Trust 6-10

Question 1

A woman’s valid will contains the following clause:

‘I give £10,000 to my trustees to hold on trust for such of my children, and in such proportions, as my wife may direct while my children are under the age of 18. Any money that remains once all of the children are over 18 shall be divided equally between my children.’

Which of the following statements best describes the respective powers and obligations of the wife and the trustees?

1. The wife and trustees both hold the property on a discretionary trust.

2 .The wife holds the property on a discretionary trust. The trustees hold the property on a fixed trust.

3. The wife has a power of appointment. The trustees hold the property on a fixed trust.
4. The wife has a power of appointment. The trustees hold the property on a discretionary trust.
5. The wife and trustees both have a power of appointment.

Answer 1

The wife has a power of appointment. The trustees hold the property on a fixed trust.

Correct
The wife is not a trustee but does have a power of appointment, meaning she can tell the trustees what to do with the funds while all the children are under 18. There is then a gift-over to the children once they reach the age of 18. The trustees have no discretion here at all. They must simply hold the property as directed.

Question 2

A testator’s will contains the following clause:

‘I give my estate to my partner for life, remainder to my daughter on the condition that she survives my partner.’

Which of the following correctly describes the interests of the testator’s partner and daughter?

1. The partner has a vested right to the income during their lifetime. The daughter has a contingent right to the income once the partner dies.
2. The partner has a vested right to the income during their lifetime. The daughter has a vested right to the capital once the partner dies.
3. The partner has a vested right to the income during their lifetime. The daughter has a vested right to the income once the partner dies.
4. The partner has a vested right to the income during their lifetime. The daughter has a contingent right to the capital once the partner dies.
5. The partner has a vested right to the capital during their lifetime. The daughter has a contingent right to the capital once the partner dies.

Answer 2

The partner has a vested right to the income during their lifetime. The daughter has a contingent right to the capital once the partner dies.

Correct
The partner is the life tenant. They are entitled to the income during their lifetime. The daughter has a remainder interest which is contingent upon surviving the partner

Question 3

A man and his girlfriend consider opening a joint bank account but believe that this will be difficult because the girlfriend does not have British nationality. Instead, the man opens the account in his own name, assuring the girlfriend that “it’s both of our account really”. They both regularly pay money into the account and use it for paying household expenses such as electricity bills and food shopping, as well as eating out and holidays. The man regularly refers to the account as “our account”.

What is the most likely conclusion that a court would reach about this arrangement?

The man holds the money in the account on trust for his girlfriend.

The man is the full legal and beneficial owner of the money in the account. The girlfriend has no equitable proprietary interest.

The man holds the money in the account on trust for himself and his girlfriend equally.

The man holds the money in the account on a discretionary trust for himself and his girlfriend.

The man holds the money in the account on trust for himself, with a power to pay money to his girlfriend.

Answer 3

The man holds the money in the account on trust for himself and his girlfriend equally.

Correct
This is the most likely conclusion, based on similarities to the case of Paul v Constance. ‘ as much yours as it is mine’

Question 4

A testator wants to include a trust of land in their will. They want the land to be held on trust for their children.

What must the settlor do in order for this trust to be enforceable?

1. Declare the trust in signed writing. There is no need to transfer legal title of the land to the intended trustees as this is a testamentary trust.
2. Transfer legal title of the land to the intended trustees and ensure the declaration of trust has been evidenced in signed writing.
3. Transfer legal title of the land to the intended trustees and ensure the will is validly executed.
4. Ensure the will is validly executed. There is no need to transfer legal title of the land to the intended trustees as this is a testamentary trust.
5. Declare the trust in signed writing and then transfer legal title of the land to the intended trustees

Answer 4

Ensure the will is validly executed. There is no need to transfer legal title of the land to the intended trustees as this is a testamentary trust.

Correct
A testamentary trust is valid if the testator’s will is valid. As long as the will is validly executed, the requirements of s53(1)(b) LPA 1925 will be satisfied. The trust will not take effect until the testator has died and so there is no need to transfer legal title in their lifetime. The trustee’s personal representatives must ensure that the legal title is transferred to the intended trustees (if they are not the trustees themselves).

