Trusts Flashcards
Outline the purposes of trusts. Why do people create them? What do they allow people to do?
The trustee is said to ‘hold the property on trust’ for the beneficiary, leading to these purposes being created:
Enable people to act in good faith when dealing with a property, in favour of a person who has beneficial interest within it.
Allows people to split control & ownership / split property in a variety of ways.
Gaining successive interests - using money to establish a trust & wanting it to be managed in the interests of someone else & across time, e.g. different generations.
Gaining concurrent interests – where benefits can be split & distributed appropriately for the benefit of other parties, all done simultaneously.
Gaining contingent interests – when the money can be used for the benefit of another party until a certain period, e.g. when one’s children turn a certain age.
Collective interests, e.g pension funds.
Fund charitable objects.
Define trusts
In his book, ‘Equity: A Course of Lectures’ Maitland defined trusts as ‘when a person has rights which he is bound to exercise upon behalf of another / or for the accomplishment of that purpose’. As a result, they ‘have those rights in trust, being called a trustee due to that purpose / other’.
Outline the four significant elements to a trust
It’s equitable
Provides the beneficiary with rights in property
Imposes obligations on the trustee, with them being fiduciary (revolves around the relationship between a trustee & beneficiary) in nature
Thomas & Hudson outlined these elements in the ‘Law of Trusts’.
Outline the roles of parties to a trusts
Settlor - transfers legal title to property to another ‘on trust’ (or declares themselves trustee), can also take the trustee to court if they breach their duties. Promotes joint ownership.
Trustee - holds legal title for the benefit of beneficiary. Promotes the unity of possession.
Beneficiary - has an equitable interest in the trust property. Reviews & keeps the trust in tact, enabling it. Does things in the interest of the beneficiary, anything otherwise leads to a breach in the obligation.
Outline the various types of trusts
Express trusts, e.g charitable (public) –> private, e.g fixed interest / discretionary
Trusts imposed by law, e.g constructive / ruling
Outline the roles & characteristics of various types of trusts
Express trusts, e.g planned –> clear that the settlor intended to create a trust. The party will often exercise a power to set up a trust, e.g by signing when they can declare a trust in their will. Dependent on the settlor’s intent.
Resulting trusts –> when A transfers property to B & pays for the property held by A without receiving anything in return, lacks intent as to what the intention is even if the purpose is established, implied not expressed, although lacks clarity as to what the terms of the trust are, e.g saying you’ll leave money to your family (1) what members of your family? Will then be transferred back to the estate where the trustee will be asked to seize control.
Constructive trusts –>
