Lecture 6 and 7: Gifts/Trusts

Question 1

What law governs bargains?

Answer 1

Contract law

Question 2

What is the difference between legal and equitable title?

Answer 2

Equitable title is the right to enjoy and benefit from the property and provides more actual control of the property than legal title. Equitable (beneficial) title primarily involves the right to enjoy the net profits as detailed in the trust.

Often one person holds legal title as a trustee and another person has the equitable/beneficial title in the same property. This is called an express trust.

Question 3

What is a bargain?

What does it require?

Answer 3

It is a contractual exchange.

Requires offer acceptance and consideration

Question 4

a) Let’s say I have set up a trust and I think I put all my property in that trust for my kids but I forgot about a cottage in Windsor. So, the trust disposes of the named items but doesn’t mention the cottage it’s not dealt with.

What type of trust is A?

B) When a express trust does not use up all the trust then a XXX trust arises.

Answer 4

This is an example of a resulting trust; it would revert to me. If I’m dead, it would go to my estate.

b) resulting trust.

Question 5

What is a gift?

What does it require?

Answer 5

A gift is an act of benevolence,

It requires formalities such as delivery, signature or attestation

Question 6

What is the difference between the goals of contract versus a gift?

What element in a contract makes it binding?

Answer 6

In gift giving the legal intent is to donate (aka intent to give)

In contract the main legal rule is to protect expectations

Consideration

Question 7

What is the common law rules to give a gift of real property (land)?

What are both of these things very generally?

If a deed is given, what does it need?

Answer 7

It requires either a deed of gift

OR

A declaration of trust

Both of these things are in documents aka you need a piece of paper

If a deed is given, it needs to be a written document, signed by the donor, sealed and delivered

Question 8

What is the common law rules to give a gift of personal property?

Can it also be granted by a deed of gift or a declaration of trust?

Answer 8

Personal property can be granted by declaration of trust or a deed of gift.

Does not need it however. A gift of personal property is effective regardless of the paper if

1) There is intention on the part of the giver

2) Acceptance by recipient

3) Delivery of the gift

Question 9

What does “a gift inter vivos’ mean?

Answer 9

It is a transfer or gift made during someones life time.

Question 10

What is a testamentary gift?

Where do you find these gifts?

Answer 10

This is a gift that takes effect on the death of the person making the gift.

You find it in a will

Question 11

What are the three ways you can make a valid gift of personal property inter vivos?

Answer 11

1. A deed
2. A declaration of trust
3. Delivery

Question 12

Requirements of making a gift just by delivery?

Answer 12

1. Intention of making a gift
2. An intention on the part of the receiver of the gift to accept
3. The actual delivery of the gift

Question 13

What do words of gift generally show?

What happens if there are no words of gift?

Answer 13

Words of gift show evidence of giving the gift, and the words help identify the object and the extent of the gift

if no words go gift, intent can be hard to prove.

Question 14

What do words of gift generally show?

What happens if there are no words of gift?

Answer 14

Words of gift show evidence of giving the gift, and the words help identify the object and the extent of the gift

If there are no words of gift, the purported receiver trying to establish the valid gift has the onus of proving the existence of a present native intention, (and to prove basically it is valid)

Question 15

Delivery of the gift

1) When must it occur? (not in regards to inter vivos)

2) Delivery is thought of as the xxx act to complete the gift

3) Does delivery transfer possession or ownership?

4) Does delivery need to be actual? if not, what is the other called and give an example

Answer 15

The delivery of a gift must occur during the time that donative intention still exits and at any stage until delivery occurs, then the donor can validly retract the gift if delivery has not happened.

Delivery is the final act that is essential to complete the gift.

Transfers both possession and ownership of the chattel to the receiver of the gift. Delivery perfects the gift completes it.

Delivery can be actual (physical giving) or constructive which takes different forms.

If the nature of the goods makes physical gift giving improbable, actions short of manual delivery can be sufficient for the change of possession.

Example: handing over the key of a lock box. Or handing over the keys to a car. These are all constructive delivery.

Question 16

What does Donatio mortis Causa mean? (DMC)

Whats the difference between a DMC and a testamentary gift?

What are the three requirements needed for a valid DMC?

Answer 16

It means someone giving a death while they are dying

This is a death bed gift. This is when they are dying and give away a property. It has the same characteristics of the testamentary gift but is different as it is when they are actively dying.

1. Impeding death from existing peril
2. Gift must be delivered prior to death and delivery can be constructive or symbolic.
3. The gift is to only take effect upon death and will revert to the donor should they recover.

