Trusts 1 Flashcards
What are the 3 certainties (general)?
- certainty of intention
- externally manifested,
- take effect immediately
- clear words - certainty of subject matter
- clear of extent and nature of B’s interest - certainty of objects
When would factional shares of subject matter fail/not fail?
Intangible/fungible Assets will not fail
- Eg 50% of shares
Tangible Assets will fail
- Eg half of wine bottles
How can certainty of subject matter be given?
- Must be possible to ascertain the nature and extent of beneficiaries interest in trust property
- Wording
- bulk, net assets, favourite X etc. are not identifiable
- reasonable income is approved - Mechanism
- can give a mechanism to dived assets
- Ie. A choose who gets what or A gets first choice
- but if decision maker dies the trust fails
What must be present for certainty of object for fixed trusts?
- One beneficiary
- conceptual and evidential certainty - 2+ dependant on each other
- need complete list test
- includes in equal shares - 2+ not dependant on each other
- if one is certain and other is not then certain one still gets their share
What must be present for certainty of object for discretionary trusts?
- Must be able to carry out survey of class
- Is/Is not test
- conceptual certainty needed
- evidential to be provided by potential beneficiaries - Not Administratively unworkable
- ie “all people of London”
What are the requirements for being a trustee/ who cannot be a trustee?
Trustee can be anyone
- Capable of acquiring and holding property for their own benefit
- Can be private person, professional person, trust corporation
Cannot be:
- a minor
- lack mental capacity
How many trustees are required?
- no min/max number
Trust of Land
- must have at least 2 and up to max of 4
- because at least 2 are needed to give valid receipt for money received on sale of land
What are the rules against perpetuity for a normal trust
- Interest under trust is void if it does not vest within 125 years
- trust is void if interest is not certain to vest within period
What effect will failure of each of the 3 certainties have?
Void for uncertainty of intention
- Property passes as gift to person who would have been trustee
Void for uncertainty of subject matter
- Property reverts to settlor
Void for uncertainty of objects
- Resulting trust in favour of settlor or settlors successors presumed
What are the requirements for self declaration of trust vs transfer on trust?
Self Declaration
- Must demonstrate by word or conduct that they intend to be legally bound
- Once declaration is made they are bound and cannot retract
(- if trust of land must evidence declaration in writing and sign)
Transfer on Trust
- Settlor must transfer trust property to trustee in appropriate fashion (constitution); and
- Settlor must make declaration of trust (ie demonstrate by word or conduct the they intent trustee to be legally bound)
(- if trust of land must evidence declaration in writing and sign)
How should different trust property be constituted? (land, shares, chattels, bank account)
Land
- Transfer deed
- Registration at HMLR (normally by transferee)
Shares
- Donor to sign stock transfer form
- Registered with company (by either)
Chattels
- Owner must have intention to transfer chattels and must deliver them to recipients
- Alternatively can be done by deed
Bank Account
- Must provide signed, written notice of transfer to bank
Requirement for trust in a will
- 3 certainties
- In valid will
- No need for constitution
If trust is not validly constituted can it still be valid
- Every Effort
- Testator has done everything in their power and it is now in hands of person able to effect transfer
- not if person is testators agent or if some approval is needed - Rule in Strong v Bird (fortuitous vesting)
- intention to make an immediate gift and remains unchanged until death
- intended donee becomes PR - Donatio Mortis Cause
- gift made in contemplation of death and there is a reason to believe death is imminent
- on condition of death (and they die)
- must have been transferred (can be constructive) - Proprietary Estoppel
- assurance is made
- donee relies on assurance and acts to their detriment
When is secret trust enforceable
Is when trust is not mentioned in will
Beneficiary must give evidence:
1. Trust existed
2. Terms communicated to trustee before death
- trustee did not refuse
If it fails
- then gift to trustee
When is half secret trust enforceable?
Is when it is mentioned in will but beneficiary is not disclosed
Enforceable only if:
- identify of beneficiary was communicated to trustee before or when will was executed
- language of will is consistent with this
If fails
- trustee hold it on resulting trust for estate
