Express Trust - Declaration of Trust Flashcards

1
Q

What is a trust?

A

A trustee holds the legal interest in property on behalf of a beneficiary, who is entitled to the beneficial interest.

Trustees have various duties and beneficiaries can enforce the trust and those duties in some situations

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2
Q

Difference between express and implied trusts

A

Express trusts are those which the settlor intended to create

Implied trusts are ones the law imposes to achieve a fair result (resulting + constructive trusts)

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3
Q

What are the two broad elements of a valid express trust?

A

Declaration of trust and constitution of trust

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4
Q

What are the elements of a valid declaration of trust? Give an overview

A

1) 3 certainties (intention; subject matter; objects)

2) Beneficiary principle – trusts need to benefit a human being, capable of enforcing it if the trustee does anything wrong

3) Perpetuities – trusts cannot last too long

4) Formalities – does it need to be in writing or not?

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5
Q

Explain certainty of intention

A

The settlor must make it clear that they intend to create a trust

They should use mandatory language and it is helpful (but not essential) to use word ‘trust’

Expressing a wish or expectation is insufficient intention

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6
Q

Explain certainty of subject matter

A

Trust property must be defined with certainty

  • Giving away ‘some’ of a collection of items will only work if they are entirely indistinguishable from one another (50 shares out of 1000; likely only applies to intangible property)
  • Settlor cannot create a trust of things they are yet to own

Beneficiary’s interests must be clearly defined too
* Assumption that each beneficiary gets a fair share if nothing expressly stated (£100k on trust for two children)
* Saying ‘give more to A than B’ is not clear enough

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7
Q

Explain certainty of objects/given postulant test

A

We must know who the trustee is holding the trust property for (the names or class of beneficiaries)

Fixed interest trusts - sets out who the beneficiaries are and the proportions they will receive the trust property in - need conceptual and evidential certainty

  • Conceptual - description of beneficiaries has an objective meaning
  • Evidential - must be able to identify who falls within the class; if records lost, this would fail

Discretionary trusts - sets out the class of beneficiaries that might benefit, but leaves it to the trustees to decide who in the class will benefit and in what shares; needs conceptual certainty only

  • The class cannot be too wide however (administrative workability)
  • Must have a rational basis for trustees to decide who falls within the class (cannot make a trust for random unconnected people)
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8
Q

Example of fixed interest trust

A

£100,000 on trust for my children equally

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9
Q

Example of discretionary trust

A

£100,000 on trust for such of my children and in such shares as my trustees shall select

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10
Q

Briefly explain the beneficiary principle

A

Trust must be for the benefit of individuals to be valid

Exceptions for purpose trusts

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11
Q

Briefly explain perpetuities

A

Beneficial interests must vest within 125 years for trusts created on or after 1 April 2010

Trusts cannot last forever essentially

Exceptions for purpose trusts

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12
Q

What are the formalities for a trust over land?

A

A declaration must be evidenced in signed writing, which must contain all material terms

If not evidenced in writing = void

Can be declared orally and then written down

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13
Q

What are the formalities for other types of property (not land)?

A

Declaration can be made orally, but better to record it in writing

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