Trusts Flashcards
formalities for a trust of realty
a contract to create a trust of land must comply with LP(MP)A 1989 s2- in writing and signed by both parties
formalities for testamentary trust
will must be valid- wills act s9
- in writing
- signed by testator or someone else in his presence,
- by signing they intended to give effect to the will,
- must be acknowledged by 2 witnesses present at the same time, those witnesses sign it
disposition of existing equitable interest formalities
must comply with s53(1)(c) LPA 1925- in writing, signed, stamp duty paid
what constitutes a disposition of an equitable interest
assignment (one person transfers their equitable interest to another in writing) or instruction to trustees to hold the equitable interest for another- must comply with 53(1)(c)
conditions for strong v bird to apply
donor must be shown to have the intention to make an inter vivos gift, must be continuing intention right up to date of death– only applies in a situation where the only thing missing is transfer of legal title
knight v knight
3 certainties- intention, subject, object
how are trustees appointed for an inter vivos trust
either expressly or by declaring the trusts and transferring the property to the trustees- may be done by deed or multiple documents
how are trustees appointed for testamentary trusts
executors chosen to administer the estate may be described as executors and trustees, if they are just executors then they will become trustees once they have completed the administration of the estate
number of trustees for land
no more than 4 TA 1925, at least 2 to sell land to stop overreaching
circs for replacement of a trustee
- death
- trustee remains out of the country for more than a year
- trustee wants to be discharged
- trustee is unfit/incapable of acting
4 steps a trustee must take on appointment, failure to do so may make them liable for a breach of trust
- find out the terms of the trust
- inspect the trust instrument and other relevant documents
- ensure that the trust property is vested in the joint names of all trustees
- make inquiries if suspicious of past breaches of trust
where to find authority for authorised investments
- trust instrument
- s3-5 of TA 2000
power of maintenance and advancement where are they stated and what are they
- trust instrument
- s31 maintenance- getting income before entitled
-s32 advancement- getting capital before entitled
problem question maintenance
- do the trustees have power to maintain at all, either under trust instrument or under s31
- is the proposal for the beneficiarys maintenance, education or benefit?
- how much income is available?
- are there any past accumulations to make up for any shortfall?
provisos for the power of advancement
- the written consent of any person entitled to a prior interest is required
- a beneficiary cannot be advanced more than their presumptive share
- amounts advanced must be brought into account when the beneficiary becomes entitled to the capital
- all of these can be removed or limited in the trust instrument to facilitate advancements
provisos for the power of advancement
- the written consent of any person entitled to a prior interest is required
- a beneficiary cannot be advanced more than their presumptive share
- amounts advanced must be brought into account when the beneficiary becomes entitled to the capital
- all of these can be removed or limited in the trust instrument to facilitate advancements
advantages enjoyed by charities
- tax benefits
- outside of the scope of the rule against perpetuities- as long as its a gift from one charity to another
- dont need a specific beneficiary
- less restrictive certainty requirements
advantages enjoyed by charities
- tax benefits
- outside of the scope of the rule against perpetuities- as long as its a gift from one charity to another
- dont need a specific beneficiary
- less restrictive certainty requirements
charities act 2011
- statutory definition of charity- now 12 specific purposes and a general catch all category
definition of charity
- s1(1)
an institution which is - established for charitable purposes only
- is subject to the High Court in the exercise of its jurisdiction with respect to charities
public benefit
- must be beneficial
- to a sufficient section of the public or the public generally
a contract to create a trust of land must comply with LP(MP)A 1989 s2- in writing and signed by both parties
formalities for a trust of realty
will must be valid- wills act s9- in writing, signed by testator or someone else in his presence, by signing they intended to give effect to the will, must be acknowledged by 2 witnesses present at the same time, those witnesses sign it
formalities for testamentary trust
must comply with s53(1)(c) LPA 1925- in writing, signed, stamp duty paid
disposition of existing equitable interest formalities
assignment (one person transfers their equitable interest to another in writing) or instruction to trustees to hold the equitable interest for another- must comply with 53(1)(c)
what constitutes a disposition of an equitable interest
3 certainties- intention, subject, object
knight v knight
either expressly or by declaring the trusts and transferring the property to the trustees- may be done by deed or multiple documents
how are trustees appointed for an inter vivos trust
executors chosen to administer the estate may be described as executors and trustees, if they are just executors then they will become trustees once they have completed the administration of the estate
how are trustees appointed for testamentary trusts
no more than 4 TA 1925, at least 2 to sell land to stop overreaching
number of trustees for land
- death
- trustee remains out of the country for more than a year
- trustee wants to be discharged
- trustee is unfit/incapable of acting
circs for replacement of a trustee
- find out the terms of the trust
- inspect the trust instrument and other relevant documents
- ensure that the trust property is vested in the joint names of all trustees
- make inquiries if suspicious of past breaches of trust
4 steps a trustee must take on appointment, failure to do so may make them liable for a breach of trust
- trust instrument
- s3-5 of TA 2000
where to find authority for authorised investments
- trust instrument
- s31 maintenance- getting income before entitled
-s32 advancement- getting capital before entitled
power of maintenance and advancement where are they stated and what are they
- do the trustees have power to maintain at all, either under trust instrument or under s31
- is the proposal for the beneficiarys maintenance, education or benefit?
- how much income is available?
