Trusts separate ownership into: 1. legal 2. equitable What does this mean?

1. legal Legal title vests in trustee; no actual ownership or enjoyment 2. equitable Vests in beneficiaries; true ownership; equitable interest

Foundation of trust law Flashcards by Jeanne Semple

What is the maximum number of trustees over land?

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Who holds legal title to a trust?

trustee

note that this not the same as ownership - they are a mere steward

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Who holds the equitable interest in a trust?

beneficiary

this means that in equity, the beneficiary owns the trust property

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does a trust have a separate legal personality?

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who transfers legal title of a trust to the trustee

settlor

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can a settlor also be a trustee

yes

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Trusts separate ownership into:

legal
equitable

What does this mean?

legal

Legal title vests in trustee; no actual ownership or enjoyment

equitable

Vests in beneficiaries; true ownership; equitable interest

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What are the 3 types of trust?

Express
Implied
bare trust

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What are 2 examples of an express trust

private trust

charitable trust

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What are 3 examples of an implied trust

resulting

constructive

statutory

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What is an express trust?

trust deliberately set up by settlor by written or oral conduct

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What is an implied trust?

implied by law

no formalities

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What type of trust arises by operation of the law?

constructive trust

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what is a bare trust?

Thas a right to both income and capital and may call for both to be remitted into their own name.

trust where beneficiary has acquired saunders v vautier rights (trust has vested)

able to demand that the trustee transfer legal title to them -> have absolute ownership of the property

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What is the difference between a vested interest and contingent interest?

vested interest
- unconditional
- no conditions needed to be satisfied by beneficiary to benefit from the trust
- required for the exercise of saunders v vautier rights
contingent interest

condition to enjoying the trust and getting full beneficial ownership

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Which of the following is a contingent interest vs a vested interest:

a. “I leave the income of £100,00 on trust for Janet for life, remainder to Mark if he survives her”

b. “I leave the income of £100,00 on trust for Janet for life, remainder to Mark absoloutely”

a. contingent interest

M needs to outlive J

b. vested

J is a life tenant -> M is a remainder man
M does not need to do anything to get the benefit

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In a discretionary trust, who holds the discretion? Over what?

the trustees

over (i) who beneficiaries are (ii) how much they get

Can a Saunders v Vautier right be exercised over a discretionary trust?

Only if there is an ascertainable group of beneficiaries e.g. children of trsutee

(and other SvV requirements are met)

more open groups such as ‘employees’ are unlikely to be able to exercise SvV

What 3 certainties are needed for a trust to be enforceable?

intention
subject matter
objects (beneficiaries)

What is the approach taken by courts to determine certainty of intention

look to context as a whole
no specific test
look at wording
look at conduct if trust is not being created by wording/ a will

What is certainty of subject matter?

ability to identify the property under the trust and amount of the property

Which of these provides sufficient certainty of subject matter for a valid trust:

“bulk of my stamp collection”
orange onesies from a collection of orange onesies
200 o my 100 ordinary shares

not valid - unclear how many this actually means
not valid - cannot be separated out as unclear which are being referred to
valid - these 200 shares are the same in nature so do not need to be separately identified

Is the below statement sufficient certainty of subject matter for a valid trust:

X leaves a reasonable income on trust for Y.

Yes -> can assess what is reasonable by looking to beneficiaries’ lifestyle and what would be reasonable for them.

If a trust has certainty of intention and subject matter but not object, what happens?

Held on resulting trust by trustee for settlor/ settlor’s estate

What is the test for certainty of object in a fixed trust? | provide both limbs of the test

Complete list test 1. Conceptual certainty -> identification of a particular group or class of people + list members in this 2. evidential certainty -> individuals in that class can be confirmed with evidence e.g: trust for X's children -> 1. list all children -> 2. prove that they are the children with birth certifcates

What is the test for certainty of object in a discretionary trust? (where trustee has absolute discretion in determining who the beneficiaries are)

Individual ascertainability test -> must be certain whether someone is or isnt a member of a class of beneficaries 1. conceptual certainty -> identification of the class or group No need for evidential certainity -> if person is proved to not fall under the concept of the beneficary class (e.g. not actually a resident of X town) the trust doesn't fail, the person is just no longer a beneficiary

What are 3 ways in which equitable title may be transferred?

1. gift 2. transfer legla title to a 3rd party to hold on trust for another 3. self-declaration of trust for another

what is an inter vivos trust

- trust made during settlor's life - intentionally mad

What are the formalities for the creation of an inter vivos express trust?

No formalities unless over land or if an existing equitable interest is being transferred

What are the formalities for the creation of an inter vivos express trust over land?

compliance with s53(1)(b)LPA 1925 1. details of the trust on land set out in writing 2. signed by settlor

What are the formalities for the creation of an inter vivos express trust transferring an exisiting equitable interest? (where one beneficiary passes on interest to another)

- document in writing - signed by transferor - executed note: if equitable and legal title are being transferred -> trust collapsed -> saunders v vautier rule stipulates that there is no need for evidence in writing

What does it mean to say that trust must be constituted in order to be valid?

constitution is when legal title to the trust property has vested in the trustee basically: legal title has been transferred

What is the rule that "equity will not assist a volunteer"?

if no trust is made by the settlor, there is no trust full stop -> law will not correct an incorrectly constituted trust no trust: transfer of equitable title but not legal title

What is the difference between formality and constitution requirements?

formalities -> transfer of equitable title constitution -> transfer of legal title

How to transfer legal and equitable rights for a gift?

1. equitable -> no formalities 2. legal title -> needs to be transferred in the following ways: registered land -> transfer deed + register at Land Registry company shares -> sign stock transfer from + register the new owner in register of members + send for and existing share certificate to Companies House other gifts -> by simple delivery

How can legal title be transferred from settlor to trustee?

1. check if there are equitable formalities (is there land) if land -> comply with s52(1)(b) 2. are there any legal formalities to constitute the trust e.g. land -> sign deed and register this and the land registry

What are 3 exceptions to the rule that "equity will not assist a volunteer"?

1. settlor does all in their power to constitute the trust but legal title is not actually transferred 2. Donatio mortis causa: death-bed gift 3. executor and the gift

What is the following exceptions to the rule that "equity will not assist a volunteer" about: 1. settlor does all in their power to constitute the trust but legal title is not actually transferred

no transfer is no fault of their own -> trust still constituted e.g. X executes deed for transfer of land and sends to land registry -> land registry fails to actually register

When does the following exceptions to the rule that "equity will not assist a volunteer" apply: 2. Donatio mortis causa: death-bed gift

1. gift must be made in contemplation of impending death 2. gift itself/ control of the gift is delivered to donee e.g. keys the house, share certificate 3. intention to make gift conditional on death

If Donatio mortis causa: death-bed gift is effective what kind of trust does this give rise to ?

constructive trust

If someone intends to make a gift to another or release someone as a debt but fails to do so in their lifetime - what can they do?

make the intended recipient of gift the executor of the will.

If someone intends to make a gift to another or release someone as a debt but fails to do so in their lifetime, they can make the intended recipient of gift the executor of the will. What is needed for this to apply?

continuing intention to make an immediate gift (donor wanted to make a gift for a long time and to do so straight away but just died before they were able to) must be no interruption to giving the gift (e.g. lion must see the vet before it is gifted)