Trusts Flashcards
Fixed trusts - test for certainty of objects/beneficiaries
Complete list test: must be able to draw up a complete list of beneficiaries
Conceptual and evidential certainty, capable of objective determination
Discretionary trusts: certainty of objects/beneficiaries test
Given postulant test: can it be said with certainty if someone is or is not a member of the class
Description must be conceptually certain
will fail if class is too wide to be administratively workable
Equity will not assist a volunteer
If a person declare a third party is to hold some property as a trustee but fails to make the transfer, equity will not enforce the trust
Exceptions: every effort test, donatio mortis causa (gift by reason of death), delivery may be constructive, strong v bird, proprietary estoppel
Testamentary trust
Trust to take effect on death and revocable until then
No requirement for transfer of property as it will be vested in testator’s PRs after death
Saunders v Vautier
If all beneficiaries have an absolute interest in the trust, are of full age and sound mind, they can cal for the transfer of the trust property
A trustee may retire without being replaced if:
They obtain consent by deed of all co-trustees and person (if any) given power to appoint in trust instrument
And
They leave at least 2 trustees or a trust corp in office
Can a trustee purchase beneficial interest?
Fair dealing rule
No rule preventing it but voidable if the trustee cannot show they paid a fair price, made full disclosure of all material facts to the beneficiary and in no way abused their position
Standard of care for trustees’ investment choices
Act w care and skill as reasonable in all the circumstances taking into account expertise they have or profess to have?
Standard of care for trustees’ discretions?
Act with the prudence of an ordinary person of business
Standard of care for trustees’ discretions?
Act with the prudence of an ordinary person of business
Limitation periods for bringing action against trustees
6 years
Except:
Time doesn’t begin to run against a beneficiary w interest in remainder until the interest falls into their possession
No limitation period if trustee party to fraud
No limitation period in action to recover trust property or its proceeds from trustee
Exceptions to first in first out rule for mixed trust funds in trustee’s personal account
- First in first out is contrary to the express or implied intentions of the claimants
- It is impractical
- Would cause injustice
3 certainties required for express private trusts
Intention to create trust, subject matter (property included) and objects (beneficiaries)
if express private trust void for uncertainty of intention, how does property pass?
as an outright gift to person who would have been trustee
if express private trust is void for uncertainty of subject matter/property or objects/beneficiaries, what happens?
property reverts to the settlor
Strong v Bird
if intending settlor dies before transfer is complete and the intended trustee becomes the settlor’s PR, the transfer is complete in law and trust is enforceable
Half secret trust
terms of the trust are in the will but the beneficiary isn’t named
beneficiary can enforce if their identity was communicated to the trustee at or before the making of the will
secret trust
looks like an outright gift to the nominated person
intendeld beneficiary can enforce it if they can prove terms of the trust by clear and convincing evidence
communication of the terms to trustee can be before or after execution of the will
if trustee/legatee refused or didn’t know about it until after the settlor’s death, trust fails and legatee keeps the gift
limited interest
beneficiary not entitled to receive capital of the trust fund
for ex: just the income for life with capital going to someone else on their death
opposed to: absolute interest
Perpetuity period of honorary trusts
21 years (including human life in being + 21)
trusts for maintenance of animals, saying of private masses, erecting and maintaining monuments and graves
When can beneficiaries select a trustee?
no person nominated in the trust instrument
beneficiaries all of full age and capacity
taken together, they are absolutely entitled to the trust
act unanimously
Can a trustee purchase property owned by the trust?
no. any such purchase is voidable
can purchase a beneficiary’s interest if they pay a fair price, make full disclosure of material facts and did not abuse their position
Resulting trust
implied trust which arises when:
-an interest under an express trust fails
-an express trust fails to exhaust the beneficial interest
-a person makes a voluntary transfer or purchase in the name of another
how many trustees required for a trust of land?
at least 2 but no more than 4
an interest under a trust is void if it does not vest within ___ years
125 years
21 or rest of person’s life + 21 years if it is a noncharitable purpose trust (like trust to care for a pet)
gift mortis causa to a trust may be enforced if
donor delivers the property to the donee while in contemplation of imminent or impending death
with the intention that the property be given to the donee if the donor dies and be returned if donor survives and the donor dies
if donor had no reason to believe they would die, gift will fail
conditions for a half secret trust
terms are revealed in will but beneficiary not named
the identity must have been communicated at or before the making of the will
and the language of the will must be consistent with the communication
conditions for a fully secret trust
looks like an outright gift to the nominated person
communication can be before or after the will is executed
beneficiary can enforce it if they can prove terms by clear and convincing evidence
but if the person who appears to have been given the gift in the will (legatee) refuses it or didn’t know about it until after the settlor’s death, the trust will fail and legatee takes gift outright
charitable trust requirements
-recognised charitable purpose (excluding advancement of political views)
-bestow an identifiable benefit
-to the public or a section of the public
if a charitable trust is impossible to carry out at the time it comes into operation, when can courts apply funds cy-pres?
when general charitable intention shown
Denley trust
appears to be for private purpose but actually for benefit of ascertainable human beneficiaries (land to be used as sports ground for employees)
When can a trustee purchase a beneficiary’s interest?
if they pay a fair price, make full disclosure of all material facts and in no way abused their position
general limitation for bringing an action against trustees
6 years
no limitation if trustee was party to a fraud or in action to recover trust property or its proceeds from hands of a trustee