Question 5

A deceased person’s estate contains £50,000 and four paintings by Picasso. Their validly executed will contains the following clauses:

‘1. £50,000 to my trustees to be distributed between such of my children and in such proportions as my trustees may decide.

My trustees must give one of my Picasso paintings to each of my four children. The children may each select their own painting but if they cannot agree, my trustees may make the selection for them.
Which statement best describes the status of the trust in clause 1 and the gifts in clause 2?

The trust in clause 1 will fail for uncertainty of objects. The gifts in clause 2 are valid.

The trust in clause 1 will fail for uncertainty of objects. The gifts in clause 2 will fail for uncertainty of subject matter.

The trust in clause 2 will fail for uncertainty of beneficial entitlement. The gifts in clause 2 will fail for uncertainty of subject matter.

Both the trust and gifts are valid.

The trust in clause 1 is valid. The gifts in clause 2 will fail for uncertainty of subject matter.

Answer 5

Both the trust and gifts are valid

Correct
Clause 1 creates a discretionary trust, of which the objects are certain. Clause 2 creates a gift to each of the settlor’s children and provides a clear mechanism for determining how the property should be distributed. The children have the power to select their own paintings and the trustee also has a default power which may be exercised if there is disagreement

Question 6

A client wishes to leave their art collection on trust for the enjoyment of the public.

Which of the following is the best advice to the client?

1. The client’s objective can be achieved by way of a non-charitable purpose trust provided that the art collection is clearly defined.
2. The client’s objective can be achieved by way of a charitable purpose trust provided that the art collection can be considered to be of educational value.
3. The client’s objective can be achieved by way of a non-charitable purpose trust provided that it complies with perpetuity requirements.
4. The client’s objective can be achieved by way of a charitable trust provided that the art collection is of merit, which may require expert evidence.
5. The client’s objective cannot be achieved as the intended purpose is not charitable, nor would it constitute a recognised non-charitable purpose trust.

Answer 6

The client’s objective can be achieved by way of a charitable trust provided that the art collection is of merit, which may require expert evidence.

The purpose can fall with the advancement of the arts. Charity Commission guidance provides that art must be of merit, which may require expert evidence to establish.

Question 7

A will contains the following provision:

“My trustees shall hold £100,000 on trust to apply the income for the provision and maintenance of football pitches for amateur football clubs in Stratford, East London.”

Which of the following is the best advice on the validity of the trust?

1. It is likely to be a valid charitable trust
   2.It is likely to be valid as a non-charitable purpose trust.
2. It is likely to be invalid for perpetuity
   4.It is likely to be invalid for lack of public benefit
3. It is likely to be invalid because the purpose is not charitable

Answer 7

Amateur sport is a charitable purpose under the Charities Act 2011, and the Charity Commissioners’ guidance and case law shows that limitation to a large locality can still satisfy public benefit. A charitable trust can be perpetual. It is likely to be charitable.
If it isn’t, it would not be valid under any of the non-charitable purpose trust exceptions. The other options are therefore incorrect.

Question 8

A will includes a draft clause providing that £5,000 shall be left on trust for the purpose of caring for the testator’s dog after the testator’s death. The clause includes sufficient detail to meet the certainty requirement.

Which statement is the best advice to the testator?

1. The trust is likely to be valid as drafted.
2. The trust is unlikely to be valid because the purpose does not fall within a recognised exception to the beneficiary principle.
3. The clause should be amended to limit the duration of the trust to the dog’s lifetime.
4. Whether the trust is valid depends on the age and likely lifespan of the dog.
5. The clause should be amended to include an express perpetuity period of no more than 21 years (or as extended by a human life in being).

Answer 8

The clause should be amended to include an express perpetuity period of no more than 21 years (or as extended by a human life in being).

Correct
Maintenance of a particular animal is an exception to the beneficiary principle but to be valid the trust must also comply with perpetuity rules.

Question 9

An organisation wishes to set up a trust fund for the purpose of promoting human rights in relation to an armed conflict abroad. The aims of the fund include raising awareness of human rights abuses, providing relief for the victims and campaigning to change the law in the country concerned in respect of legal representation for human rights activists.

Which of the following is the best advice in relation to the validity of the trust?

