Trusts Flashcards
When is a minor beneficiary entitled to receive trust income?
When they turn 18.
NOTE: It is the TRUSTEES who have the discretionary power to use the income for the minor’s maintenance, education, or benefit. The minor is not entitled to the income and would not be paid the income directly.
If a father gave his daughter £20,000 as a deposit towards the purchase of a house, how is that money treated?
The £20,000 is presumed to be an advancement for the daughter.
NOTE: the general presumption of resulting trust does not apply when the person providing the money is treated as being under a moral obligation to make financial provision for the other person, such as the case of father-child relationships. Instead, the presumption of advancement applies, and it is presumed that the father intended to make a gift to his child.
What is the power of advancement?
If a beneficiary has an interest in the capital of a trust fund, a trustee has the discretionary power to advance trust capital to a beneficiary, up to the amount of the beneficiary’s entitlement
NOTE: For trusts created before 1 October 2014, the amount advanced must not exceed half of the beneficiary’s vested or presumptive share.
What are the 3 provisions when the power of advancement applies?
1) Amount must not exceed entitlement
2) Any advancements taken into account when the fund is later distributed
3) Consent of persons with prior interest required
What is the test for ‘certainty of objects’ in a fixed trust?
The test for certainty of objects in a fixed trust is that it must be possible to draw up a complete list of all the beneficiaries (e.g., “my nephews”)
If a trust has three trustees, and one wants to retire, do they need to be replaced?
No, a trustee may retire from office without being replaced if they obtain the consent by deed of all their co-trustees.
The consent of any person who has power to appoint new trustees is also needed.
NOTE: The retiring trustee must leave at least two trustees in office (or a trust corporation), but that is not an issue here.
What is the presumption when an individual contributes to the purchase of property in the name of another and there is no evidence that a gift was intended?
That the legal owner holds on resulting trust for themself and the other party in proportion to their respective contributions.
NOTE: Does not apply if the contributor was the father or husband of the legal owner or was acting in loco parentis to the legal owner. In those cases, the presumption of advancement applies, and it is presumed that the contributor intended to make a gift unless he can prove that he did not.
How to establish accessory liability when a third party acts as an accessory to a breach of trust?
The third party is treated as a constructive trustee.
To establish accessory liability, it must be shown that the third party accessory was dishonest (did not act as an honest person would in the circumstances).
NOTE: It is NOT necessary to show that the third party knew that a breach of trust was committed.
