Trusts - General Intro

Question 1

What are the three certainties?

Answer 1

Certainty of Objects
- List of beneficiaries must be clear.

Certainty of Subject Matter
- Trust property must be clear and identifiable (e.g.: THAT chair, not any chair)

Certainty of Intention
- Clear intention to create a trust; precatory words are not enough (“I wish/desire”); the word “trust” is not required.

Question 2

What is a good way of showing certainty of subject matter when creating a trust?

Answer 2

Putting the subject matter in a separate fund can show certainty of subject matter.

Question 3

Are there any limits on what type of assets can be held on trust?

Answer 3

In theory it is unlimited: chattels, personal belongings, chose in actions (money in bank accounts), securities (bonds & shares), etc…

Question 4

What are the duties of a trustee?

Answer 4

• Hold (legal) ownership of trust property and apply it for benefit of the beneficiaries
• Not use their role to benefit from use of trust property

Question 5

What are two key benefits of a beneficiary’s interest under a trust?

Answer 5

1. B’s interests are enforceable against third parties
2. B’s interests are protected if the trustee goes insolvent

Question 6

What is the rule in Milroy v Lord and what is the Re Rose exception?

Answer 6

General Rule: Equity will not perfect an imperfect gift / Equity will not assist a volunteer (e.g. improperly constituted trust or where the donee does not provide consideration; settlor must do everything necessary to effect transfer of legal title) (Milroy v Lord).
- The settlor must have done everything necessary to transfer the legal title to the trustee.
- The 3 methods of transfer are: (i) outright gift; (ii) transfer on trust; (iii) self-declared trust.

The rule in Re Rose: if the donor has taken all necessary steps expected of him to transfer legal title but the
transfer is delayed by a routine operation of law, the gift is still valid.
Example: C completes a share transfer form but the Company delays in putting B on the register of members.

It would be unconscionable for the gift not to be completed, notwithstanding that the nephew was a volunteer.

Question 7

What remedies are equitable?

Answer 7

Specific Performance,
Injunctions,
Covenants (positive or restrictive),
Rescission (misrepresentation, mistake, duress/undue influence),
Court Declaration (as to the parties’ rights),
Rectification (contract amended to reflect the parties’ intentions).

Question 8

What is the statutory rule against remoteness of vesting?

Answer 8

A person must receive a vested interest within 125 years maximum

EG: X can remain in this house for the rest of her life [life remainder interest], and Y will obtain a beneficial interest in the house after X’s death.

NB: This does not need to be clear from the outset of the trust; there is a “wait and see” rule.

Question 9

What is the role against inalienability for non-charitable purpose trusts?

Answer 9

The perpetuity is 21 years maximum

In other words: It must be clear from the outset of the trust that it will end within the 21 year maximum period.

N.B.: Charitable purpose trusts have no limit on their duration (can exist in “perpetuity”).

Question 10

Can equitable interests be enforced against a bona fide purchaser without notice?

EG: Trustee - in breach of his fiduciary duty to the beneficiary - sells the trust property to a third party.

Answer 10

No, an equitable interest cannot be enforced against a BFP without notice.

Question 11

Can you have “purpose trusts” where the objects/beneficiaries are charitable or purposes/causes?

Answer 11

Generally, no (the definite “beneficiary principle”) because it is important that trusts are certain and enforceable.

There are 2 exceptions:
- Non-charitable purpose trusts
- Charitable purpose trusts

Question 12

What are two formalities required to create an express trust?

[IN MCQs, BE CAREFUL DISTINGUISHING BETWEEN THESE TWO THINGS! READ THE QUESTION CAREFULLY!]

Answer 12

Declaration of trust OF LAND (must be in writing and signed by someone capable to declare the trust: settlor or trustee)

NOTE:
- For trusts not relating to land, words are sufficient to create a trust, so long as the settlor’s intentions are clear.
- a will can validly declare a trust of land.
- The writing format is not prescribed for trusts of land (Paul v Constance) but it must show the terms of the trust and the settlor’s intention to create the trust.
- Non-compliance with writing requirement means the trust of land is unenforceable (not void).

Constituting the trust (valid transfer of legal & equitable title to the Trustee)
- The settlor must have done everything necessary to transfer the legal title to the trustee.
- If a self-declaration trust, there is no transfer of legal title.
- EFFECT: The transfer is IRREVOCABLE
- FAILED Constitution: Transfer if VOID.