Question 17

Case of Re Cole Page

Facts: Cole bought a home and fixed it in London. Was supposed to be used as a family home. Wife joined at a later point and said “look it’s all yours” Cole went bankrupt, and the contents of the home was claimed by the trustee to pay off his debts.

Ms. Cole claimed that the furniture and the contents of the home was given to her.
Lawyer argued that a perfect gift of chattels can be made by showing them to the receipt and speaking words of gift. Thus, she claimed this was a change of possession.

Issue: Was this a true gift?

What are the three requirements of a valid gift?

Is this always the case?

Answer 17

Holding:

Courts held this argument was not valid under other case law

A gift of chattels cannot be perfected by showing them and stating words of gift

In order to establish a gift, you have the three requirements.
1. Intention
2. Delivery
3. Acceptance

Mr. Cole did show the intention needed to give to this wife, but he did not deliver anything other, and she did not accept anything. Thus, she did not meet part 2 and 3 of the test.

No. In two cases thereafter, the court held in very similar situations that physical delivery was already given but in Cole it was not. Point is that it is very dependant on Judicial interpretation.

Question 18

Case of Mackedie V Mackedie

Facts: Deceased had 5 paintings worth 35k each. Son claimed father had given him all the paintings as birthday presents wrapped with his name on them. The dad said he would hold onto them for the son.

In the will, the paintings were given to someone else.

Issue: Did the son get the paintings?

Answer 18

The court found that the paintings belonged to the son because there was a clear intention by the deceased to make a gift, including the written endorsements that were known to the deceased.

Moreover, the court found that the presentation of the paintings as wrapped birthday gifts constituted delivery even though they remained in the possession of the deceased.

Question 19

Can constructive delivery be okay?

Generally when do the courts say this is okay?

Answer 19

Courts have recognized “constructive delivery” where the chattel-for example, a car-is too large or difficult to transfer easily.

In such cases, delivery of the “means of control”-for example, the keys to the car-may be sufficient, although the factual context will be examined carefully to ensure that the donor has done everything possible to part with possession.

Question 20

Bauernschmidt v Bauernschmidt,

Facts: A donor placed a gift in his safety deposit box, and gave a duplicate key to the donee.

Issue: Is this a valid gift?

What would happen if he gave over his only set of keys?

Answer 20

The court concluded that there was no change in the donor’s control over the subject matter of the alleged gift.

By contrast, when a donor handed over the only set of keys to a safety deposit box to a donee, while stating that the donee could have whatever was in the box, the court held that the donee was entitled to the securities valued at over $185,000 contained in the box

Question 21

Is symbolic delivery generally enough?

For example, if the donor delivers a photo of a new car, using words of gift it may be argued that there has been symbolic delivery.

Answer 21

By contrast with constructive delivery (delivery of the means of control), some cases have considered the idea of “symbolic delivery.”

For example, if the donor delivers a photo of a new car, using words of gift it may be argued that there has been symbolic delivery.

According to Ziff however, “there is little authority on which to base the view that symbolic delivery … is enough to complete a gift.”

Question 22

Thomas v Times Book 1966

Facts: Defendant argues he was gifted a manuscript of the book. Plaintiff who is the wife claims she is entitled to the book.

Issue: Was this a valid gift?

(Applied the three part test)

Answer 22

Holding:

Applying three part test

1) Evidence shows there was intention to give the gift

2) The defendant has accepted the gift

3) The defendant has possession of the gift by consent by the deceased. This is sufficient delivery to perfect the gift.

Thus, it was a valid gift.

Question 23

What is a trust?

Answer 23

This is a situation where one party holds legal title as trustee, and another party has equitable/beneficial title in the same property.

Question 24

What is equitable (beneficial) title for a trust?

What is a trustee for a trust?

Answer 24

Equitable title (beneficial title) is the right to enjoy and benefit from the property and provides more actual control of the property than legal title.

A trustee is the one basically delegating the trust

Question 25

Case of Watt v Watt Estate

Facts: Shirley and Richard were friends (not related just same last name) Richard was the owner of the Marina, and Shirley was there daily to help. She was the “right hand person” and never received money. Over the period of 4 years, S’s husband also helped Richard. When the boat was completed, R gave S a set of keys, and gave her free use of the boat until Richard died.

Before Richard died, he wrote a document Infront of Shirley saying Richard and Shirley had joint ownership. If the boat was sold, it would be divided evenly. When Richard passed away, Shirley claimed possession of the boat. The claim was denied. She then sued the estate for title and possession of the boat.

Issue:

1) Can a court make a declaration of trust if the criteria for a gift has not been met?

Answer 25

COA found that Shirley was entitled to half the boat. The court noted that the evidence shows Richards conduct was consistent with giving Shirley interests in the boat.

