Introduction

Question 1

Who holds the legal interest in a trust?

Answer 1

The trustee

Question 2

Who holds the equitable interest in a trust?

Answer 2

The beneficiary

Question 3

What is a chattel?

Answer 3

A tangible item (other than land)

Question 4

What is chose in action?

Answer 4

An intangible right such as debt or a company share

Question 5

What happened in the case Customs and Excise Commissioners v Richmond Theatre Management Ltd [1995]?

Answer 5

A theatre sold advance tickets for performances. Terms and conditions stated that the company would hold the purchase money ‘upon trust’ for the customer until the performance took place, and return money if it was cancelled. No restrictions on how the company could use the money and was not required to account to the customers - not a trustee, ability to freely use money incompatible with a trust

Question 6

What happened in the case Re Bond Worth [1980]?

Answer 6

The ability for a company to use fibres in its manufacturing process was inconsistent with the company holding the fibres on trust for the unpaid seller of them - not a trust

Question 7

Name 6 benefits of using a trust

Answer 7

Separation of ownership and management of property, expertise, protection, flexibility, control and ring fencing insolvency

Question 8

Who can a beneficiaries equitable proprietary interest be enforced against?

Answer 8

Third parties

Question 9

Name 3 broad key uses for trusts

Answer 9

Commercial arrangements, private arrangements charitable purposes

Question 10

Name 5 examples of commercial arrangements

Answer 10

Share ownership, investment funds, pension funds, other forms of tax efficient employee remuneration, corporate tax avoidance

Question 11

Name 3 examples of private arrangements

Answer 11

Testamentary planning, land ownership, tax planning

Question 12

Name 2 types of implied trusts (arising by operation of law)

Answer 12

Resulting trusts, constructive trusts

Question 13

What are statutory trusts?

Answer 13

Trusts arising as the result of the application of a specific statutory rule

Question 14

What are testamentary trusts?

Answer 14

Trusts created via a will

Question 15

What are inter vivos trusts?

Answer 15

Trusts created in the lifetime of the settlor

Question 16

What are fixed trusts?

Answer 16

Where the trustee knows exactly what they need to give to each beneficiary

Question 17

What are discretionary trusts?

Answer 17

Where the trustee knows who the potential beneficiaries are but has the power to determine who benefits and in what shares

Question 18

What is a bare trust?

Answer 18

Where the trustee simply holds the legal title on trust for the sole benefit of the beneficiary

Question 19

What did the House of Lords state in the case Foley v Hill [1848]?

Answer 19

That a bank is not a trustee of money deposited by it’s customers

Question 20

What is a quistclose trust?

Answer 20

A device that combines a debt and a trust

Question 21

Which case did the quistclose trusts come from?

Answer 21

Barclays Bank Ltd v Quistclose Investments Ltd [1970]

Question 22

What happened in the case Re Farepak Food and Gifts Ltd (in administration) [2006]?

Answer 22

Farepak ran a Xmas savings scheme, agreeing with customers that in return for 11 monthly payments it would obtain retail vouchers for customers and distribute in Nov. Farepak went into admin. In Oct. Course concluded money paid to Farepak was not subject to a quistclose trust

Question 23

In what circumstances can quistclose trusts arise?

Answer 23

In any situation where property is transferred to a person whose use of the property is restricted to a specific purpose