- are there any past accumulations to make up for any shortfall?
problem question
- the written consent of any person entitled to a prior interest is required
- a beneficiary cannot be advanced more than their presumptive share
- amounts advanced must be brought into account when the beneficiary becomes entitled to the capital
- all of these can be removed or limited in the trust instrument to facilitate advancements
provisos for the power of advancement
- the written consent of any person entitled to a prior interest is required
- a beneficiary cannot be advanced more than their presumptive share
- amounts advanced must be brought into account when the beneficiary becomes entitled to the capital
- all of these can be removed or limited in the trust instrument to facilitate advancements
provisos for the power of advancement
- tax benefits
- outside of the scope of the rule against perpetuities- as long as its a gift from one charity to another
- dont need a specific beneficiary
- less restrictive certainty requirements
advantages enjoyed by charities
- tax benefits
- outside of the scope of the rule against perpetuities- as long as its a gift from one charity to another
- dont need a specific beneficiary
- less restrictive certainty requirements
advantages enjoyed by charities
- statutory definition of charity- now 12 specific purposes and a general catch all category
charities act 2011
- s1(1)
an institution which is - established for charitable purposes only
- is subject to the High Court in the exercise of its jurisdiction with respect to charities
definition of charity
- must be beneficial
- to a sufficient section of the public or the public generally
public benefit
not charitable if it is attempting to influence gov policy
national anti-vivisection Society v irc
situations which may give rise to a resulting trust
- failure
- purchase money resulting trusts- eg apparent gifts (equity presumes a gift was intended eg parent to child)
4 ways a failure to dispose a beneficial interest creates a resulting trust
- failure of a trust- re diplock
- no trusts declared- vandervell v irc
- incomplete disposal of the beneficial interest- abbot fund and Andrews trust
- failure of a specific purpose- Barclays v quistclose
how purchase money resulting trusts are made
- purchase in the name of another
- purchase by several in the name of one
- presumption of advancement (POA)
POA
- works in opposition to and is stronger than the presumption of a resulting trust
- where certain relationships exist a voluntary transfer is presumed to be by way of a gift
husband and wife- Pettitt v pettitt- wife bought a house, husband made alterations etc- doesnt give him an equitable interest
also covers parents transferring to kids
if there is no POA because the transaction isnt between husband and wife, the presumption is one of resulting trust - can rebut POA by contrary evidence of intention- but not if it was based on an illegal purpose- Gascoigne v Gascoigne
constructive trusts
- one that comes into being without the need to comply with formal requirements- comes into being at the time of the relevant conduct, is based on wrongdoing and is independent of the intention of the constructive trustee
- fiduciaries taking unauthorised profits- keech v Sandford, boardman v Phipps
statutory implied trusts- proprietary estoppel
3 elements claimant has to prove
- representation
- reliance
- detriment
retirement of trustees
- no automatic right to retire
- can be express
- or TA s39 gives conditions where you can
- beneficiaries have to allow it and put it in writing
trustees duties- use to decide if there has been a breach
- to invest the fund
- recover debts
- distribute the trust property in accordance with the terms of the trust instrument
- to protect the trust assets
is the trustee responsible for the breach?
- all have a duty to act
- the fact that one is a solicitor doesnt reduce the obligations of other trustees unless they are controlling- Head v Gould
- a trustee cant be held liable for breaches before he took up appointment or for breaches after retirement unless he retired to facilitate it
ways a trustee can claim relief from liability
- express provisions in the trust instrument- armitage v nurse
- statutory relief may be granted by the courts
- where a beneficiary is involved- re Somerset
- beneficiaries can release them from liability
- retiring trustee can seek indemnity from co trustees
- liability is joint and several if more than one is found liable
limitation period for breach
- 6 years from the date of the breach
- or 6 years after their interest falls into possession
fact pattern q for tracing
- there will be an initial fiduciary relationship to found the equitable proprietary claim by beneficiaries
- then consider whether the assets are mixed or unmixed and the rules- and the identity of the recipient
- consider that the result needs to be equitable- defences
proprietary rights- and advantages
- right in an asset eg a car that is good against third parties
advantages
- the success of a proprietary claim doesnt depend on the solvency of D
- a prop right is advantageous for beneficiaries- they could claim the asset even if it has inc in value– they may be able to claim more interest (get it from the date of receipt of the property- personal- only get interest from the date when liability is settled)
when can’t you trace in equity
- not possible to trace property to a bona fide purchaser for value with no notice (equitys darling)
- not possible if given to an innocent volunteer
- re diplock
mixed fund
re hallet- if a trustee spends trust money and their own money it is presumed they spent their own money first to keep them honest
but
re oatway- if trustee is then bankrupt and cant pay back the beneficiaries it flips so money spent on an asset is presumed to belong to beneficiaries so they can get some money back
what is dishonesty?
1995 royal Brunei airlines v tan- based upon acc knowledge was Ds conduct dishonest according to the standards of ordinary honest people?
2002 - Twinsectra v Yardley
- Dishonest to the standards of ordinary honest people and did they appreciate that?- combined
2005- Barlow Clowes v Eurotrust
- Go back to royal brunei airlines v Tan
2017- Ivey v Genting Casinos
- Actual state of d’s knowledge/belief and is that dishonest by the standard of ordinary honest people
2019-Group 7 v Notable
- was the defendants conduct honest or dishonest according to the standards of ordinary honest people?
5 states of knowledge- baden
- actual knowledge
- wilfully shutting ones eyes to the obvious
- wilfully and recklessly failing to make such inquiries as a reasonable and honest man would make
- knowledge of circs which would indicate the facts to an honest and reasonable man
- knowledge of circs which would put an honest and reasonable man on inquiry
remedies for stranger liability
dishonest assistant- personal only as they dont have property
knowing recipient- prop or personal but need a level of knowledge for personal
can use tracing too