Shirley was given equitable title to one half of the boat, and upon Richards death, his widow became trustee of Shirley’s Interest.

Court said this was not a gift outright, and even though Shirley was given a set of keys, other keys were given to other people. In addition, document said “joint ownership” which shows Richard did not want to give away all his interests.

RATIO: A court CAN make a declaration of trust if the criteria for a gift has not been met.

Question 26

What is the role of a trust/trustee?

What are trusts used as often?

Answer 26

A trust is something set up to give an interest/title to a beneficiary. There is a trustee who still has legal title and some control.

A trustee has legal title to all of the trust property with rights which may include disposition, management, administration, and possession.

Trusts are often used as a wealth management tool, and is often apart of a will.

Question 27

Example of Trust- Freebie

Set of parents who are rich and have young kids. Part of their will they want the kids to have the money, but not when they are 10. Thus, a trusted person (the trustee) would follow the directions of the trust.

It may say when they are 21, they get half the money, or whatever. It is a way of controlling the management of the trust.

Answer 27

Freebie

Question 28

Why is it that a person who is the trustee who is executing a trust, who has property due to that trust, that property is completely separate from their own?

Answer 28

If I am given a trust to hold for my nephew, and I go bankrupt, the creditors can only go after my stuff, not the trustee stuff.

Example: if I am a trustee in my uncles will, that trust property is sperate from my property. The reason for this, is for example, if I lose all my money, none of the trusts assets of my uncles would be available to the creditors coming after me. If trustee goes personally bankrupt, no trust assets form part of trustee’s own property.

Question 29

What title does a beneficiary have?

Can you be a trustee and beneficiary at the same time?

Provide an example:

Answer 29

Has equitable (beneficial) title. Equitable (beneficial) title primarily involves the right to enjoy the net profits as detailed in the trust.

Typically, a beneficiary does not have possession of the property, but the trust might allow the beneficiary to have possession of an asset such as a family home.

It’s possible to be a trustee and beneficiary at the same time.

Example
A testator (the one making the will or trust) I may leave property to my husband, and in trust for him to his life, with the remainder to our children. That is an example where he is the trustee, but he is also receiving a benefit aka trustee and beneficiary.

Question 30

What type of trust is typically created by the court

Answer 30

A constructive trust.

Question 31

True or False: There is a presumption of resulting trust as general rule for gratuitous transfers

Answer 31

Yes. It can be rebutted.

Question 32

What are the three types of trusts?

Answer 32

Resulting Trust

Express Trust

Constructive Trust

Question 33

Whats a resulting trust?

Do they have a beneficial interest?

Answer 33

An arrangement where one person holds property for the benefit of another.

No they only get legal title. Where a person transfers property to another and gives him or her legal title but does not intend for that person to have an equitable or beneficial interest in the property.

Since the beneficial interest in the property is not given to anyone else, its “results” back to the person who transferred the property.

Key take away- it results to the person who transferred the property.

Question 34

Whats an express trust?

Answer 34

Property is transferred by a person to a trustee who holds the property for the benefit of one or more person’s called beneficiaries.

Trustee can distribute the property or income from the property to the beneficiaries.

In writing, in expressed terms. Used as tools for wealth management or for a will.

Question 35

Resulting Trusts

1) Does it have a document?

2) Who assigns it?

2) When do Resulting trusts arise? (Two most common circumstances)

Answer 35

1) Unlike an express trust, there is no document here.

2) It is a situation that happens where the court will say ok this is a resulting trust.

3)

1. When trust document failed to fully dispose of all beneficial interest in the property, equity will presume a resulting trust for the benefit of the trustor (settlor, person who made the trust); or
2. Equity will presume a resulting trust in a gratuitous transfer (some exceptions).

Question 36

Example to understand resulting trusts

Answer 36

Ann purchased property and asks that title be placed in the name of Bob

Equity presumes that Ann intended to retain the equitable interest by making Bob a trustee, holding legal title for Ann’s benefit.

Legal title is in Bob’s name because equity does not ignore the law, but the beneficial interest is treated as resulting back to Ann, unless Bob can show that Ann intended to make a gift of the property to him.

May look like a gift to Bob, but equity starts with the view that Ann intended to create a trust.

Summary: In a dispute over who holds beneficial interest, equity applies presumption of resulting trust in the absence of evidence as to Ann’s intentions. If there is nothing else that supports Ann intended to give the property to Bob, it would be a resulting trust to Ann

Question 37

Is there a presumption there is a resulting trust?

What are the exceptions of to the presumption of a resulting trust?

Answer 37

Yes there is.

