Express Trusts

Question 1

Name the case which created trusts and describe

Answer 1

tyrell

Facts: Found that if you included an extra use, the legislation would be ineffective, ie. A gives land to B and their heirs for the use of C and their heirs.

Held: The Court of Chancery decided to enforce this second use like that in which the first use had been enforced prior to the enactment of the Statute of Uses.
The second use is now known as a trust.

Question 2

Background on trusts

Answer 2

trust developed out of the medieval concept of the use whereby the owner of land would give it to another to hold it on his behalf

In the 1500s, the Statute of Uses was developed in England and was established in Ireland in 1634.

Poor attempt to deal with uses.

The statute intervened and executed the use and made the mechanism ineffective for avoiding paying tax.

Question 3

Define a trust

Answer 3

trustee holds property in equity which can be real or personal and title can be legal or equitable, to benefit the beneficiary who accrues the real benefit

Question 4

Whys it important to distinguish between trusts and powers

Answer 4

Different tests apply to determine whether they are valid instruments or not.
Trusts are mandatory in nature and the court can supervise their implementation and interfere whereas they can’t in relation to power.

Trusts are imperative in nature, one must fulfil their duties, however, powers don’t have to be exercised.
Beneficiaries under fixed trust are owners in equity of trust property while objects of a power have only an expectation that the power may be exercised in their favour.

Question 5

Name the types of power and define

Answer 5

Power of appointment: The capacity to name certain individuals that may benefit from that power
General: Applies to anyone
Special: Applies to only certain classes/certain individuals
Intermediate: Applies to anyone except for certain classes/individuals
The imperative nature of a trust allows the person creating it to know that their wishes will be met.

Question 6

What are the types of trust and define

Answer 6

Fixed trust
The interest which each beneficiary is meant to take is specified in the trust instrument.

Discretionary

Trustees are under an obligation to distribute the trust property to the beneficiaries however they can choose who benefits and what extent they should benefit to.
Beneficiaries can’t force a trustee to be named but the court can supervise.

Question 7

What is a power in the nature of a trust
Name cases

Answer 7

If someone were to create a power of appointment in their will and it failed to exercise, very little can be done.
However, the court may sometimes determine that it is a power in the nature of a trust.
The court implies the existence of a trust in default of any appointment being made by the donee of the power.
The courts will consider the intentions of the person creating the instrument from the language used.

Burrough v Philcox
Re kieran

Question 8

Burrough v Philcox

Answer 8

Facts: Concerned a testator who gave life estates to his 2 children with the remainder to their children.
If they were to die with no children, then the remainder would be disposed to a specified class.
They had the power of appointment to appoint/dispose the property among the class the testator chose but died before exercising this.

Held: A power in the nature of a trust was established.
Cottenham L held that if there’s a general intention in favour of individuals/a class and this intention has failed, the courts will carry out that intention.
However, the courts don’t act like a normal trustee, they assume every person gets the same amount.
Comment: This outcome is not ideal, but better than the intention not being carried out at all.

Question 9

Re Kieran

Answer 9

Re Kieran 1916

Facts: Concerned a testator leaving his farm and property to his brother for brothers eldest son.
If the eldest son were to die before he turned 21, the property would go to the brothers other sons that he appointed- power of appointment to 3 sons.
All sons died before power was exercised, tried to leave the farm to one of his daughters in his will.

Issue: Did the power fail completely?
If so, then the daughter would receive the farm.

Held: Applied the principle in Burrough where there is a general intention in favour of the specified class, the 3 sons.
Court do not act like trustees so each of the 3 sons were entitled to 1/3.

Question 10

What are the key statutes in regards to formalities

Name cases

Answer 10

S4 of statute of frauds act
s78 of succession act

Mccormick v Grogan
Rochefauld v Boustead- affirmed by mcguidly and joy

Question 11

S4 of statute of frauds act

Answer 11

Requires that a trust be evidenced in writing and signed by a person able to declare the trust or by his will.
Doesn’t require all the trust to be set out in wiring, but at least some.

Question 12

s78 of succession act

Answer 12

to create a trust in a will, it has to:
Be in writing
Signed
Have a signature witness

Question 13

McCormick v Grogan

Answer 13

The court will not permit a beneficiary to be deprived of an interest in land when there is no written evidence if such result would amount to fraud.