The trust is likely to be upheld as a valid charitable trust in respect of the purposes of raising awareness of human rights abuses and providing relief to victims.

The trust is unlikely to be a valid charitable trust as it is not wholly and exclusively charitable.

The trust is unlikely to be upheld as a valid charitable trust because the purposes do not fall within a recognised charitable purpose.

The trust is unlikely to be a valid charitable trust because it relates to overseas activities.

The trust is likely to be a valid charitable trust for the purpose of the advancement of human rights.

Answer 9

The trust is unlikely to be a valid charitable trust as it is not wholly and exclusively charitable.
Correct
It is unlikely that the purpose of changing the law in a foreign country would be considered charitable as it would likely not meet the public benefit requirement. The purposes would therefore not be wholly and exclusively charitable.

Question 10

A client wishes to set up a trust for the purpose of operating a food bank to provide food to people in the local area.

Which of the following is the best advice to the client?

The trust is likely to be upheld as a valid charitable trust because there is a presumption of public benefit in relation to activities which relieve poverty.

The trust is likely to be upheld as a valid charitable trust for the purpose of the relief of poverty.

The trust is unlikely to be upheld as a valid charitable trust because it is not explicitly for poor people

The trust is unlikely to be upheld as a valid charitable trust because there is no perpetuity period.

The trust is unlikely to be upheld as a valid charitable trust because it is limited to a restricted geographical area.

Answer 10

The trust is likely to be upheld as a valid charitable trust for the purpose of the relief of poverty.

Correct
The purpose is likely to fall within the charitable purpose of the relief of poverty and satisfy the public benefit test.

Question 11

A father declares a trust for his three-year old son over the money in the father’s bank account.

Which of the following is the most accurate statement in relation to this trust?

The trust is unenforceable as the father has not complied with the necessary formalities for creating a new trust. There is a resulting trust for the father.

The trust is void as the father has not complied with the necessary formalities for creating a new trust. The father remains the full legal owner.

The trust is valid. It would be a good idea to evidence it in writing but this is not legally necessary.

The trust is unenforceable as the father has not complied with the necessary formalities for creating a new trust. The father should evidence it in writing.

The trust is void as the father has not complied with the necessary formalities for creating a new trust. There is a resulting trust for the father.

Question 12

A woman sends a signed letter to her son, asking him if he will hold her holiday home on trust for her grandchildren. She then properly executes a deed to transfer the legal title of the holiday home to her son and sends it to her solicitor to complete the registration at the Land Registry. The solicitor put the deed in his drawer and forgot to register it. The woman died one month after handing the deed to her solicitor.

Which of the following statements provides the best advice regarding the holiday home?

The formalities for declaring a trust of land have been satisfied. Although the trust has not been constituted, equity will perfect the trust because the woman had done everything in her power to transfer legal title to her son.

The formalities for declaring a trust of land have been satisfied and the trust has been constituted. Legal title has therefore passed to the son who holds it on trust for the grandchildren.

The formalities for declaring a trust of land have been satisfied but the trust has not been constituted. The holiday home remains part of the woman’s estate on her death.

The formalities for declaring a trust of land have been satisfied so the trust has been constituted. Legal title has therefore passed to the son who holds it on trust for the grandchildren.

The formalities for declaring a trust of land have not been satisfied, nor has the trust been constituted. The holiday home remains part of the woman’s estate on her death.

Answer 12

The formalities for declaring a trust of land have been satisfied but the trust has not been constituted. The holiday home remains part of the woman’s estate on her death.

Correct
The signed note satisfies s53(1)(b) LPA 1925 but legal title has not been transferred to the son. The rule in Milroy v Lord provides that equity will not perfect the imperfect transfer. There are no relevant exceptions here as the solicitor is the woman’s agent, meaning she has not put the matter beyond her own control.

Question 13

A father wants to hold his house on trust for his daughter. The father creates a document recording the terms and details of the trust but does not sign it.

Which of the following is correct?

The trust is void and there is a resulting trust for the father.

The trust is valid and the daughter can enforce it.

The trust will only become enforceable if the father signs the document.

The trust is void and the father remains the full legal owner.

The trust is unenforceable and there is a resulting trust for the father

Answer 13

The trust will only become enforceable if the father signs the document.

