Trust And Other Legal Concept

Question 1

What is the origin of trust?

Answer 1

Trust is a creation of equity.

Question 2

What is the origin of contract?

Answer 2

Contract was developed under common law.

Question 3

What is the essence of a contract?

Answer 3

A contract is a common law personal obligation resulting from the agreement between the parties.

Question 4

How does a trust differ from a contract in terms of parties involved?

Answer 4

Only parties privy to a contract can enforce it; beneficiaries of a trust may enforce it even if they are not privy.

Question 5

What type of rights does a trust confer?

Answer 5

Trusts confer rights in rem.

Question 6

What type of rights does a contract confer?

Answer 6

Contracts give rights in personam.

Question 7

True or False: A contract requires consideration to be enforceable.

Answer 7

True.

Question 8

True or False: A trust requires consideration to be enforceable.

Answer 8

False.

Question 9

What is bailment?

Answer 9

Bailment is a delivery of goods in trust upon a contract that the trust shall be faithfully executed.

Question 10

What is a key difference between bailment and trust regarding ownership?

Answer 10

In bailment, the bailor retains legal ownership, while in a trust, legal title is vested in the trustee.

Question 11

True or False: A bailee can confer good title to third parties.

Answer 11

False.

Question 12

What fiduciary relationship exists between a principal and an agent?

Answer 12

An agent stands in a fiduciary relationship with the principal.

Question 13

How is the relationship between a trustee and beneficiaries different from that of an agent and principal?

Answer 13

A trustee is not under the control of the beneficiaries, while a principal controls the agent.

Question 14

What is the legal status of trust in comparison to power?

Answer 14

Trust is equitable while power is legal.

Question 15

What must a trustee do under a trust?

Answer 15

A trustee must perform his duties under the trust.

Question 16

What happens to a trust if a trustee dies?

Answer 16

The trust does not fail; a new trustee is appointed.

Question 17

What is a ‘power of appointment’?

Answer 17

A power of appointment is an authority given to a person to deal with or dispose of property not their own.

Question 18

True or False: A donee of a power is obligated to exercise that power.

Answer 18

False.

Question 19

What is the difference in beneficiary certainty between a trust and a power?

Answer 19

A trust requires certainty of beneficiaries, while a power does not.

Question 20

What is a key characteristic of a personal representative in estate administration?

Answer 20

A personal representative distributes property after collection of assets and payment of debts.

Question 21

What is the limitation period for an action for breach of trust?

Answer 21

6 years.

Question 22

What is the limitation period for administration of an estate?

Answer 22

12 years.

Question 23

Fill in the blank: A beneficiary under a trust is usually a _______.

Answer 23

volunteer.

Question 24

Fill in the blank: A _______ is a delivery of goods to another for a limited purpose.

Answer 24

bailment.

Question 25

What is the primary duty of a personal representative?

Answer 25

To distribute property after collection of assets and payment of debts.

Question 26

What concept does 'delegatus non potest delegare' relate to?

Answer 26

It applies to both agents and trustees regarding their duties.

Question 27

What are the basic differences between trusts and administration of estates?

Answer 27

Trusts were developed by the court of Chancery; administration of estates was developed by the Ecclesiastical court and later taken over by Chancery in the 18th century ## Footnote Trusts involve holding property as directed, while personal representatives distribute property to entitled individuals.

Question 28

What is the limitation period for an action for breach of trust?

Answer 28

6 years ## Footnote For administration of estate, the limitation period is 12 years.

Question 29

What must a trustee do regarding co-trustees?

Answer 29

Act jointly with co-trustees for all properties ## Footnote A sole trustee cannot give a valid receipt for money received from the sale of land without authority from other trustees.

Question 30

What statute governs the appointment and retirement of trustees?

Answer 30

Trustee Act, 1893 ## Footnote This statute does not apply to personal representatives.

Question 31

Can an executor who is not also a trustee retire from his office?

Answer 31

No ## Footnote An executor must apply for an order or revocation of the grant of probate if they wish to retire.

Question 32

What happens if a named executor in a will dies before probate?

Answer 32

Persons interested in the estate can apply for 'letters of administration' ## Footnote This does not invalidate the will, which will be annexed to the letters.

Question 33

What is the fiduciary duty of both administrations of estates and trustees?

Answer 33

Both have a fiduciary duty to the beneficiaries ## Footnote They are accountable for any breach of their duties.

Question 34

What is the nature of secret trusts?