Exceptions to presumption of resulting trust

1) Gratuitous transfers between family members

2) There may be a presumption of advancement. It was once a case that a transfer of husband to wife was a presumption of advancement.

Question 38

What is the doctrine of survivorship and advancement?

Answer 38

Survivorship: When you buy a home with a spouse you are legally married to or become joint tenants, you acquire the right of survivorship. If your spouse or a co-owner dies before you, their property share is automatically distributed to the surviving joint tenants

Advancement: This common law doctrine assumes that when one spouse transfers property to the other, it’s considered a gift and becomes the sole property of the recipient spouse.

Question 39

Pecore v Pecore 2007

Facts: E was a retired miner and had assets over 1.2 million. E loved P and her husband. E died. P did not turn over the joint bank accounts to the estate. P and her husband break up, and he claimed half of the value of the estate. P argues that the accounts became hers entirely by right of survivorship.

Issues:

Do the presumptions of advancement continue in modern times with adult children?

If it is gone, what takes its place?

If these presumptions continue to apply, how can these presumptions be rebutted?

Does the presumption of advancement apply to minor children?

Answer 39

1) In Pecore, the court held that when there is a parent and adult child, the presumption of advancement is gone and

Resulting trust takes its place.

2) Daughter successfully rebutted presumption of resulting trust. There was ample evidence E’s intention to have the balance go to P upon his death through the law of survivorship for jointly held property.

3) The presumption of advancement will apply only to gratuitous transfers from parents to MINOR children. Because P was not a minor child, the starting point was that it was a resulting trust. If she was a minor, the presumption of advancement would have applied

Question 40

Are the presumptions of a resulting trust or advancement rebuttable?

Answer 40

In certain circumstances, there will be a presumption of resulting trust or a presumption of advancement.

Both presumptions are rebuttable

A rebuttal may be successful if sufficient evidence displaces the presumption.

When there is a presumption, the burden of proof shifts to the party trying to rebut the presumption.

Question 41

When does the presumption of advancement arise prior to the case of Pecroe?

What changed after Pecroe?

Answer 41

Before Pecore, law stated any gratuitous transfer gave rise to the doctrine of advancement. Therefore, anyone trying to argue it was not a gift had to rebut the assumption

The Pecroe decision changed this, any transfer of parent to adult child the resulting trust presumption applies and not advancement

Question 42

What is a constructive trust?

How is it set up?

What is it used for mostly?

Can you give me an example?

Answer 42

A court may find a trust even if there is no specific intention to create a trust.

A constructive trust is a creation of the court and is used to make sure there is a fair result in cases where a person who does not have title to property has made significant contributions to the property gets some sort of compensation.

Prevents unjust enrichment for the party who has legal title. (unjust enrichment is when one person receives a lot of benefit from the toil of another)

Contribution can be of financial nature, can be improvements of a property, or maintenance.

This type of trust is often imposed in cases of co-habituated couples.

EXAMPLE: a couple who lives together but the title is owned by the guy. But for 10 years, the other person lives there, pays the mortgage, pays utilities, does renovations etc. in essence, they have contributed to the value of the property, and did a lot. If they brea up, this is not fair as the girl has no way of getting money from them. Thus a court would impose a constructive trust and should be entitled to some compensation.

Question 43

Can a donor have an intention to make a gift in the future? Is this valid?

Answer 43

A donor must have intention to make a present gift. Not a intention to make one in the future.

A donor may make a present gift, but postpone the enjoyment to the future; title passes at moment of gift, but gift will be enjoyed by receiver at a point in the future. Distinction between a postponed gift and a testamentary gift

Question 44

What is the difference between a post pond gift and a testamentary gift?

Answer 44

A testamentary gift must meet requirements which is usually a signed document in the presence of the witnesses. Basically, there are a lot of formalities.

A testator does not relinquish any rights in the property until they die.

Question 45

In regards to a donation mortise causa, why is evidence of intention important when thinking about a DMC versus a inter vivo gift?

Answer 45

A dying person can also make a valid gift inter vivos, therefore evidence of intention is important if they made a unrevocable inter vivos gift, or a donation mortis causa.

Question 46

Zachariuc, Chevrier v Public Trustee

Facts: Situation where Z gave insturctions to C to find money in his basement when he was contemplating his death. Z gave C a house key, and to check him on in the morning and to witness a paper of his will. Z had died.

Issue: Whether a gift was a Donatio Mortis Causier?

What is the test for a DMC?

Answer 46

Court stated that the rule is the following to see if it was a Donatio Mortis Causier (TEST)

Gift must be made in contemplation of death.

Revocation of gift if donor recovers.

Gift must be delivered prior to death and delivery can be constructive or symbolic.