Correct
As this is a trust of land, the formalities in s53(1)(b) LPA 1925 are applicable. The trust will only become enforceable once it has been evidenced in signed writing.

Question 14

Shortly before her death, a woman transfers legal title to some company shares to her brother, asking him to hold the shares on trust for “all my friends”.

Advise the woman’s brother

The brother holds the shares on a discretionary trust for the woman’s friends.

The brother holds the shares on a resulting trust for the woman’s estate.

The brother holds the shares on a constructive trust for the woman’s estate.

The brother holds the shares on an express trust for the woman’s friends.

The brother is the full legal owner of the shares

Answer 14

The brother holds the shares on a resulting trust for the woman’s estate.

Correct
The trust will fail for uncertainty of objects. As legal title has passed to the intended trustee, he holds it on an automatic resulting trust.

Question 15

Shortly before undergoing a major operation, a woman hands a gold ring to her girlfriend saying “if I don’t make it, this is yours”. The woman dies during the operation.

Advise the woman’s girlfriend

The woman has not made a valid donatio mortis causa. The girlfriend holds the ring on resulting trust for the woman’s estate.

The woman has not made a valid donatio mortis causa. The gift remains part of her estate.

The woman has made a valid donatio mortis causa. The girlfriend is now the full legal owner of the ring.

The woman has made a valid lifetime gift. The girlfriend is now the full legal owner of the ring.

The woman has made a valid donatio mortis causa. Her personal representatives hold the ring on trust for the girlfriend.

Answer 15

Correct
The gift was made in contemplation of death and clearly conditional upon death. The woman physically handed the ring to her girlfriend, clearly passing dominion. As the woman has now died, the condition has been satisfied and the gift takes effect.

Question 16

A father declares a trust for his three-year old son over the money in the father’s bank account.

Which of the following is the most accurate statement in relation to this trust?

The trust is void as the father has not complied with the necessary formalities for creating a new trust. The father remains the full legal owner.

The trust is unenforceable as the father has not complied with the necessary formalities for creating a new trust. The father should evidence it in writing.

The trust is unenforceable as the father has not complied with the necessary formalities for creating a new trust. There is a resulting trust for the father.

The trust is valid. It would be a good idea to evidence it in writing but this is not legally necessary.

The trust is void as the father has not complied with the necessary formalities for creating a new trust. There is a resulting trust for the father.

Answer 16

The trust is valid. It would be a good idea to evidence it in writing but this is not legally necessary.

Correct
The father does not need to use writing, as this is not a new trust of land. The trust is valid and enforceable as it is. However, it would be a good idea to have some evidence of this trust.

Question 17

A woman sends a signed letter to her son, asking him if he will hold her holiday home on trust for her grandchildren. She then properly executes a deed to transfer the legal title of the holiday home to her son and sends it to her solicitor to complete the registration at the Land Registry. The solicitor put the deed in his drawer and forgot to register it. The woman died one month after handing the deed to her solicitor.

Which of the following statements provides the best advice regarding the holiday home?

The formalities for declaring a trust of land have been satisfied. Although the trust has not been constituted, equity will perfect the trust because the woman had done everything in her power to transfer legal title to her son.

The formalities for declaring a trust of land have not been satisfied, nor has the trust been constituted. The holiday home remains part of the woman’s estate on her death.

The formalities for declaring a trust of land have been satisfied but the trust has not been constituted. The holiday home remains part of the woman’s estate on her death.

The formalities for declaring a trust of land have been satisfied and the trust has been constituted. Legal title has therefore passed to the son who holds it on trust for the grandchildren.

The formalities for declaring a trust of land have been satisfied so the trust has been constituted. Legal title has therefore passed to the son who holds it on trust for the grandchildren.

Answer 17

Correct
The signed note satisfies s53(1)(b) LPA 1925 but legal title has not been transferred to the son. The rule in Milroy v Lord provides that equity will not perfect the imperfect transfer. There are no relevant exceptions here as the solicitor is the woman’s agent, meaning she has not put the matter beyond her own control.

Question 18

A woman purchased a cottage which was registered in her sole name. She subsequently entered a relationship with a man. They were not married or in a civil partnership. The man spent many weekends helping the woman to decorate the cottage. The woman told the man that the improvements to the cottage would “benefit us both”.