Answer 34

Controversial whether they are express or constructive trusts ## Footnote Based on a representation that it would be inequitable for someone to keep property obtained by fraud or abuse of a fiduciary position.

Question 35

How can a secret trust be created?

Answer 35

Inter vivos by a settlor or through testamentary disposition by a testator ## Footnote Legal formalities must be followed for validity.

Question 36

What is required for a declaration of trust to be valid?

Answer 36

It must be evidenced in writing ## Footnote Contracts relating to the disposition of interest in land must also be written.

Question 37

What are the two types of secret trusts?

Answer 37

Fully secret trusts and half-secret trusts ## Footnote Fully secret trusts do not disclose any trust in the will; half-secret trusts declare a trust but not the beneficiaries.

Question 38

What are the three elements required to establish a secret trust?

Answer 38

* Intention * Communication * Acceptance ## Footnote These must occur during the testator's lifetime.

Question 39

What must be proved regarding the intention of the testator in a secret trust?

Answer 39

The intention that the gift is to be employed as he desired, not as the donee desired ## Footnote This intention must be communicated to the donee.

Question 40

What is necessary for communication to establish a secret trust?

Answer 40

Must be communicated to the legatee before the testator's death ## Footnote Communication can be oral or written and must include details of the subject matter and beneficiaries.

Question 41

What happens if the proposed secret trustee does not know of the trust during the testator's lifetime?

Answer 41

The secret trust will be ineffective ## Footnote The apparent beneficiary will take the property absolutely.

Question 42

What is the significance of acceptance in secret trusts?

Answer 42

The donee must accept the obligation to hold on secret trust ## Footnote Acceptance can be express or implied.

Question 43

What is a half-secret trust?

Answer 43

A trust that is expressly declared on the face of the will without mentioning the beneficiaries ## Footnote The fraud theory is not applicable to half-secret trusts.

Question 44

What was established in the case of Blackwell v. Blackwell regarding secret trusts?

Answer 44

The trust was binding in respect of the objects disclosed by the testator ## Footnote Communication of the purpose to the legatee with acquiescence removes it from the provisions of the Wills Act.

Question 45

What is required for establishing half secret trusts?

Answer 45

The same requirements as fully secret trusts: * Intention of the testator * Communication of such intention to the legatee or proposed secret trustee * Acceptance or acquiescence from the legatee ## Footnote Full communication and acceptance are crucial for the trust's validity

Question 46

What happens if the terms of the trust are not communicated to the legatee before the testator’s death?

Answer 46

The legatee holds on resulting trust for the estate ## Footnote This means the legacy will revert to the testator's estate.

Question 47

In the case of Re Boyes, what was the court's ruling regarding the trust?

Answer 47

The trust for the intended beneficiary failed and the legacy must be held on resulting trust for the residue of the testator’s estate ## Footnote This was due to no disclosure being made to the solicitor before the testator's death.

Question 48

What are the three effects of half secret trusts?

Answer 48

* A secret beneficiary can enforce a trust if duly communicated before or at the time of making the will * Conflict between the will's terms and subsequent communication results in inability to enforce the trust * A secret beneficiary cannot enforce a trust if communication is made after the will's execution ## Footnote The secret trust must be established prior to the will's execution.

Question 49

True or False: The fraud theory can satisfactorily account for the existence of half secret trusts.

Answer 49

False ## Footnote The fraud theory does not adequately explain half secret trusts.

Question 50

What consensus exists regarding secret trusts and the Wills Act?

Answer 50

Secret trusts are declared inter vivos and should not be read into the will. They arise outside and independently of the will ## Footnote Thus, the formalities of the will are not applicable to secret trusts.

Question 51

What does the acceptance of a personal obligation by the legatee create?

Answer 51

The secret trust ## Footnote This occurs when the testator's intention is communicated and accepted.

Question 52

In Re Young, what was the key issue regarding the witness of the will?

Answer 52

Whether the witness forfeited his interest ## Footnote The court held that he did not forfeit his interest as the trust was created outside the will.

Question 53

What was the court's ruling in Re Gardener regarding a predeceased beneficiary?

Answer 53

The share of the beneficiary had not lapsed; it passed to the deceased beneficiary’s personal representative ## Footnote This was because the title under the secret trust arose dehors the will.

Question 54

What is the essence of secret trusts?

Answer 54

Secrecy in making provisions ## Footnote This contrasts with the Wills Act, which requires reasonable evidence of dispositions.