Trusts

Question 1

Express trusts

Answer 1

Created with the intention to either benefit individuals or achieve a purpose.

Question 2

Implied trusts

Answer 2

Implied trusts come into existence as a matter of law. No express intention to create trust.

Two types of implied trust:
- resulting trusts and
- constructive trusts

Question 3

Inter vivos trusts (during settlors lifetime) involve…

Answer 3

1. Declaration of trust
2. Transfer of title

Should an inter vivos trust fail, the equitable interest will result back to the settlor if they are still alive.

Question 4

Testamentary trusts (on death set out in will) involve:

Answer 4

• Declaration of trust that complies with s9 Wills Act 1837
• Transfer of title

Failed testamentary trusts result in the equitable interest reverting to the residuary beneficiary under the terms of then will.

Question 5

Fixed Interest Trusts

Answer 5

Where the beneficiaries and their shares are fixed by the settlor. The trustee has no discretion as to the beneficiaries and their entitlement.

Question 6

Discretionary trusts

Answer 6

The settlor gives the trustee the discretion to select who, from a given class of persons, will receive the trust property in what shares. All the beneficiary has is an expectation but no property rights until discretion is exercised.

Question 7

Creation and requirements of express trusts:
(3)

Answer 7

The three certainties of intention, subject matter and objects.

Question 8

Certainty of intention

Answer 8

Must be clear p intended to create a trust. Failure to do so will mean it’s a gift.
Settlor must use correct words;
- Precatory words: Express a hope, wish or moral obligation and usually indicate a gift was intended (and not a trust)
- Imperative words: express a command and indicate a trust or power is intended. The Words impose a duty on someone to act as trustee and hold property for someone else.

Question 9

Certainty of subject matter

Question 10

Certainty of objects

Question 11

Certainty of Subject Matter

Answer 11

Must be clear;
i. What property is being held on trust; and
ii. What the individual interest of the beneficiaries are:

• Description of property: vague or general description render trust void with tangible property, the physical separation of the trust property is required.
• Beneficiary’s interest: the beneficial interests must be clear ( ie must be allocated when trust established)

Question 12

Certainty of Objects

Answer 12

It must be clear who the beneficiaries of the trust are;

• Fixed trust: the beneficiaries are specified or it must be possible to draw up a complete list of every beneficiary.

•Discretionary trust: the trustee is given the discretion as to who amongst a class of beneficiaries will benefit but you need 1. Conceptual certainty 2. Evidential certainty 3. Administrative workability.

Beneficiary Principle and Perpetuities: to be valid, private trusts must meet these requirements:
1. Beneficiary Principle
2. Rule against perpetuities