Trusts Flashcards
What is a testamentary trust?
Trust contained in a will, and takes effect on the death of a testator.
Must remain revocable until death, and contained in a will executed under the Wills Act.
When does a resulting trust arise?
When:
- An interest under an express trust fails
- An express trust fails to exhaust the beneficial interest
- Somebody makes a voluntary transfer / purchase in the name of another
What are the three certainties?
- Certainty of intention (to create a trust)
- Certainty of subject matter (property that is being subject to the trust)
- Certainty of objects (beneficiaries)
What is the complete list test?
Used for fixed trusts.
Needs:
- Conceptual certainty (who the actual class is)
+
- Evidential certainty (evidence proving a person falls within that class)
What is the any given postulant test?
Used for discretionary trusts.
A definition of class must be sufficiently clear to enable the trustees to assess the potential range of beneficiaries and determine whether any person falls within the class
How must trustees act generally?
With unanimity
What is the maximum and minimum number of trustees needed?
Minimum = 1
Maximum = no maximum
Trustees of land
Minimum = 2
Maximum = no maximum (but only 4 can hold title)
What is the remoteness of vesting rule?
An interest under a trust is void if it does not / will not vest within 125 years
What is the inalienability rule?
Where a non-charitable purpose trust is valid, it is valid for either:
- 21 years, or
- the rest of a person’s life, plus 21 years
What are examples of a non-charitable purpose trust?
- maintenance of tombs
- care of specific animals
- saying of private masses
Can a valid declaration of trust be revoked?
No
What is the rule regarding tangible and intangible property subject to a trust?
Property subject to a trust must be distinguishable from other similar property.
Intangible property = must be segregated from other property of the same type.
Tangible property = do not need to be segregated from property of the same type.
Can a trust be set up for an unborn child?
No, but it is possible to start up the trust once the child is born, then to provide that additional, defined unborn children will join the beneficiaries once they are born
What is the rule in Milroy v Lord?
Equity will not perfect an imperfect gift or assist a volunteer.
What is the consequence if trust property has not been property vested in trustees?
Trust will not be completely constituted.
Trust will be void and unenforceable.
What are the exceptions to the rule that equity will not assist a volunteer / equity will not perfect an imperfect gift?
- where transferor has done everything in their power to effect the transfer
- where there has been fortuitous vesting
- where proprietary estoppel applies
- a gift in contemplation of death
What is the Re Rose principle?
Transfer of property is effective in equity once the transferor has done everything in his power to effect the transfer
What are the requirements under the Re Rose principle?
- Transferor must use the correct method of transferring the property
- Transferor must have done all that they can do to effect the transfer, and the failure to complete the transfer is on party of the third party
What is the rule in Mascall v Mascall?
If the transferor has sent all required documents for registration / delivered them to the transferor, the transfer will be complete in equity and the transferor cannot revoke the transfer.
What is the principle in Pennington v Waine?
A donor will not be permitted to change their mind if it would be unconscionable, in the eyes of equity, to do so.
E.g., if donor has given assurance that the transferor will not go back on their word, and the transferee acted in reliance of this assurance by changing their position.
What is fortuitous vesting?
The failure to complete the transfer to the intended transferee may be resolved,fed if the transferee later acquires the legal title
What are the requirements for fortuitous vesting?
- Donor intended to make an immediate gift
- Their intention to transfer the property continued until death
- Legal title is vested in the donee as the legal representative (e.g., executor) of the donor
What is the rule in Strong v Bird?
Where a donor has an intention to make a gift of property during their lifetime but has not effectively vested the legal title in the intended transferee, the transfer can be completed if the legal title is fortuitously vested in the intended recipient.
What is proprietary estoppel?
Used as a method to require a donor to complete an imperfect gift
What elements must be present to use proprietory estoppel?
- an assurance / representation to the donee by the donor
- donee has relied on that assurance
- donee has suffered detriment as a result of their reasonable reliance on the assurance
What are the requirements for a valid gift in contemplation of death?
- gift must be made in contemplation of imminent death
- gift must be conditional upon the death of the donor
- there must have been actual or constructive delivery up of the property (donor must transfer control of the property by handing over the property itself / transferring something which represents legal title)
What is the rule in Saunders v Vautier?
Beneficiaries can use this rule to request a variance of the trust / winding up of the trust.
What criteria must be met to use the rule in Saunders v Vautier?
Beneficiaries must meet the following:
- be an adult
- be sui juris (have legal competence)
- between them, absolutely entitled to the entirety of the trust property
What are the heads of charity?
- prevention / relief of poverty
- advancement of education
- advancement of religion
- advancement of health / savings lives
- advancement of animal welfare
What is the public benefit test for charitable trusts?
- is the charity for the benefit of all the public or just a section?
- are the charitable purposes beneficial or detrimental?
What is the Cy-près doctrine?
If trust property is applies to a charity, but that charity no longer exists, the trust property will be applied to another charity whose purposes are as close as possible to the purposes of the original bequest.
What happens if it is not possible to find a close match to the original purpose for the reason of cy-près?
The trust property may be applied Cy-près to support general charitable purposes.
What happens if a charitable bequest fails before it can take effect (e.g., charity closes before testator’s death)?
Property will be applied cy-près if the donor had a general intention to benefit a type of charity (rather than one specific charity).
If this cannot be proven, the property will return to the donor on an automatic resulting trust.
What is the presumption of advancement?
Whereby the relationship between the parties (parents / children or spouses) creates the assumption that a transfer of property is an outright gift and therefore not subject to a resulting trust.
Can be rebutted if direct evidence can be shown that transferor intended the property to result back to them.
What is an express common intention constructive trust?
- Express agreement (communication indicating parties common intention)
- Common to the parties (shares between both)
- To share the home (common intention to share ownership of the home)
What is an inferred common intention constructive trust?
Whereby the courts can infer a common intention on the basis of the whole course of conduct between the parties.
E.g., direct contributions to the purchase price
What is dishonest assistance?
Where a third party dishonestly assists in a breach of trust
What must there be evidence of to establish accessory liability?
- Fiduciary relationship between the trustee and beneficiary
- Breach on part of the trustee
- Trustee does not need to have been personally dishonest (dishonesty must be present for the third party)
- Third party must have assisted in procuring the breach in some way
What are the requirements for knowing receipt (recipient liability)?
Where third party knowingly receives trust property for their benefit in breach of trust + their knowledge is sufficient to make it unconscionable for them to retain the trust property.
Must be:
- A BOT
- Beneficial receipt of the trust property
- Knowledge (of the third party) of the BOT
- Recipient liability is based on unconscionability rather than dishonesty.
What is a trustee’s power of maintenance?
Trustees have discretion to use trust income for the maintenance/ education / benefit of the minor beneficiaries
What is trustee’s power of advancement?
Trustees have the power to advance capital to the beneficiaries to advance their position in life (if there is a life tenant, they must give their consent)
