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Scottish Property Law > Trusts > Flashcards

Trusts Flashcards

Flashcards on the Law of Trusts

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1
Q

What is a trust?

A

A trust is a relationship where property is held by one party for the benefit of another party.

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2
Q

What is the definition of a trustee?

A

Trustees are fiduciaries in whom title is vested. They own the trust but for the benefit of others.

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3
Q

What is a public trust?

A

Public trusts are for the benefit of the public or some section of the public (Eg A trust that helps long-term unemployed get back into work).

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4
Q

What is a private trust?

A

A private trust is for the benefit of a particular person. (Eg Trust fund that someone’s wealthy grandparents have set up for their grandchildren).

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5
Q

What is a discretionary trust?

A

A discretionary benefit is one where the rights of the beneficiaries depend on the discretion of the trustees.

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6
Q

What is a mortis causa trust?

A

A trust which is created on death by the deceased’s testament, which will nominate trustees and identify the assets that are to be trust assets.

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7
Q

What is an inter vivos trust?

A

An intervivos trust is a trust created by someone who is alive.

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8
Q

What are the two distinct steps of a vivos trust?

A

(1) A “declaration of trust”; and (2) The vesting of property in the trustees.

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9
Q

Can a trustor make themselves one of the trustees?

A

Yes, they can. If so they are in the same position as other trustees - IE are bound to administer the property in the same way according to trust purposes.

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10
Q

To assess the validity of a trust, what must also be considered?

A

The purposes of a newly created trust.

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11
Q

Can a trust be rendered invalid if it is “secret”?

A

Yes.

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12
Q

A trust is set up which is against public policy. Is this invalid?

A

Yes.

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13
Q

A trust has no substantial human benefit. Is this invalid?

A

Yes.

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14
Q

What does the case of Shaws Trustees v Greenock Medical Aid (1930) show?

A

A trust with uncertain intentions can not be a valid trust.

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15
Q

A trust is set up to sponsor illegal criminal activity. is this invalid?

A

Yes.

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16
Q

A trust is set up and has no identified beneficiaries. is this an invalid trust - support with authority.

A

Yes, as per McCaig v University of Glasgow (1907).

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17
Q

What does the case of McCaig v University of Glasgow (1907) show?

A

That if a trust is set up and has no identified beneficiaries, it is an invalid trust.

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18
Q

What are the circumstances that a trust can be rendered invalid?

A

(a) Uncertain purposes
(b) Secret purposes
(c) Contrary to public policy
(d) No substantial human benefit.
(e) Illegal purposes
(f) No identified beneficiaries

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19
Q

Who can be a trustee?

A

Legal, juristic and natural persons.

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20
Q

If there’s no regulation in trust deeds about future trustees what happens?

A

Default rule is that in absence of regulation in trust deed that trustees have power to assume new trustees.

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21
Q

What is an ‘ex officio’ trustee?

A

Someone who is a trustee of a particular trust simply by virtue of holding a certain office.

22
Q

In what circumstances may a trustee cease to be a trustee?

A

Death, resignation or removal.

23
Q

How can trustees’ investment duties be fined?

A

As an obligation to invest the funds in an appropriate manner which must be both authorised and proper.

24
Q

What must a trustee have regard for when making investments?

A

They must have regard to the possibility that diversification of investments may be in the best interest of the beneficiary as per Raes v Meek.

25
Q

What does the case of Raes v Meek show?

A

A trustee must bring to the administration of the trust the same care and diligence which a person of ordinary prudence may be expected to use in the management of his own affairs.

26
Q

Are trustees allowed to accumulate capital?

A

No. They must not for example reinvest so as to build capital.

27
Q

What must trustees do in regard to accounts?

A

Trustees must keep account and must retain the vouchers: IE relevant documents such as receipts.

28
Q

Should trustees adhere to terms of trust deed and trust law?

A

Yes.

29
Q

What does auctor in rem saum mean?

A

Trustees must not act in any capacity so as to benefit themselves (buy, sell, borrow).

30
Q

What case shows that you must not buy from a trust of which you are a trustee?

A

University of Aberdeen v Magistrates of Aberdeen.

31
Q

What case shows that you must not sell from a trust of which you are a trustee?

A

Cherry’s Trustees v Patrick (1911)

32
Q

What case shows that you must not borrow from a trust of which you are a trustee?

A

Perston v Perston Trustees (1863)

33
Q

What does the case of University of Aberdeen v Town Council of Aberdeen (1877) show?

A

A trustee must not use his position as trustee to obtain any personal advantage.

34
Q

What case shows that if a trustee has power to exercise discretion it should not be exercised in their own favour?

A

Inglis v Inglis (1983)

35
Q

Who is the only interests that should matter to a trustee? Support with authority.

A

Beneficiaries, Martin v City of Edinburgh (1988)

36
Q

What does the case of Martin v City of Edinburgh (1988) show?

A

That trustees should only be considering the interests of the beneficiaries.

37
Q

If a trustee has acted in good faith and has not acted negligently, can be held liable for overlooking a trustee?

A

No

38
Q

If the powers of a trustee in the trust deed are lacking, what happens?

A

Common law and statutes may fill in some of the gaps.

39
Q

What happens if a trustee breaks their trust? Support with authority.

A

Then another trustee may pursue but failing that a beneficiary may raise an action as per Hood v MacDonalds (1949).

40
Q

What does the case of Hood v MacDonalds (1949) show?

A

That if a trustee breaches their trust then another trustee may pursue but failing that a beneficiary may raise an action.

41
Q

Can trustees receive payment?

A

Trustees are entitled to be remunerated for reasonable expenses but not generally their time.

42
Q

In private trusts, what permits variation and what allows this?

A

In private trusts, variation must be brought by all beneficiaries of the trust at common law and all beneficiaries must agree.

43
Q

Can the court permit variation of private trusts?

A

Yes but only limited to enlarging admin and enabling trustees to make an advance of capital.

44
Q

How do public trusts allow variation?

A

Either from the court or from the trustees.

45
Q

What is the ‘cy-près’ scheme?

A

The cy-près scheme is a common law power open to the court to try and vary the purposes of a public trust if it has failed either at conception or has later failed for other reasons.

46
Q

What are the two types of failures as per the cy-près scheme?

A

(1) Initial failure: Trust cannot be put into operation

(2) Supervening failure: Charitable trust is up and running but later becomes unworkable.

47
Q

How can trusts be terminated?

A

By the revocation by the trustor however this is in very limited circumstances. Also by trustees however this is rare too. LR (MP) (S) 1990 allows public trusts to be terminated also.

48
Q

In what circumstances will a trustor complete a revocation of their trust?

A

Insolvency and qualification in trust deed.

49
Q

Can a beneficiary demand property? Support with authority.

A

If there’s only a single beneficiary under the trust then the beneficiary may compel trustee to make over the property to the beneficiary at any point if the beneficiary is over 16 - as per Millers Trustees v Miller (1890)

50
Q

What does the case of Millers Trustees v Miller (1890) show?

A

The case shows that the law allows the partial or total termination of a trust at the request of a single beneficiary, where the beneficiary is the only person with an interest.

Scottish Property Law (5 decks)

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