Trust 3 - Beneficial entitlement

Question 1

What are the advantages of having a beneficial equitable interest?

Answer 1

• Interest can be enforced against everyone (except Equity’s Darling)
• Can claim interest in traceable proceeds
• Interest is unaffected by trustee’s bankruptcy/insolvency

Question 2

What is a fixed interest trust?

Answer 2

Settlor sets out entitlement for each beneficiary (or whole trust is for sole beneficiary)

Question 3

What happens where there are multiple beneficiaries for a fixed trust but uncertainty with some identities?

Answer 3

Trust may not fail completely
If identifiable ones have entitlement not dependent on uncertain ones, they can take their interest

Question 4

What is a power of appointment?

Answer 4

• 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

Question 5

What rights do objects under a fixed trust have?

Answer 5

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

Question 6

What are the requirements for the Rule in S v V?

Answer 6

Beneficiaries must be
- over 18
- of sound mind and
- all agree
For contingent, defeasible interests, must all act together

Question 7

What rights do objects under a discretionary trust have?

Answer 7

• right to obtain info
• Seek return of misapplied trust property
• Rule in S v V (although unlikely used)
  Personal Rights

Question 8

What interest do objects of a discretionary not have?

Answer 8

Don’t have an equitable interest in the property until discretion is exercised in their favour

Question 9

What is the difference between ‘vested in possession’ and ‘vested in interest’? How can they be defeated?

Answer 9

In Possession = current right to current enjoyment
In Interest = current right to future enjoyment
Vested interests can be defeated by a condition subsequent

Question 10

What limits are there on the rule in S v V?

Answer 10

• Cannot tell trustees how to perform their role