Limiting The Life Of Private Trusts

Question 1

How are liferents restricted?

Answer 1

Can’t pass to someone not yet alive (Frog’s Creditors)

Question 2

Fraser v Rose

Answer 2

Providing for daughter but only if left mother within 4 weeks of his death

Question 3

Trusts for memorials?

Answer 3

Invalid if excessively extravagant (McCaig; Aitken)

Question 4

Effect of void condition?

Answer 4

Treated as if it were satisfied and you ignore it

Question 5

What is an accumulation?

Answer 5

Beneficial enjoyment postponed for longer than permitted

Question 6

How are accumulations capped?

Answer 6

6 periods

Have to elect one

Question 7

Express or implied?

Answer 7

Both prohibited - Lord v Colvin

Question 8

Issues with the current law

Answer 8

Typically estate distributed other than would have wanted / bad tax consequences
Need to ensure that rule restricting accumulations is clear
Law complex and hard for practitioners to apply
Policy reasons no longer valid
Need modern simple rules rather than heaps of ancient cases
Cost of litigation can only be justified

Question 9

What if no period expressed or expressed inaccurately?

Answer 9

Accumulating takes place for a permitted period and then ceases (McIvers Trs v Lord Adv)

Question 10

Policy justifications for rule against accumulations

Answer 10

Prevents distortions in economy which may be cases by large amounts of wealth being held trust for long period

Prevents accumulation of vast wealth for benefit of a limited number of individuals far into the future

Prevents trustees from disinheriting their immediate family by amassing fortunes for unknown future amounts

Dead hand control

Question 11

SLC proposals

Answer 11

Abolish rules restricting duration entirely

But allow power to alter purposes where there has been a material change of circumstances and a period of 25 years has lapsed since the creation of the trust

Question 12

Solution? (SLC)

Answer 12

Flexible approach. No restriction but after 25 years, can change in light of changing personal circumstances and societal conditions

Question 13

Fixed rule systems

Answer 13

England and Isle of Man
125 100
Simpler to just have one period
Arbitrary

Question 14

No rules?

Answer 14

Manitoba, South Australia, Jersey and Guernsey, SA - never

Question 15

Children who were not yet born could get what from fiar?

Answer 15

Could get fee. Unusual because normally couldn’t get anything because not yet alone

Question 16

Which case held that trustees could invest in insurance and this did not qualify as accumulation?

Answer 16

Cathcart’s trustee v heneage

Question 17

McIver’s Trs v Lord Adv

Answer 17

Directed trustees to hold trust estate and accumulate until son 22. No - had to be when 25 or lifetime of granter

Question 18

Restriction on liferents

Answer 18

Invention of 17th centaur to keep land in same family. But meant disinherited others, nothing for anyone but heir, can’t buy new property or mortgage it

Then successive liferents!