Intro

Question 1

What is a trust?

Answer 1

A trust is an equitable duty relating to property. Person subject to the duty is called a trustee and the person to whom the duty is owed is called a beneficiary.

• property to which duty relates is called the trust property
• trustee is usually the legal owner of the trust property
• beneficiary has an equitable proprietary interest in that property
• duty is equitable because it was created an developed by the court of chancery

Question 2

What is subject matter of a trust?

Answer 2

It is the trust property. Fundamental to a trust.

If no trust property, the trust will cease to exist.

Question 3

What are trust objects?

Answer 3

The beneficiaries or purposes of trusts.

Question 4

What kind of interest does a beneficiary have in the trust property?

Answer 4

Has an equitable proprietary interest.

Important for two reasons:
1. The beneficiary’s rights are enforceable against third parties
2. The beneficiary’s rights are protected against the insolvency of the trustee

Question 5

What are the three main categories of trusts?

Answer 5

Express

Resulting

Constructive

Question 6

Who is the settlor?

Answer 6

The person who created the trust

Question 7

What are the difference of rights for a beneficiary under a trust and person with an interest in a deceased estate?

Answer 7

Under trust: equitable proprietary right

Under will: Personal right

Question 8

What are the perpetuity rules?

Answer 8

1. Rule against remoteness of vesting: applies to trusts with people or charities as their objects. Important to consider this rule when establishing or administering a trust that does not immediately give rise to vested interests in trust property - discretionary trusts and trusts which contain contingencies.
2. Rule against inalienability: Applies to non-charitable purpose trusts

Question 9

What is the rule against the remoteness of vesting?

Answer 9

• The statutory perpetuity period is 125 years. The trust property must vest in a person or charity at the end of that period.
• It does not need to be clear from the outset that the trust property will vest within 125 years. Wait and see rule applies.
• The class closing rules apply at the end of the statutory perpetuity period

Question 10

What is rule against inalienability?

Answer 10

Applies to non-charitable purpose trusts.

• Common law perpetuity period is 21 years.
• Must be clear from the outset of the trust that it will come to an end within the common law perpetuity period. Not possible to wait and see.
• Common law perpetuity period can be extended by reference to a life in being. A common way to do this is by way of a Royal lives clause.