Lecture 1 Flashcards
Introduction to E&T
What is a trust?
A legal device which enables one party to hold legal rights for the benefits of another
What is a Settlor?
One who creates inter vivos trust i.e creates a lifetime trust when alive and appoints trustees, beneficiaries etc.
What is a testator?
One who creates a testamentary trust
What is a testamentary trust?
A trust created through a Will
What is a trustee?
One who holds the legal title and manages the trust on behalf of the beneficiary
What is a beneficiary?
Also known as the object, one who holds equitable title and enjoys the substance of the trust property
What is the trust property?
The object which is owned in the trust, usually land
What is the relationship between the trustee and beneficiary?
Trustee has an obligation towards the beneficiary
Beneficiary has entitlement towards the trust property
What are equitable rights?
Equity grants beneficiary enforceable rights against the trustee which common law doesn’t. Does this for the sake of justice and fairness.
What is an express trust?
A trust that is intentionally created by the settlor in writing where trustee and beneficiary are clearly named
What is an express private trust?
A trust between a specific settlor, trustee and beneficiary. Unlike an express public trust where the beneficiary would be the public.
What are the three certainties for an express private trust to be valid?
- Certainty of intention
- Certainty of subject matter (trust property)
- Certainty of objects (i.e beneficiaries)
Can one hold both legal and equitable titles to a trust?
No. Equity is not involved.
What is a resulting trust?
Where equity creates a trust to reflect the presumed intent of the parties to ensure the property benefits the person who provided the funds
What is a constructive trust?
Where equity decides that the legal owner of the property has behaved unconscionably and thus creates a new trust
What is the first certainty of express private trusts?
Intention to create a trust.
Which case clarifies that the settlor must manifest an intention to create a trust?
Knight v Knight (1840)
How does the law establish whether intentions to create a trust exist?
By analysing the available evidence - it is a question of fact
What are the different methods of creating a trust?
- In writing
- Trust instruments
- Wills
- Orally declared
- Implied trusts
What does Re Gulbenkian’s Settlement (HL, 1970) claim regarding Trust Instruments?
Trust Instruments must be interpreted to reflect the settlor’s intentions and that there must be certainty of beneficiaries, meaning they must be identifiable.
What Act allows for the incorporation of extrinsic evidence with Wills?
s.21 Administration of Justice Act 1982
Do the three certainties apply to implied trusts?
No, three certainties only apply to express private trusts.
What should be noted about interpretation of trusts?
The use of precatory words such as hope, wish, desire, etc. do not constitute a valid trust due to lack of intention.
What is the issue of discretion v obligation?
Vague wording in Wills or trusts leave the trust property up to the discretion of the trustee as opposed to being an obligation
“to be at her disposal in any way she may think best, for the benefit of herself and her family”
Lambe v Eames (CA, 1871)
Found not to be a trust - left up to her discretion
Is the use of the word trust enough to constitute a valid trust?
Tito v Waddell (No.2) (PC, 1977)
No
“in full confidence… do what is right”
Re Adams & Kensington Vestry (1844)
No trust, discretion.
“I hereby direct… shall at her death be equally divided among the survive said nieces”
Comisky v Bowring-Hanbury (HL, 1905)
Valid trust. Mandatory wording = obligation.
Can a trust be created through informal wording?
Paul v Constance [CA, 1977]
“The money is as much yours as mine”
Yes.
What are sham trusts?
Trusts which are created to deceive a third party i.e tax collectors. No true intention.
Midlands Bank v Wyatt (HC, 1995)
Can conduct reveal intention?
Re Kayford Ltd [1975] Megarry J
Yes.
