Trust Law- Introductory Concepts Flashcards
Who are the parties involved in a trust?
A trust, initially involves a tripartite relationship. In any trust three parties must be involved - the truster, the trustee and the beneficiary. If a single individual with the real right in the property (a sole trustee) becomes the person who alone has a personal right against the trustee (a sole beneficiary) the trust is extinguished by the doctrine of confusion.
how many trustees can there be?
General rule - a truster is free to require that there be one or more trustees as he see fit is subject to a number of qualifications.
what are essential to any trust?
a) the existence of trust property and the passing of title to that property
b) a trust must have certain purposes. Where the trust has been created by the voluntary act of the truster these purposes will be specified by him. Where the trust has been implied by law the purposes will also be implied by law.
are trusts corporations?
Although a body corporate may be a trustee, a trust is not a corporation. An entity created by statute may be called a “trust” or “trustees” and be a corporate body. For example, National Health Service Trust
What are common uses of trusts?
(a) investment and financial planning purposes including pension funds, trusts for employee share ownership and unit trusts;
(b) protective purposes including trusts for children, incapable persons such as mentally incapable individuals and persons of full capacity but limited ability;
(c) commercial purposes such as the manipulation of the control of companies by the ownership of shares by a trust.; and
(d) community trusts have been set up by crofters or other tenants to acquire and own the landlord’s interest in certain Highland estates.
(e) Private trusts are frequently encountered in connection with taxation.
what are the five common situations where trusts occur and where there are many additional rules?
a) executors
b) judicial factors
c) improper liferents
d) trustees in bankruptcy
e) conveyancing matters
what are executors?
- Representative of the deceased.
- to some extent trustees in respect of the executor estate of the deceased .
- principle function or duty of the the executor is to in gather and distribute the estate.
what are judicial factors?
trustees appointed by the court in many situations to administer property in cases where the property is the subject of litigation or because it lacks some other competent administration at the date of the factor’s appointment
what are improper liferents?
otherwise known as “trusts or beneficiary” liferents. Involve trustees who hold the property for the benefit of two distinct types of beneficiary, the liferenter and the fiar. Improper liferents may be almentary or non-alimentary
what are the ways in which alimentary liferent differs from an ordinary liferent?
Three main ways:
(1) An alimentary liferent is a special form of liferent in which property is given to trustees for the purpose of providing the liferenter with funds from which his maintenance and support is drawn or his education paid. (McMURDO’S TRS. v McMURDO (1897) 24R. 458);
(2) Protection from creditors of the liferenter. Any excess will, however, be available to his creditors. (See LIVINGSTONE v LIVINGSTONE (1886) 14R. 43);
(3) Once the alimentary liferenter accepts the liferent, he cannot thereafter renounce or assign it. This is now modified by TRUSTS (S) ACT 1961, s.1(4) which allows the court to authorise the variation or revocation of an alimentary liferent.
what happens if a trustee is in bankruptcy?
Many detailed rules laid down in statute. The appointment of either the interim trustee or the permanent trustee and the powers afforded to both are dealt with in the BANKRUPTCY (S) ACT 1985. Where a person becomes insolvent, the court may be requested to award sequestration of his estate. The party appointed to oversee this is the trustee in bankruptcy who administers a bankrupt’s estate for the benefit of creditors. In the rare situation where there is property left over after paying of the creditors of the sequestrated party and the expenses of sequestration, the permanent trustee will hold this remaining property on a resulting trust for the debtor. (BANKRUPTCY (S) ACT 1985, s.51(5)).
