Trust Law

Question 1

Andrea settles property on trust in favour for Cora for the life of Brian, then to Abdul for life and then to Edmond absolutely, who has which interest?

Answer 1

Core has an interest in possession (pur autre vie)
Brian has no interest
Abdul has an interest in possession for life on the death of Brian
Edmond has a reversionary interest in the trust settled by Andrea

Question 2

What happens when no person is expressly named as the remainderman?

Answer 2

The trust is a resulting trust and the remainderman is therefore the settlor

Question 3

What is a discretionary trust?

Answer 3

A trust that enables the trustees to choose to whom, amongst a defined group of beneficiaries, they should make payments of income and capital

Question 4

How does s60(1) TCGA 1992 apply and provide for bare trusts?

Answer 4

It provides that property held by a person as nominee for another person or as trustee for another person absolutely entitled as against the trust

Beneficiary alone is the person liable to income tax and inheritance tax

Question 5

True or false, S.48(1) ITA 1984 provides that a reversionary interest is not charged to inheritance tax except in certain cases. The interest of a remainderman under a trust is one of the interests that come within this section.

Answer 5

True

Question 6

True or false, S.48(1) ITA 1984 provides that a reversionary interest is not charged to inheritance tax except in certain cases. The interest of the life tenant under a trust comes within this section.

Answer 6

False

Question 7

True or false, S.48(1) ITA 1984 provides that a reversionary interest is not charged to inheritance tax except in certain cases. The interest of the settlor under a resulting trust comes under this section.

Answer 7

True

Question 8

True or false, S.48(1) ITA 1984 provides that a reversionary interest is not charged to inheritance tax except in certain cases. The interest of a beneficiary under a bare trust comes under this section.

Answer 8

False

Question 9

Sanjna settles an interest in possession trust for her daughter Natasha for life.

Natasha’s sisters, Gurleen and Anaya are named as remaindermen in the trust deed, which states that Gurleen has to be 40 before her interest vests.

Gurleen and Natasha die in an accident when Gurleen is 27. Gurleen was married to Pradeep when she died.

Who is the person entitled to become absolutely entitled to the trust property?

Answer 9

Anaya only as Gurleen’s reversionary interest is contingent on her turning 30 meaning the interest does not vest and cannot be passed to her legatees after her death.

Anaya is the only remainderman.

Question 10

What is the name of the person who is holds the legal title to trust property?

Answer 10

The trustee of a trust is the legal owner of the trust property.

Question 11

What is a resulting trust?

Answer 11

Where the settlor is also the remainderman, it may arise where no person is expressly identified in the trust deed.

Question 12

True or false, a resulting trust may arise without being created by a deed or Will?

Answer 12

True

Question 13

True or false, a bare trust is an implied trust?

Answer 13

False

Question 14

True or false, a constructive trust may arise without being created by a deed or will?

Answer 14

True

Question 15

Anthony is a trustee of a fixed interest trust of which Barbara is the life tenant and Christina is the remainderman. Who are the beneficiaries?

Answer 15

Barbara and Christina

Question 16

True or false, a resulting trust is an type of express private trust?

Answer 16

False

Question 17

A Will is a written direction and instruction by which a person expresses their requirements and wishes to the devolution of their property after their death.

According to Sarah’s Will, she wants Matt to be able to continue to live in their house until his death, and the house to then pass to their son Thomas.

What is the term used to describe Matt’s position?

Answer 17

Life tenant

Question 18

Mark has set up a trust in writing. The subject matter of the trust is Mark’s 1,000 shares in XZP plc. He has appointed a trustee, Jason, who does not have the discretion or power to accumulate income. Jason is required to act solely in accordance with Mark’s wishes.

What type of trust is this?

Answer 18

Bare trust

Question 19

Carly set up a trust for her grandchildren. She specified that it should be used for their benefit only, ideally to cover their educational costs.

What type of trust is this?

Answer 19

Discretionary trust

Question 20

What are the three key pieces of legislation that govern trust law in England?

Answer 20

Trusts of Land and Appointment of Trustees Act 1996

Trustee Act 1925

Trustees Act 2000

Question 21

True or false, the reversionary interest of a remainderman under an interest in possession may be an absolute interest?

Answer 21

True

Question 22

True or false, the reversionary interest of a remainderman under an interest in possession may be a residual interest?

Answer 22

False

Question 23

True or false, the reversionary interest of a remainderman under an interest in possession may be a contingent interest?

Answer 23

True

Question 24

True or false, a fixed interest might be of benefit if somebody has a history of getting into financial difficulties?

Answer 24

False

Question 25

True or false, a benefit of a trust is that the owner can conceal their ownership of property?

Answer 25

True

Question 26

What are the three main categories of private trust?

Answer 26

Bare trusts
Interests in possession/Fixed interest trust
Discretionary trusts

Question 27

How are the express and implied terms of a trust decided?

Answer 27

Express terms will be primarily decided upon by the settlor of the trust

Implied terms will be included in the trust relationship by equity

Question 28

What are the characteristics of a bare trust/nominee arrangement?

Answer 28

No active duties imposed
Hold the trust property and act solely in accordance with the wishes of the beneficiary
Held by a person as trustee for another person absolutely entitled against the trustee

Question 29

What are the characteristics of an interest in possession/fixed interest trust?

Answer 29

The beneficiary with the interest has the immediate entitlement to the net income produced by the property and immediate use of the property

The beneficiary cannot be prevented by the trustees from the above

Entitled only to net income not capital

Question 30

What types of interest in possession/fixed interest trust are there?

Answer 30

Life interest - life tenant = enjoys interest in possession for the duration of their life

Interest pur autre vie - enjoys interest for so long as someone else is alive

Fixed period - fixed interest - until certain time or event happens

Question 31

What does it mean for remaindermen to have a reversionary interest?

Answer 31

A future interest under the settlement, it could be an absolute interest or a contingent interest