Trusts

Question 1

Fixed trusts - test for certainty of objects/beneficiaries

Answer 1

Complete list test: must be able to draw up a complete list of beneficiaries
Conceptual and evidential certainty, capable of objective determination

Question 2

Discretionary trusts: certainty of objects/beneficiaries test

Answer 2

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

Question 3

Equity will not assist a volunteer

Answer 3

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

Question 4

Testamentary trust

Answer 4

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

Question 5

Saunders v Vautier

Answer 5

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

Question 6

A trustee may retire without being replaced if:

Answer 6

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

Question 7

Can a trustee purchase beneficial interest?

Answer 7

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

Question 8

Standard of care for trustees’ investment choices

Answer 8

Act w care and skill as reasonable in all the circumstances taking into account expertise they have or profess to have?

Question 9

Standard of care for trustees’ discretions?

Answer 9

Act with the prudence of an ordinary person of business

Question 10

Standard of care for trustees’ discretions?

Answer 10

Act with the prudence of an ordinary person of business

Question 11

Limitation periods for bringing action against trustees

Answer 11

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

Question 12

Exceptions to first in first out rule for mixed trust funds in trustee’s personal account

Answer 12

1. First in first out is contrary to the express or implied intentions of the claimants
2. It is impractical
3. Would cause injustice

Question 13

3 certainties required for express private trusts

Answer 13

Intention to create trust, subject matter (property included) and objects (beneficiaries)

Question 14

if express private trust void for uncertainty of intention, how does property pass?

Answer 14

as an outright gift to person who would have been trustee

Question 15

if express private trust is void for uncertainty of subject matter/property or objects/beneficiaries, what happens?

Answer 15

property reverts to the settlor

Question 16

Strong v Bird

Answer 16

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

Question 17

Half secret trust

Answer 17

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

Question 18

secret trust

Answer 18

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

Question 19

limited interest

Answer 19

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

Question 20

Perpetuity period of honorary trusts

Answer 20

21 years (including human life in being + 21)

trusts for maintenance of animals, saying of private masses, erecting and maintaining monuments and graves

Question 21

When can beneficiaries select a trustee?

Answer 21

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

Question 22

Can a trustee purchase property owned by the trust?

Answer 22

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