The relationship has broken down and the man is claiming a beneficial interest in the cottage.

Which of the following statements is the best advice?

It is unlikely that the man could successfully establish a beneficial interest in the cottage.

It is likely that the man could establish a beneficial interest in the cottage under an express trust.

It is likely that the man could establish a common intention constructive trust based on his detrimental reliance upon the express discussions about benefitting from the cottage.

It is likely that the man could establish a beneficial interest in the cottage under a purchase money resulting trust.

It is likely that the man could establish a common intention constructive trust based on the whole course of conduct in relation to the cottage.

Answer 18

It is unlikely that the man could successfully establish a beneficial interest in the cottage.

Correct
This is the most likely analysis. The express discussions were not about ownership of the house and it is unlikely that helping the woman to decorate the cottage would be sufficient to infer a common intention for the man to acquire an interest in the cottage.

Question 19

A man and a woman bought a house as a family home which was registered in their joint names. 75% of the deposit was provided by the woman, with the balance provided by way of mortgage for which they were jointly liable. The woman made most of the mortgage repayments and paid most of the outgoings. The man and woman lived in a quasi-matrimonial relationship for 25 years, during which time they had three children. Throughout this period the parties kept separate bank accounts and made separate investments. The couple recently separated and the woman is claiming that she is entitled to a larger share of the house than the man.

Which of the following is the best advice to the woman?

The couple are presumed to be equitable joint tenants. It is unlikely that the presumption can be rebutted.

The couple are presumed to be equitable tenants in common in proportion to their respective contributions to the mortgage and outgoings. It is unlikely that this presumption can be rebutted, meaning the woman will have a greater share of the property than the man.

The couple are presumed to be equitable joint tenants. Based on the whole course of conduct, the court is likely to rebut the presumption and award the woman a greater share which will be quantified with reference to her financial contributions to the mortgage and outgoings.

The couple are presumed to be equitable joint tenants. It is unlikely that the presumption will be rebutted until the couple ended the relationship, at which stage the presumption will be rebutted in favour of a tenancy in common in equal shares.

The couple are presumed to be equitable tenants in common. Based on the whole course of conduct, the court is likely to rebut the presumption and award the woman a greater share which will be quantified with reference to her financial contributions to the mortgage and outgoings.

Answer 19

The couple are presumed to be equitable joint tenants. Based on the whole course of conduct, the court is likely to rebut the presumption and award the woman a greater share which will be quantified with reference to her financial contributions to the mortgage and outgoings.

Correct
This is the most likely analysis, based on the similarity between this fact pattern and the facts of Stack v Dowden, where rigid separation of finances was a significant factor.

Question 20

A woman and her girlfriend bought a house which they registered in their joint names. During the course of a 12 year relationship, they contributed equally towards the mortgage payments and other household outgoings. The couple then separated and agreed that the woman would remain in the house and that the girlfriend should use their joint savings as a deposit on a new flat. The girlfriend made no further contributions to the house. The woman died 15 years later. Her personal representatives claim that her estate is entitled to a share of the house (which has increased significantly in value since the couple separated).

Which of the following is the best advice to the woman’s personal representatives?

It is presumed that the couple were equitable joint tenants. It is likely that the presumption was rebutted when the couple separated. The woman’s estate is likely to have a greater share based on her continued contributions and the increase in the value of the house.

It is presumed that the couple were equitable joint tenants. It is unlikely that the presumption can be rebutted.

It is presumed that the couple were equitable tenants in common in equal shares. It is likely that the presumption was rebutted when the couple separated. The woman’s estate is likely to have a greater share based on her continued contributions and the increase in the value of the house.

It is presumed that the couple were equitable joint tenants. It is unlikely that the presumption can be rebutted. The house passes to the girlfriend via survivorship.

It is presumed that the couple were equitable joint tenants. It is likely that the presumption will be rebutted in favour of a tenancy in common in equal shares.

Answer 20

It is presumed that the couple were equitable joint tenants. It is likely that the presumption was rebutted when the couple separated. The woman’s estate is likely to have a greater share based on her continued contributions and the increase in the value of the house.