Question 13

When constituting a trust (transferring legal title), how is legal title transferred in different assets?
- Land
- Shares
- Choses in action
- Chattels
- Cheques

Answer 13

Land: Transfer by deed and registration (title passes at registration)
Shares: Signing stock transfer form and being registered on Company’s register of members
Choses in Action (debt/bank accounts): Transfer upon receipt of notice in writing to Bank/Debtor
Chattels: Deed of gift OR delivery + evidence of intention to transfer
Cheques/bills of exchange: Transferor endorsing the cheque by signing their name on the back

Question 14

What is an example of a self-declaration trust?

Answer 14

Where the settlor declares himself to be trustee (holding legal title to property) for a beneficiary (who gets an equitable interest in the property).

EG: A father writes to his daughter declaring himself to be holding his house on trust for his daughter. He signs the letter and sends it to his daughter.
- In this case, there is no transfer of legal title because the father is settlor + trustee, so the trust IS properly constituted.

Question 15

Consider a gift, transfer on trust, and self-declared trust.

In which situation do you need to consider the formalities required to transfer legal and/or equitable title?

Answer 15

Gift = only consider formalities re. legal title
Transfer on Trust = consider both formalities to transfer legal AND equitable title
Self-declared Trust = only consider formalities re. equitable title

Question 16

Does the Re Rose exception apply to transfers of registered land?

Answer 16

Yes (Mascal v Mascal).

Facts: Father handed his son a signed transfer deed and land certificate. He later wanted to revoke the gift. The transfer had not yet been registered with the Land Registry.

Apply Milroy v Lord: On the facts, the father had not done everything in his power necessary to complete the legal title transfer (e.g. he did not register his son’s interest at the LR) by sending it in the post.

Held: The gift was complete in equity, so the father could not revoke it.
By giving the final documents to his son, the father had given everything the intended transferee [the son] needed to complete the legal title transfer. As the father had put the gift of land beyond his own control, the gift could not be revoked.

Contrasting Examples:
1. Transferring shares required consent from the UK Treasury because the transferor was domiciled abroad. This consent was not obtained, so the matter was still within the transferor’s control, so the transfer was unenforceable (Re Fry).
2. A had given B the stocks transfer form but not the share certificate, so the matter was still within A’s control and the transfer was unenforceable under (Re Rose / Mascal v Mascal).

Question 17

What happened in Pennington v Waine and how was it treated in Curtis v Pulbrook?

Answer 17

Pennington v Waine caused confusion in the Re Rose exception because:

The transferor should have done more to transfer title to the shares:
(1) She did not give the documents to the Company Registrar.
(2) She did not give the documents to the transferee or his agent.
The documents were with herself / her agent, so it was within her control to stop the transfer.

Arden LJ found it was “unconscionable” to for the donor to change her mind.
- Transferor made the gift of her own free will
- She told the transferee about the gift and left the documents with her auditors to act on
- The auditors told the transferee that he did not need to take further actions
- The transferee agreed to act as director [which he could not do without owning a share]

Curtis v Pulbrook has suggested that Pennington v Waine will only be followed on the same / very similar facts. Curtis suggested it is similar to prorprietary estoppel:
1. Transferee was given an assurance (that he did not need to do anything else);
2. Transferee relied on this;
3. Detriment: Transferee took on the burdens of a directorship role.

In MCQs - be careful.
If A wants to transfer assets via trust to B but leaves the transfer document with A’s solicitor, it is STILL within A’s control (the solicitor is acting as agent for A), so this will NOT invoke Re Rose / Mascal v Mascal.

Question 18

How do courts ascertain Certainty of Intention?

Answer 18

Objectively - the natural meaning of words written or said; contextual features of the document; facts known or assumed by the author of the document; common sense.

• S’ clear intention to enter into a trust and knowledge that beneficial interest passes to B.
• Precatory words are not enough - “I wish, I desire that my son is provided for by my sisters”.
• Using the word “trust” is not necessary.
• Segregating assets (e.g. in a separate account, company, body corporate) is a good indication.

Example: Continued use of the words “this money is as much yours as it is mine” persuaded the courts to treat a sole bank account as a joint bank account between former spouses (Paul v Constance).
- In this case, the husband did not know he was entering into a trust (he likely did not know what once is) but he clearly intended to enter into a relationship characteristic of a trust.

NOTE that for wills (gifts on death), precatory words are not binding but if a person is mentioned, the trust asset is deemed to be an outright gift to the person listed (as it would be wrong to stop the testator’s money going to someone on his death, for policy reasons).

Example: A testator makes a financial gift in his will. The clause reads ‘to my wife, in full confidence that she will make a fair distribution of the money to our children’.

