Trust 3 - Beneficial entitlement Flashcards
What are the advantages of having a beneficial equitable interest?
- Interest can be enforced against everyone (except Equity’s Darling)
- Can claim interest in traceable proceeds
- Interest is unaffected by trustee’s bankruptcy/insolvency
What is a fixed interest trust?
Settlor sets out entitlement for each beneficiary (or whole trust is for sole beneficiary)
What happens where there are multiple beneficiaries for a fixed trust but uncertainty with some identities?
Trust may not fail completely
If identifiable ones have entitlement not dependent on uncertain ones, they can take their interest
What is a power of appointment?
- A right to choose who, from within a specified class of objects, receives property
- have absolute discretion as to who benefits and when
- Must satisfy is/is not test
What rights do objects under a fixed trust have?
Proprietary Rights:
- May be vested or contingent
- Capable of sale/transfer
- Can be asserted against 3rd parties (via trustees)
- Rule in S v V
Personal Rights:
- Right to compel administration;
- be informed of entitlement once interest vests;
- sue trustees for breach
What are the requirements for the Rule in S v V?
Beneficiaries must be
- over 18,
- of sound mind and
- all agree
For contingent, defeasible interests, must all act together
What rights do objects under a discretionary trust have?
- right to obtain info
- Seek return of misapplied trust property
- Rule in S v V (although unlikely used)
Personal Rights
What interest do objects of a discretionary not have?
Don’t have an equitable interest in the property until discretion is exercised in their favour
What is the difference between ‘vested in possession’ and ‘vested in interest’? How can they be defeated?
In Possession = current right to current enjoyment
In Interest = current right to future enjoyment
Vested interests can be defeated by a condition subsequent
What limits are there on the rule in S v V?
- Cannot tell trustees how to perform their role