The court may insist on not complying with the statutory requirement if it would amount to fraud, as long as other evidence exists, ie. Oral evidence.

Question 14

Rochefoucauld v Boustead

Answer 14

Facts: Concerned an owner of mortgaged property where the mortgagee sold it to the defendant . The defendant orally agreed to hold the property in a trust for the plaintiff, but sold the land and went bankrupt.

Issue: if the court were to insist on compliance with the statutory requirements, it would’ve led to fraud.

Held: Courts stated that its fraud on the part of the defendant in which the land was conveyed to them as a trustee, to deny the trust and claim the land for themselves.
It is competent for a person to produce parole evidence that the property was conveyed on a trust.
The plaintiff could provide oral evidence that the trust existed.
Conclusion: Plaintiff allowed the profits that the defendant obtained from the sale of their land.

Question 15

Whar are the essential elements of valid trust

Answer 15

Certainty of words
certainty of subject
certainty of object matter

Question 16

Certainty of words
Name cases

Answer 16

No set formula, ie. You don’t have to use words like trust and trustee
Imperative language, ie. Shall apply, property is to be distributed
NB: Phrases like may apply are not imperative and will be insufficient.
Precatory words: words that express a hope/expectation/wish that are less than mandatory in nature may cause difficulties.

Re hamilton
re humphries estate
re sweeney
Comisky v Bowring

Question 17

Re hamilton

Answer 17

Facts: Concerned a testator who gave legacies to 2 nieces.
One of them died and the executors wanted to wish them to bequeath to 2 named families.

Held: The court won’t allow precatory words to create a trust unless other words show that the testator intended to use it.
Precatory words are not to never be used, but the courts must read the instrument in full.
No trust found in favour of the 2 new families.

Question 18

Re humphries estate

Answer 18

Re Humphrey’s Estate 1916

Facts: The husband wished in his will that the wife would leave the property to son and remainder to the daughter.

Held: “The tide has turned and is running strong against precatory trusts.”
The wife took an absolute interest, the courts in construing the instrument as a whole were satisfied that it was an absolute gift to the wife.

Question 19

Re sweeney

Answer 19

Facts: Concerned a testator who left all assets to wife for her own absolute benefit, subject to giving to someone else.

Held: If it looks like an outright or absolute gift in a will, it can only be qualified by equally definitive language.
The wording was not clear to constitute a trust, the wife had absolute benefit.

Question 20

Comiskey v Bowring Hanbury

Answer 20

Facts:“To my wife absolutely in full confidence and then after her death to other people”

Held: Looking at instrument as a whole, it could be construed as imposing a trust obligation.

Question 21

Certainty of subject matter
State cases

Answer 21

To ensure the creation of a valid express trust, the subject matter of the trust, ie. the property/shares must be defined with sufficient certainty.
What the beneficiary is to take must be certain.

Phrases:
‘The bulk of’ - causes problems.
‘Residue’- sufficiently certain.
‘Reasonable’:]
Golays will
Hunter v Moss

Question 22

Re golays will

Answer 22

Facts: Concerned a gift in a will where the trustees were to use property to benefit the beneficiary. She could live in one of the flats and receive ‘reasonable income’ from the other properties.

Issue: Was ‘reasonable income’ sufficiently certain?

Held: An objective assessment of what constitutes reasonable was taken, the trust was not void due to uncertainty.
The adverse outcome would have voided the trust which would have went against the testators intentions.

Question 23

Hunter v moss

Answer 23

Hunter v Moss 1993

Facts: Concerned an undefined portion of an asset; the trust involved shares in a company and the testator wanted to create a trust of 5% of the company.

Held:
HC: Any suggested uncertainty of subject matter was theoretical and conceptual rather than real and practical; any one block of the shares could satisfy the trust, it didnt matter that they were segregated.
Upheld by CoA.


MArtin 1996- decision in hunter good because it prevented trysts failing due to uncertainty

Question 24

Certainty of objects
Fixed and Discretionary

Answer 24

The courts do try to uphold instruments and avoid voiding them.
If the courts need to intervene, the objects/beneficiaries must be defined with a sufficient degree of certainty to allow them to fulfil the testators intentions.

