Express Trusts

Question 1

What is equity?

Answer 1

Separate from common law, for justice and fairness to both parties

Question 2

What is a trust?

Answer 2

Trust is an arrangement where a trustee holds the property for the benefit of another.

Question 3

Who is the settlor?

Answer 3

Person who creates a trust. Selects the trustees, beneficiaires and property, lays out the terms.

Question 4

How is a trust property held and owned?

Answer 4

Legal title goes to trustee, equitable or beneficial title goes to beneficiary

Question 5

Why use a trust?

Answer 5

Ensure that the control is on the trustee, protects it for young beneficiaries. More versatile and sophisticated than gifts, can impose conditions.

Question 6

What is an express trust?

Answer 6

Trusts that the settlor EXPRESSLY intends to create - to benefit individual or to achieve a puropse

Question 7

What are implied trusts?

Answer 7

Arise even though there has not be any express intention on the settlor.
Resulting trusts
Constructive trusts

Question 8

What are resulting trusts?

Answer 8

Implied trust

Implied in situations where it is PRESUMED that the settlor would have indeed such a trust.

Question 9

What is a constructive trust?

Answer 9

Implied trust
Implied in order to achieve a FAIR RESULT between the parties involved.

Question 10

How can trusts be created?

Answer 10

In lifetime (lifetime trusts), or through a will (will trusts).

In lifetime - must make a valid declaration, and ensure that the property is put in that rust with the right transfer to the trustee.

For the will: take effect on their death, make a valid declaration of trust in the will, and direct that title to trust property will be put in the hands of the truste

Question 11

What is the residuary estate?

Answer 11

What remains of the settlors property on death, after tax, specific legacies and debts etc.

Question 12

What must be placed in a declaration of trust for it to be valid?

Answer 12

Identify of Trustees

Identify of property that is to be held (subject-matter)

Identify of beneficiaires (name or by description) (object)

Identify the powers and duties that the trustee have (if not, will be statute powers)

Question 13

What are fixed interest trusts?

Answer 13

Trustees have NO DISCRETION as to how the trust property is to e distributed between beneficiaires. Settlor has stipulated once and for all the portions etc.

Question 14

What are discretionary trusts?

Answer 14

Gives the trustees a discretion as to the amounts any person May receive, or particular people receiving it

Question 15

What are the 3 certainties?

Answer 15

Certainty of intention - clear that it is a trust

Certainty of subject matter - clear what property is being held, and what the interests are for each beneficiary

Certainty of objects - clear WHO the beneficiaries are

Question 16

What must be in certainty of intention?

Answer 16

Intention and words that impose a DUTY on someone to ac as a trustee.

Doesn’t have to specifically say “on trust”

Question 17

What happens if there is no certainty of intention?

Answer 17

Likely that it is a gift, not a trust. Therefore no trust is made. Law rely on presumptions to wrk out legal result.

Question 18

What are the 2 aspects of certain of subject matter?

Answer 18

Trust property must be described with certainty - must be identically.

Settlor must define the beneficiaries interest with certainty - if silent, it is shares equally. If shares as trustee sees fit, is certain. If NOT- “generous amount”, this is NOT cetain.

Question 19

What happens if there is no certainty of subject matter?

Answer 19

If settlor intends to create trust with THEMSLEVES as trustee, but there is no certainty of trust property, NO TRUST.

If settlor transfers property to 3rd party and declares trustee over “some of it”, no trust wll be created, and 3rd party can take it all.

If settlor has appointed trustee and intended to create trust, but does not specify interests, trustee shal hold trust for the benefit of the SETTLOR under a resulting trust.

Question 20

What can be the issue with certainty of objects?

Answer 20

If the beneficiaries are described as a class ,then fixed vs discretionary trusts must be determined.

Fixed interest trust: complete list test, must be possible to draw up a complete list of each adn every beneficiary. Must have conceptual certainty and evidential certainty.

For discretionary trusts: a complete list is not needed, but the trustees DO NEED TO ensure that they are distributing it to the right people.

Question 21

What is the given postulant test?

Answer 21

Given individual test - used for discretionary trusts to determine the certainty of object (beneficiaries).

“Can it be said with certainty whether any given postulant (individual), is or is not a member of the class of objects)”

Question 22

What is the beneficiary principle?

Answer 22

In order for trust to be valid, a trust must be for the benefit of the individuals - individuals must be able to represent it at court.

Question 23

What are the rules of perpetuities?

Answer 23

Reduces the view of locking away wealth, therefore prevents this, there is an acceptable period of 125 years perpetuity period.

Question 24

What are the formalities required to declare a valid trust?

Answer 24

For wills: must be in a will that complies with wills Act (made in writing, signed by testator in joint presence of 2 witnesses, who also sign)

For lifetime: can be made orally (although not advised).

For trusts of land, must comply with LPA 1925 - must be “manifested and proved by some writing signed by some person who is able to declare such trust”

Question 25

What are the 2 methods of constituting an express lifetime trust?

Answer 25

Settlor appoints THEMSEVLES trustee, and makes valid declaration

Settlor appoints someone else, makes a valid declaration and MUST TRANSFER LEGAL TITLE to the trustee.

Question 26

How must land be transferred to the trustee on creation of a trust?

Answer 26

Execute a deed: must state it is a deed, and the person making the deed must sign it in presence of a witness who also signs it.

TR1 for registered land, and gives the executed deed either to trustee to give to land registry, or land registry direct.

Legal title is NOT transferred until AL steps have been completed.

Question 27

How must shares be transferred to the trustee on creation of a trust?

Answer 27

2 ways - CREST system or otuside CREST system

In CREST system: share transfer system for public quotes companies.

Outside: for private companies, paperwork. Execute stock transfer form, and give executed stock transfer form and relevant share certificate ether to trustee to give to company, or send it to company itself.

Once registered a new shareholder, will THEN be new legal owner.

Question 28

How must money be transferred to the trustee on creation of a trust?

Answer 28

Passed with delivery

If settlor hands over cash to trustee.

If settlor transfers electronically, once it has arrived in bank account

If settlor hands over cheque, legal title once cheque is cleared .if settlor dies before then, cheque can no longer be cashed.

Question 29

How must chattels be transferred to the trustee on creation of a trust?

Answer 29

Through PHYSICAL delivery of the asset to trustee, or by deed.

Question 30

What does “equity will not assist a volunteer” mean?

Answer 30

Equity is not allude to perfect an imperfect gift. If the consideration or transfer is not complete, then it is void.

Question 31

What are the 2 exceptions to “equity will not assist a volunteer”?

Answer 31

“Every effort” test
Strong v Bird

Question 32

What is the every effort test?

Answer 32

Where settlor did everything they could to transfer legal title, the transfer may be regarded as complete in equity, even through transfer of legal title has not yet been completed.

Must have passed the point of no return - beyond recall. All steps necessary.

Question 33

What is the Pennington v Waine exception to trust validity?

Answer 33

If settlor does not go far enough to satisfy the every effort test, but did intent to creat a trusts and took some action to follow through, equity MAY regard the trust as valid, once the stage is reached where it would be unconscionable for settlor to back out of trust.

Question 34

What is the rule in strong v bird?

Answer 34

When someone dies, people are appointed to administer and distribute their estate.

If the person dies leaving a will - executors.

If person dies without will : administrators.

They acquire elgal title to all assets that comprise of the deceased estate.

If settlor wanted to create trust, but did not get round to elgal title transfer, if that SAME PERSON IS THEN appointed as executor or administrator, then it will suffice in a valid trust.