Trusts Flashcards
Types of Express Private Trusts (5)
- Fixed
- Discretionary
- Purpose
- Inter Vivos Trust - Over a Lifetime
- Testamentary Trust - Arising from Will
Express Private Trusts Key Requirements (3)
- Express Intention
- Subject Matter
- Object
Express Intention (5)
- Words or Conduct
- Own Property
- Trust Immediately
- Evidence through Witnesses (Informal)
- If Fails, Property passes as Gift to Trustee
Subject Matter (4)
- Tangible Stock must be Separated
- Property must already exist
- Beneficial Entitlement must be Certain
- Uncertain Subject Matter - Property Reverts
Number of Trustees Required (3)
- Usually 1
- 2-4 for land
- Can increase to maximum of 4
Rules Against Perpetuity (2)
- Contingent interest void if it does not vest within 125 years
- Noncharitable trusts - limited to 21 years or life in being plus 21 years
Inter Vivos Trusts (3)
- Trusts created during lifetime
- Settlor can declare themselves trustee
- Trust with another as Trustee
Exceptions to “Equity will not Assist a Volunteer” (4)
- Every Effort Test - Imperfect Gift will be held
- Donatio Mortis Causa - Gift by the Reason of Death
- Rule in Strong v Bird - Death before constitution, trust treated as validly constituted
- Proprietary Estoppel - Gift Valid when Assurance, Reliance, Detriment
Requirements of Testamentary Trust (4)
- Valid Will
- Appropriate Trustee
- No breach of perpetuity rules
- No transfer requirement at the time of creation
Secret Trust Fails if (2)
- Trustee fails to accept
- Did not know until after settlor’s death
Half Secret Trust requires (1)
communication of beneficiary’s identity must be made on or before will execution
Fixed Trusts: Vested Interest
No condition attached to interest
Fixed Trusts: Contingent Interest
Condition attached to interest
Fixed Trusts: Limited Interest
No Right to Trust Capital
Fixed Trust: Absolute Interest
Right to Capital and Income
Rule in Saunders v Vautier (3)
- Terminate Trust
- If all beneficiaries have absolute interest, adults and sound of mind
- Can apply to fixed or discretionary
Resulting Trust Arises (2)
- Voluntary Transfer or Purchase in Name of Another
- Failure to Exhaust Beneficial Interest under Express Trust
Requirements for Resulting Trust in Real or Personal Property (3)
- Money used to purchase property
- Money must be provided at or before time title vests in trustee
- Claimant has burden of proving they paid towards purchase
Presumption of Advancement in Resulting Trusts
Under the obligation to provide for the other party (look at relationship)
Family Homes: Legal Title in One Name - Proprietary Estoppel (3)
- Assurance
- Reliance on Assurance
- Detriment
Common Intention Constructive Trust (3)
- Common Intention
- Reliance to Claimant’s Detriment
- Claimant attempts to assert an equitable interest in the family home
Charitable Trusts: Rules Against Perpetuity (3)
- Does not apply
- Initial gift within 80 years
- subsequent gifts from charity can happen anytime
Requirements for Charitable Trusts (3)
- Fall within defined charitable purpose
- Public benefit
- Exclusively charitable
Cy-Pres Doctrine (4)
- Applies to Charitable Trusts
- Impossible or Impractical, Court will apply trust property to similar charitable purpose
- Initial failure: General Charitable Intent Required
- Subsequent Failure: No Charitable Intent Required
Denly Trust (2)
- Human beneficiaries can enforce trust
- Can’t terminate trust using Saunders v Vautier
Honorary Trust
Perpetuity Period applies: Human life in being plus 21 years or 21 years
Hierarchy of power to replace trustees (4)
- Document
- Continuing trustees
- Personal representatives of last surviving trustees
- Court
Retirement without appointing (2)
- Consent of co-trustees and any person named in trust document
- At least two trustees or trust corporation must remain in office
Duty Not to Profit from Trusteeship
- When trustee can prove that they were going to be appointed director anyways
Duties of Trustees (10)
- Deal appropriately with the trust property
- Statutory duty of care
- Traditional duty of care
- Act jointly if there is more than 1 trustee
- Act personally and not delegate
- Take possession of trust property
- Keep accounts and records
- Act impartially and treat them all equally
- Confidentiality
- Invest
Duty to Invest (4)
- Authorised investments - UK, Document can restrict
- Criteria - Suitability and Diversification
- Advice of Investments -Subjective and Objective
- Review
Power of Maintenance (4)
- Interest in income
- Paid directly to school or parent/guardian
- Ends when beneficiary turns 18
- Upto October 2014 - Apply a Reasonable Amount
Power of Advancement (5)
- Vested, Remainder, Contingent Interest
- Amount must not exceed entitlement
- Advances must be factored into final distribution
- Consent of person with prior interest is required
- Upto October 2014 - Limited to one hald of the beneficiary’s vested or presumptive share
Liability of Trustees (4)
- Only trustees responsible liable
- When more than one - liability joint and several
- 6 year limitation period when limitation period starts for remainder interest
- No limitation in case of fraud or recover property from trustee
Trust Property Not Mixed (2)
- Claim back property
- Claim charge over asset to the amount if it has been substituted
Bona Fide Purchaser Liability (2)
- Paid in good faith and without notice
- No claim against person
Innocent Volunteer Liability (2)
- No personal claims
- Proprietary claims allowed
Knowing recipient (2)
- Beneficiaries can bring personal claim
- Proprietary claims allowed
Dishonest Accessory (2)
- Personally liable
- Can be active or passive
- Proprietary claims unlikely
