Mid-Term Flashcards
What is an express trust?
Trust in which a settlor expressly sets out intention to have property held by 1 or more people for the benefit of some other person, valid purpose, or both
How can a settlor express a will?
orally, deed, by will
Types of trusts
private, charitable, fixed, discretionary
Fixed Trust
interest of each ben is established at outset: amount, piece of property, proportion of trust property (can include a formula)
Remedy fixed trust disadvantages of inflexibilty?
Make discretionary or give trustees/beneficiaries powers
What is a power?
authority to deal with someone else’s property
Who is the donor of a power?
the person who gives authority
Who is the donee?
Recipient of power
Who is the object of power?
Person who benefits from power
What is a mere power?
Power to deal with property but no fiduciary duty. No duty to exercise it/cannot be compelled.
What is a fiduciary power?
Power to deal with property held by trustee. Does not have to exercise the power but MUST consider it.
Examples of powers granted to trustees (4)
- Power to encroach on capital
- Advance capital early to remainder people before life tenant dies
- Power to accumulate income if trust property generates revenue
- Name or un-name beneficiaries
What are the features of discretionary trusts?
Trustees given power to determine:
- how income, capital, or both are distributed
- who the beneficiaries are (must appoint some)
- How much each ben gets
- Power of selection
What are dispositive terms?
Terms that control how trust property is to be disposed of by (a) removal from trust or (b) distributed to beneficiaries
What are administrative terms?
Terms created by trust instrument or by law for the best management of trust property such as (a) duties and powers and (b) terms regulating the ongoing administration of trust
What is the duty to retain?
Imposed if trust property is important to keep (ie company shares), or if descendants cannot run company
What is the discretion to retain or sell?
Imposed if the settlor foresees a need to exit certain investments ie shares or real estate (market downturn)
What is the duty to sell?
Applies to property with large capital value but does not generate income stream; wants capital value invested in revenue producing assets.
What is the power to invest? Legislation?
Imposed to direct trustee on what to do with generated proceeds. MB Trustee Act s68(2) gives trustee broad discretion to invest, but subject to restrictions in trust instrument.
2 ways to create an express trust?
- Voluntarily (make sure you get it right - equity will not assist a volunteer)
- Pursuant to contract (if done incorrectly, may get remedies such as damages or specific performance) Useful when certainty around property rights are required.
What is a completely constituted trust? Case?
Trust where legal title has been vested in trustee
Milroy v Lord: whatever rules apply to transfer a particular type of property apply to attempts to transfer it into trust.
What are the 3 certainties?
Intention (settlor means to create trust), Objects (certainty over who the beneficiaries or purposes are), Subject Matter (what property is subject to trust)
Validity under the Wills Act:
s3: will is valid only if it is in writing
s4: will is not valid unless:
a. signed by testator at the end
b. testator makes/acknowledges signature in the presence of 2 or more witnesses simultaneously
c. 2 or more witnesses attest will in presence of testator
Exception to validity under ss3-4 of Wills Act
s23: Court may dispense with formalities if satisfied that a doc embodies the testamentary intentions of a deceased. Court may order that doc to be fully effective, even if not executed in compliance with formal requirements (Timm v Rudolph)
George v Daily (no will)
George redid will to disinherit rest of sons. DIscussed intentions with accountant, who wrote letter to lawyer. George died. Despite lawyer and accountant swearing that the doc was George’s true testamentary intentions, DID NOT QUALIFY BECAUSE THERE WAS NO EVIDENCE TO PROVE THAT DAILY READ OR KNEW OF EXACT CONTENTS OF LETTER.
Timm v Rudolph (no will)
Shirley died before husband, her estate went to husband, which then went to HIS daughter. Shirley sat down with articling student to prepare will.
Ratio: will instructions given to lawyer may be admitted to probate, if there is evidence that testator had intention that this be dispository and operate until formal will drawn up. Here, Shirley spoke with articling student and thought she had more time, NO WILL.
What is a personal declaration of trust?
A declaration that oneself is the trustee of your own property to be held for someone else.
Advantages of PDTs?
instantaneous, simple, require no formal transfer of title if settlor is to be the only trustee.
Drawbacks of PDTs?
Difficult to prove, courts require compelling proof of trust rather than gift. Maitland: “men often mean to give things to their kinfolk, do not often mean to constitute themselves as trustees”
Glynn v Commissioner of Taxation
Old Glynn had sons and 1600 shares, to be held on trust for each. Recorded in share register and transaction records. Old G did not tell sons or share dividents. CoT wanted to tax upon Old G’s death, family stated they were trust property
Decision: trust
Law: Old G’s behaviour was not inconsistent with idea he was trustee: recorded trust in company record, as a parent, applied dividends to maintenance of sons.
Will the transfer to a trustee (3rd party) be effective if there is a missing or defective document?
NO
3rd party transfer fail - Milroy v Lord
- failed to satisfy requirements of the mode of gifting
- could have done PDT
TM owned shares he wished to transfer to SL on trust for niece E. TM executed deed saying so, but did NOT carry out transfer. SL had general POA and could effect transfer, which she did not. SL and TM both acted as if trust existed.
Law: ordinary legal formalities to transfer property apply to transfer of property in a trust.
Law 2: legal title must move in accordance with settlor’s expressed intentions. If transfer fails, so does trust.
Law 3: if a legal transfer is gratuitous AND defective, equity will not assist a volunteer.