Correct
This is the most likely analysis, based on the similarity to the fact pattern in Jones v Kernott. It is unlikely the presumption could be rebutted before the couple separated, but their subsequent conduct suggests that it was intended that the woman should benefit from subsequent increases in the house price.

Question 21

A father is the registered owner of freehold land which is used as a farm. He encourages his daughter to work on the farm and regularly assures her that he will leave the farm to her on his death. His daughter lives and works on the farm for her whole life, giving up other career opportunities. On the father’s death, he leaves the farm to his son.

Which of the following is the best advice to the daughter on whether she can claim the farm by estoppel?

She may have a claim to the farm by estoppel, but more evidence will be needed on whether she can satisfy each element of the claim.

She is very likely to have a successful claim to the farm by estoppel.

She can only claim estoppel if she suffered substantial financial detriment in working on the farm.

She cannot claim estoppel because it can only be used as a defence, not a cause of action.

She cannot claim estoppel because equity will not perfect an imperfect gift.

Answer 21

She may have a claim to the farm by estoppel, but more evidence will be needed on whether she can satisfy each element of the claim.

Correct
On these facts, the daughter may have a successful claim, but more evidence is needed on whether there was sufficient assurance, reliance, detriment and unconscionability.

Question 22

A man and woman bought a house 20 years ago as a family home. The house was registered in the man’s sole name. The couple were not married or in a civil partnership. When the house was purchased they agreed that they had equal shares in the house but did not write this down. The couple lived together in a quasi-matrimonial relationship, sharing all outgoings including the mortgage payments, until they separated recently. The man denies that the woman has any interest in the house.

Which of the following is the best advice to the woman?

The starting point is that the man is the sole equitable owner. It is likely that the woman has acquired an interest under a common intention constructive trust. Under this trust, the man and woman are likely to be equitable tenants in common in equal shares.

The starting point is that the man is the sole equitable owner. It is unlikely that the woman can establish an equitable interest in the house.

The starting point is that the man is the sole equitable owner. It is likely that the woman has acquired an interest under a common intention constructive trust. Under this trust, the man and woman are likely to be equitable joint tenants.

It is presumed that the man and woman are equitable joint tenants. This presumption is likely to be rebutted in favour of a tenancy in common in equal shares.

It is presumed that the man and woman are equitable joint tenants. It is unlikely that the presumption can be rebutted.

Answer 22

Correct
This is the most likely analysis based on the express discussions between the parties. There is nothing which suggests that their intention changed over time.

The starting point is that the man is the sole equitable owner. It is likely that the woman has acquired an interest under a common intention constructive trust. Under this trust, the man and woman are likely to be equitable tenants in common in equal shares.

Question 23

The sole beneficiary of a trust has an interest in the £50,000 trust capital which is contingent upon attaining the age of 25. The beneficiary is currently 17 years old. The beneficiary has asked the trustee to advance her £30,000 from the trust fund so that she can fund her studies to become an educational psychologist.

Which of the following best describes the powers and duties of the trustee?

The trustee may advance £30,000 to the beneficiary for any purpose.

The trustee may not advance any capital to the beneficiary until she attains the age of 18.

The trustee may not advance any capital to the beneficiary until she attains the age of 25.

The trustee may advance £30,000 to the beneficiary for the requested purpose.

The trustee must advance £30,000 to the beneficiary for the requested purpose.

Answer 23

The trustee may advance £30,000 to the beneficiary for the requested purpose.

Correct
The power of advancement in s32 TA 1925 gives the trustee the power, but not the obligation, to advance the money for the beneficiary’s education.

Question 24

Trustees have been holding a trust fund for a woman for life, remainder to the woman’s daughters in equal shares when they reach the age of 25. The woman has just died. Her younger daughter is 21 and her older daughter is 27.

Advise the trustees on their obligations with respect to the trust income and capital.

The trustees must continue to hold the capital on trust unless the beneficiaries request their shares of the capital. They must accumulate the income unless the beneficiaries request it.

The trustees must continue to hold the capital on trust unless the beneficiaries direct them to transfer it to them. They must distribute the income to both beneficiaries in the meantime.

The trustees must continue to hold the capital on trust but must distribute the older beneficiary’s share of the capital if she requests it. They must continue to hold the younger beneficiary’s share on trust until she reaches the age of 25. They must distribute the income to both beneficiaries in the meantime.

