The rule in Saunders v Vautier Flashcards
What is the key principle of the rule in Saunders v Vautier?
A) A trustee can distribute trust assets at their discretion
B) A minor beneficiary can demand their share of the trust early
C) A trustee can change the terms of the trust without beneficiary consent
D) A sole adult beneficiary with a vested interest can terminate the trust
D) A sole adult beneficiary with a vested interest can terminate the trust
Explanation: The rule allows a single beneficiary who is absolutely entitled to the trust property to demand legal title to the assets, effectively ending the trust.
When can multiple beneficiaries exercise Saunders v Vautier together?
A) If all beneficiaries are minors
B) If each beneficiary has a contingent interest
C) If all beneficiaries are adults of sound mind and agree
D) If the trustee consents
C) If all beneficiaries are adults of sound mind and agree
Explanation: The rule extends to multiple beneficiaries, but all must be adults with the mental capacity to agree to collapse the trust.
What happens if a trust has successive interests (e.g., life tenant and remainder interest)?
A) Saunders v Vautier can only be exercised when all beneficiaries agree and meet legal criteria
B) The life tenant alone can collapse the trust
C) The remainder beneficiary alone can collapse the trust
D) Saunders v Vautier does not apply to such trusts
A) Saunders v Vautier can only be exercised when all beneficiaries agree and meet legal criteria
Explanation: Successive interests require all parties with a vested interest to consent before the trust can be terminated.
A trust holds £10,000 for A and B in equal shares, to be distributed at 25. A is 19, and B is 17. A demands their share. What should the trustee do?
A) Transfer £5,000 to A and continue holding B’s share
B) Deny A’s request because the trust states funds are distributed at 25
C) Transfer the full £10,000 to A since they are the only adult
D) Seek court approval before making any decision
A) Transfer £5,000 to A and continue holding B’s share
Explanation: Since A has a vested interest and is an adult, they can exercise Saunders v Vautier on their share. B’s share remains in trust.
A trust provides that A (50 years old) receives income for life, and B (17 years old) gets the capital upon A’s death. A and B jointly ask to split the trust fund now. What should the trustee do?
A) Transfer half the trust fund to each immediately
B) Deny the request since B is a minor
C) Transfer the full trust fund to A
D) Seek consent from the settlor
B) Deny the request since B is a minor
Explanation: Successive interests require agreement from all adult beneficiaries with capacity. Since B is a minor, they cannot exercise Saunders v Vautier yet.
A discretionary trust has multiple beneficiaries, some with contingent interests. The objects of the trust agree to collapse it. When can Saunders v Vautier be applied?
A) If all beneficiaries, including contingent ones, are adults and agree
B) Only if the trustee consents
C) If at least half of the beneficiaries agree
D) Saunders v Vautier never applies to discretionary trusts
A) If all beneficiaries, including contingent ones, are adults and agree
Explanation: Even contingent interest holders can exercise Saunders v Vautier if all adult beneficiaries consent.
Which of the following is the biggest practical limitation of applying Saunders v Vautier to large trusts?
A) Large trusts often have too many beneficiaries to reach consensus
B) Trustees have sole discretion in such cases
C) The rule only applies to fixed trusts
D) It requires court approval in all cases
A) Large trusts often have too many beneficiaries to reach consensus
Explanation: Large discretionary trusts with many objects make unanimous agreement difficult, limiting practical application.
