say in Re Baden’s Deed Trusts (No 2)
- Enough to be able to prove X is in the class. No need to positively prove X is not in the class. (anyone who they are not sure of is not included)
how can uncertainty be cured via delegation, give a case example (2)
- by an umpire
- Re Coxen
- Re Tuck’s ST - rabbi
with Fiduciary Powers what has to be done with the power (certainty of objects)
- The power does not have to be exercised
- But the T must consider exercising it
what do you need to look for with fiduciary powers (certainty of objects)
- a ‘gift over’ (a second donation)
what is the test for fiduciary powers (certainty of objects)
- Same test as for discretionary trusts
what are the cases for fiduciary powers (certainty of objects)
- Re Gulbenkian’s Settlements [1970] AC 508 (HL)
- Re Gestetner’s Settlement [1953] Ch 672
how do gifts work in regards to certainty of objects and what is the case
- Gifts can only be given to people who satisfy this condition and that condition defines the class of people who are allowed to benefit
- Re Allen
what is the test for members of a class and what case is it from?
- Test: Can one can say with certainty that some person would clearly be a member of the class?
- Re Barlow
What is required from a fixed trust when there is a duty to survey the field
- Complete list required – defines what one must do
what is a duty to survey the field
- looking at the class of beneficiaries and deciding who is eligible and how are they eligible
what is the main case for Discretionary Trust when surveying the field
- McPhail v Doulton, Re Baden’s Deed Trusts (No 1)
what is the main case for fiduciary powers when surveying the field
- Re Gestetner’s Settlement
what is Administrative Unworkability and the 2 cases
- Can the Trust actually make this work?
- Probably applicable only to discretionary trusts
- Inability to do any good with the fund
- Re Gulbenkian’s Settlements (1970)
- R v District Auditor, ex p West Yorkshire Metropolitan County Council (1986)
what case defines capriciousness and what is it
- Brown v Burdett (1882): Trust is capricious and has no reasonable purpose and is invalid.
what is the general policy for perpetuities
- General policy: Wealth should not be tied up for long period of time. The ‘Dead Hand’ rationale
what tensions are there between the certainties
- Upholding the actual intention of the settlor.
- That intention being impossible or impracticable to carry out they invalidate the trust
who can benefit from the trust
non trustees
what is a resulting trust and what is the case
- a resulting trust is implied and equitable ownership results to the person who advances the purchase money because it is presumed there is a trust but since there are no instruction on what to do with it, the ownership goes back to the settlor:
- Dyer v Dyer
when does ownership ‘results’ back to who provided the value
- If there is no obligation or instruction to deal with the property
- Resultare = spring back
what are 3 failures of certainty of intention
- If there has been a transfer of property from settlor to trustee but there is not certainty of intention to create a trust, the would be trustee get a gift
- If a settlor fails to self-declare a trust, she remains the owner of the property: Jones v Lock (1865) LR 1 Ch App 25 (CA Ch)
- If there has been a transfer of property to the would-be trustee, there is no trust but an absolute transfer; a gift.
what are 2 failures of Certainty of Subject Matter
- If the property cannot be ascertained, similarly there is no trust and ownership remains with the transferee or settlor. They are not benefiting because they hold some of the shares on a trust the settlor has everything
- If the beneficiary’s shares cannot be identified, the transferred property is held on resulting trust for the settlor.
what are 2 failures of Certainty of Objects
- If a fixed or discretionary trust fails because the relevant certainty of objects test fails, the transferred property is again held on resulting trust.
- If a fiduciary power fails for want of certainty of objects, the transferred property is held for the recipient of the gift over absolutely.
what is The Beneficiary Principle
- Principle is that trusts are for people, not purposes (excluding the exceptions and charitable trusts)
- There must be a beneficiary or beneficiaries, not least because they are the only people who can enforce the trusts