Question 19

Does the settlor need to know what a trust actually is and that he is entering into one?

[Certainty of Intention question]

Answer 19

No, he just needs to show/know that he clearly intends to enter into a relationship characteristic of a trust.

Example: Continued use of the words “this money is as much yours as it is mine” persuaded the courts to treat a sole bank account as a joint bank account between former spouses (Paul v Constance).

Question 20

What are some problems with identifying trust property through description?
[Certainty of Subject Matter]

Answer 20

The description must be very specific to satisfy the court’s objective test.

EG: You cannot create a trust for the “bulk” of my estate on death because even if the estate is ascertainable, the word “bulk” is ambiguous (Palmer v Simmonds).
EG: Same as above for a company’s “net assets” which is an abstract monetary sum based on profits minus liabilities.
CONTRAST:
EG: “B should enjoy my flat for her lifetime and enjoy a ‘reasonable income’”. The court accepted the words “reasonable income” as sufficiently certain to allow the court to make an objective assessment based on the facts.

It may be easier to provide a fractional interest, e.g. 20% of my 100 shares.

Question 21

Explain the case law on Certainty of Subject Matter regarding:
- Tangible vs Non-Tangible assets
- Fungible vs Non-Fungible assets (identical and readily exchanged).
- Tangible assets forming Goods in bulk?

Answer 21

20% of my 100 shares = VALID, because they are intangible FUNGIBLE assets. (Any other combination is invalid). There is no need to segregate shares to satisfy intention of subject matter (Hunter v Moss).

20% of my 10 diamonds = invalid, because they are not fungible; each tangible diamond has its own unique cut, clarity, size etc…

Tangible Goods in bulk (e.g. 20/100 bottles of wine; x5 1kg bars of gold) = INVALID unless the goods are clearly segregated for the beneficiary (Re London Wine Co.).

Question 22

What is the “beneficial entitlement requirement”?

Answer 22

The extent of B’s beneficial interest in the trust assets must be ascertainable.

There must be an “objective yardstick” - in re Golay’s trust, the court found the words “reasonable income” were sufficient to determine what income the daughter was entitled to on the facts.

EG: Trustees hold two cars on trust for A and B. The trust gives C the power to determine which car goes to A and B. If C dies before this decision can be made, the trust will FAIL due to lack of certainty of subject matter (Boyce v Boyce).

Question 23

What is the test for Certainty of Objects for FIXED trusts?

Answer 23

The complete list test, i.e. both conceptual and evidential certainty (IRC v Broadway Cottages Trust)

Question 24

Define “Conceptual certainty” and “Evidential certainty”.

Answer 24

Conceptual certainty = is the writing of the trust precise enough to define the class of persons they intend to benefit?

Evidential certainty = is there evidence on the facts that makes the class of persons identifiable?

Question 25

What is the test for Certainty of Objects for DISCRETIONARY trusts?

Answer 25

The “is/is not” test (McPhail v Doulton); a complete fixed list is not required.

Trustees need to be able to say whether any given person is or is not part of the class of persons to benefit.
- Conceptual certainty still required.

Example: “relatives” was found conceptually certain in (Re Baden’s Trust no.2)
Example: “friends” is not; “employees” or “children” are fine, subject to any step-children or adopted children causing issues with the settlor’s intentions on the facts.
Example: “residents of Greater London” is administratively unworkable.

Question 26

The courts could not reach an agreement on how to test EVIDENTIAL UNCERTAINTY in Discretionary Trusts. What is the most common-sense approach to take?

Answer 26

Sachs LJ’s view: it is for the potential claimant to prove to the Trustee’s satisfaction that they are within the class of persons to benefit from the trust.

EG: “Past, current and future employees” - this can be ascertained, e.g. with payslips or employment contracts.
EG: “S’ children, grand-children and great grand-children” - this can be ascertained with birth certificates.

Also consider ADMINISTRATIVE (UN)WORKABILITY:
Example: “residents of Greater London” or “inhabitants of West Yorkshire” were administratively unworkable.

Question 27

What happens to the trust money given to trustees if the trust is found to be void?
e.g. for lack of certainty of objects.

Answer 27

The trustees will hold the trust assets on a resulting trust for the Settlor/Testator’s estate.

Question 28

What is the difference between a Trustee vs Power of Appointment [discretionary trusts]

Answer 28

Discretionary trustees have to decide how S’ assets are split between a class of people, or for example, family members.

