Introduction To Trusts

Question 1

What is an express trust?

Answer 1

A trust created with the express intention of the settlor to create a trust. Usually done via a trust deed.

Question 2

The two types of express trusts?

Answer 2

1. Fixed trusts
2. Discretionary trust

Question 3

What is a fixed trust?

Answer 3

Trusts where the interests of the beneficiaries are clearly defined by the settlor. Trustee has no choice and must do what the settlor tells them.
Eg i transfer my painting to bella to hold on trust for my wife for life and at her death to my children in equal shares

Question 4

What is a discretionary trust?

Answer 4

The trustee will have the discretion as to how to distribute the porperty among members of an identifiable class.
Eg i tranfer my painting to bella to be held on trust for my children in such shares as bella in her absolute discretion may decide.

Question 5

What is a purpose trust?

Answer 5

The trust is set up for a particular purpose rather than to benefit certain people.

Question 6

What is a charitable trust?

Answer 6

Type of purpose trust created for the benefit of an indefinate class of people/ or the public at large

Question 7

What is an implied trust?

Answer 7

A trust is implied in equity where the settlor has not expressed their intention to create a trust. In such cases a trust will be preseumed to ensure a fair outcome.

Question 8

2 types of implied trusts?

Answer 8

1. Resulting trusts
2. constructive trusts

Question 9

How does a resulting trust arise?

Answer 9

When a person intends to create a trust relationship but the formalities of creating a trust were not followed.

Question 10

What is a constructive trust?

Answer 10

Where equity intervenes to prevent a legal owner from denying the beneficial interest of another eg where there was a common intention that both parties should acquire a beneficial interest and one party acts to their detriment in that belief.

Question 11

What are the two tyopes of interests?

Answer 11

1. Vested interest
2. Contingent interests

Question 12

What is vested interests?

Answer 12

No condition is needed to be satisfied before the beneficiaries can benefit from the trust.

Question 13

What is a contingent trust?

Answer 13

A condition needs to be satisfied before the beneficiariy’s interest become vested usually attaining a certain age.