The trustees must distribute the older beneficiary’s share of the capital as soon as possible. They must continue to hold the younger beneficiary’s share of the capital on trust unless she directs them to transfer it to her. They must distribute the income to her in the meantime.

The trustees must distribute the capital to both beneficiaries as soon as possible.

Answer 24

The trustees must distribute the older beneficiary’s share of the capital as soon as possible. They must continue to hold the younger beneficiary’s share of the capital on trust unless she directs them to transfer it to her. They must distribute the income to her in the meantime.

Correct
The older beneficiary’s interest in the capital has vested in possession, meaning the trustees must distribute her share as soon as possible. The younger beneficiary’s share has vested in interest only. The trustees must continue to hold it on trust unless she exercises her Saunders v Vautier rights and collapses the trust. As she is over 18 they must distribute the income.

Question 25

Trustees hold a £10,000 trust fund on trust for a sole beneficiary (currently aged 17). The beneficiary has asked the trustees for an advancement of £4,000 capital to buy a car. The beneficiary also wants the trustees to use the trust income to fund the running costs of the car.

How should the trustees deal with the request?

The trustees may not advance the £4,000 capital or apply the income for the car’s running costs.

The trustees may advance the £4,000 capital but may not apply the income for the car’s running costs.

The trustees must advance the £4,000 capital but may not apply the income for the car’s running costs.

The trustees may advance the £4,000 capital and apply the income for the car’s running costs.

The trustees must advance the £4,000 capital and apply the income for the car’s running costs.

Answer 25

The trustees may advance the £4,000 capital and apply the income for the car’s running costs.

Correct
The trustees have the power under ss 31 and 32 LPA 1925 to advance capital for the benefit of the beneficiary and to apply income for their maintenance.

Question 26

A family trust has two trustees (both of whom are individuals) and two adult beneficiaries. The beneficiaries would like to remove one of the trustees. The trust instrument does not provide any person with a power to appoint trustees.

Which of the following statements most accurately describes the rights of the beneficiaries?

The beneficiaries do not have a power to compel the trustee to retire. They could instead agree to collapse the trust and then resettle the property on a new trust with new trustees.

The beneficiaries have a power to compel the trustee to retire as long as they both agree but they must appoint a new trustee first.

The beneficiaries have a power to compel the trustee to retire if the other trustee agrees.

The beneficiaries cannot do anything to change the trustees of the trust.

The beneficiaries have the right to ask the trustee to retire but cannot compel them to do so.

Answer 26

The beneficiaries have a power to compel the trustee to retire as long as they both agree but they must appoint a new trustee first.

Correct
The beneficiaries have Saunders v Vautier rights and therefore have the power to compel a trustee to retire under s19 TLATA as long as they both agree. As there are only two trustees, they must appoint another trustee first.

Question 27

The sole trustee of a trust for an adult beneficiary has just died. The trust instrument contains no powers to appoint trustees.

Who has the power to appoint a replacement trustee?

The court only.

The trustee’s personal representatives only.

The beneficiary, the trustee’s personal representatives and the court.

Nobody.

The beneficiary only

Answer 27

The beneficiary, the trustee’s personal representatives and the court.

Correct
The beneficiary has a power to appoint trustees under s 19 TLATA. The trustee’s personal representatives can exercise the s36 TA 1925 statutory power. The court also has a power to appoint trustees under s 41 TA 1925

Question 28

A family trust has two trustees (both of whom are individuals) and two adult beneficiaries. The beneficiaries would like to remove one of the trustees. The trust instrument does not provide any person with a power to appoint trustees.

Which of the following statements most accurately describes the rights of the beneficiaries?

The beneficiaries have the right to ask the trustee to retire but cannot compel them to do so.

The beneficiaries have a power to compel the trustee to retire if the other trustee agrees.

The beneficiaries have a power to compel the trustee to retire as long as they both agree but they must appoint a new trustee first.

The beneficiaries cannot do anything to change the trustees of the trust.

The beneficiaries do not have a power to compel the trustee to retire. They could instead agree to collapse the trust and then resettle the property on a new trust with new trustees.