Fixed Trust:
The interest which each beneficiary is to take is specified in the trust instrument and the trustees have no discretion to determine either who will benefit or the extent of that individual’s share.

Discretionary Trust:
Trustees are under an obligation to distribute the trust property to the beneficiaries, although they have a discretion to select which members of the class should benefit and to what extent.

Question 25

Whats the test for certainty of objects for fixed trusts

Answer 25

The beneficiaries must be clearly identified/ identifiable.

Question 26

Whats the test for certainty of objects for mere powers

Answer 26

Re Gulbenkian’s Settlement Trust 1970

Held: Test- If you can say with certainty whether any given individual is or is not a member of the class.
No need to ascertain/ list out all the beneficiaries but must be able to identify them.

Question 27

Whats the test for certainty of objects for discretionary trusts in England
state cases

Answer 27

IRC v Broadway
Mcphail v Doulton

Question 28

IRC v Broadway

Answer 28

A discretionary trust would be void for uncertainty unless the whole list of beneficiaries were ascertained to capable of ascertainment.

Question 29

Mcphail

Answer 29

Facts: Concerned a deed created which set up a fund to be held on certain trusts for a staff of a company and their relatives and dependants.
Executors needed opinion of court because there were too many people.

Held: Reformed the test for uncertainty.

HoL: Held that a trust was created and not a power. The test for certainty of objects for a discretionary trust was not as set out in IRC.
Test: Similar to the test set out for powers as in Re Gulbenkian- the trust is valid if it can be said with certainty that any given individual is or is not a member of the class.

CoA: Relatives and dependents- sufficiently and conceptually certain.
Friends- Not sufficiently and evidentially certain.

Question 30

NAme cases for test in ireland

Answer 30

Re Parker
Mcgovern v Davoren

Question 31

Re parkers will

Answer 31

Facts: Concerned a small family trust; a testator set out a trust to be divided amongst his nephews and nieces and their children, confined to those alive at the time of his death.

Held: The trust was valid and not void for uncertainty.
Test: The trust will be invalid unless the entire class of beneficiaries can be ascertained, ie. List drawn up

Question 32

O’Byrne v davoren

Answer 32

Facts: Concerned a testator who purported to create a trust for the post primary education for a class of persons: her children, grandchildren and direct descendants.

Issue 1: Was it a charitable trust?
Held: No, the class was confined, had no element of public benefit.

Issue 2: Was the trust indefinite, making it invalid?
Held: Yes, if it had been limited to a class of relatives, before the time of the testators death, it would have been valid.
Private trusts can’t go on indefinitely.
The test is that of the one set out in Re Parker.

Question 33

Which approach preferable, parker or mcphail

Answer 33

Parker:
If the testators intentions are to be fulfilled by equal division, certainty requirement here is more preferable.


McPhail:
Lord Wilberforce: Because a lot of recent discretionary trusts purport to benefit a wider class, and the intention of the testator may not be equal division, rather provide more to those who need it, McPhail would be preferable.

Question 34

Name cases for administrative unworkability

Answer 34

Mcphail
Re mainstaus settlement
R v District

Question 35

Mcphail

Answer 35

It will administratively unworkable where a class of potential beneficiaries is so large.

Question 36

Re maintay

Answer 36

A power of appointment can’t be invalid just because it is wide in ambit.
A discretionary trust may be void and seen as administratively unworkable if it favours a wide class.

Power will be capricious if there is no sensible consideration between the testator and choosing who they want to benefit, ie. No reason behind choosing that class
Example: Choosing a beneficiary by their height or their colour.

Question 37

R v District author

Answer 37

Facts: Concerned a trust that was for the benefit of all or some inhabitants of the county West Yorkshire; the council had money left in their budget so created the trust. (2.5 million potential beneficiaries)

Held: It was administratively unworkable- the instrument was not practical.
Although the reason why the council wanted to create the trust was justified, shows that discretionary powers and trusts can be void due to administrative unworkability.

Virgo: example of admin unworkability not capricisouness

Question 38

Outcomes of the certainty test

Answer 38

Words- trustee free of obligation

Objects- resulting trust as trust obligation was intended

subject matter

if trust clearly defined but beneficial shares uncertain- resulting

If unclear what property attached to- recipient