Powers of Appointments are powers given to someone OTHER than a trustee. This person is NOT required to exercise this power. The desired transferee under powers of appointment have far more limited rights compared to beneficiaries under a discretionary trust.

Question 29

Do beneficiaries under a discretionary trust have any proprietary interest in the trust assets?

Answer 29

No, not until the trustees exercise their discretion. Then, they get an equitable interest in the assets.

Question 30

Trustees are holding a fund on trust for A for life, remainder to B.

What are A and B’s respective entitlements?

Answer 30

A is entitled to INCOME (Land, Bank Accounts, Shares)
B is entitled, upon A’s death, to CAPITAL (Rent, Interest, Dividends)

To remember it: Think of the “capital” as whatever is leftover going B –> “remaining capital”,
or consider that the life interest gets the underlying asset but the “vested in interest”/delayed right gets the long-term proceeds, i.e. rent, interest or dividends.

Question 31

What is the rule in Saunders v Vautier?

Answer 31

The beneficiaries - if all 18yrs old with sound mind - can all agree to collapse the trust and transfer their respective trust property to themselves absolutely.

EXAMPLE 1.
Where both beneficiaries have distinct rights (e.g. £2,000 trust money to be shared equally between A (17yrs) and B (18yrs) when they reach the age of 25), B can exercise his Saunders v Vautier rights and get the £1,000 early. The trust must continue to hold onto A’s £1,000 until he reaches 18yrs and can choose whether to collapse the trust and get his own trust money.
- B’s right is already vested (he is 18yrs old of sound mind), so he can collapse his interest for own severable portion of the money.

EXAMPLE 2.
Property is held on trust for A [65yrs] for life, remainder to B [17yrs].
A has a vested interest in the income.
B has a vested interest in the capital.
- As their interests are not severable, A and B cannot collapse the trust together as B is underage.
- In other words, beneficiaries with contingent interests can only exercise their Saunders v Vautier rights if they all act together.

Question 32

What are the requirements to establish a charitable purpose trust?

Answer 32

1. Charitable purpose;
   Must be one of the 12 items under statute but charity law is flexible by analogy:
   - The prevention or relief of poverty
   - The advancement of education [merely increasing knowledge with no teaching not enough - Re Shaw]
   - The advancement of religion
   - The advancement of health or the saving of lives​
   - The advancement of citizenship or community development​ [town regeneration; civic duties/volunteering]
   - The advancement of the arts, culture, heritage or science​ [art needs to be of merit; evidence can be needed]
   - The advancement of amateur sport
   - The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
   - The advancement of environmental protection or improvement
   - The relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage
   - The advancement of animal welfare
   - The promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services
2. Satisfy “public benefit” test;
   - Identifiable benefit (no presumption of a benefit existing); any benefit is weighed against any harm arising.
   EG: Negative impact on medical research outweighs benefit to animal welfare of banning vivisection.
   EG: Preferably politically neutral (e.g. a pro-eco group that does a range of activities, including political activities aimed at changing government policy was upheld).
   - Public or section of the public
   - Number of beneficiaries cannot be negligible;
   - What distinguishes Bs from other members of the “public” cannot be their relationship with a particular individual, e.g. the settlor / through an employment relationship.
3. Be “wholly and exclusively” charitable.
   - If there is a non-charitable purpose but it is “incidental or subsidiary” to charitable purpose, trust is valid.
   - It is possible for the court to sever/cut off the non-charitable part and save only the charitable component.

Question 33

What are the requirements to establish a non-charitable purpose trust?

Answer 33

Rules Applicable:
1. Can only be trusts created by a WILL.
2. B’s interests must vest within 125 years (statute - rule against remoteness of vesting). [applies to other trusts!]
3. Assets cannot be tied up / exist in perpetuity for longer than 21 YEARS (rule against inalienability: trust property must be capable of being transferred freely).

(Re Endacott) established the exceptions to the beneficiary principle and this narrow class of “purpose trusts” is very narrowly construed:
1. Constructing/maintaining graves or monuments;
2. Privately saying masses [“private” =/ public benefit, so cannot be a charitable trust];
3. Maintaining particular animals [might not have public benefit, hence might not be a charitable trust]
4. Promoting fox hunting [effectively defunct due to Hunting Act 2004]

5. Re Denley’s purpose trusts (where persons DIRECTLY AND TANGIBLY benefit from the purpose).
   - In this case, the employees would directly and tangibly benefit from the sports field.

Question 34

How would you best describe the fundamental importance of the requirement for certainty in a non-charitable purpose trust?

Answer 34

The purpose must be so clearly defined that if the trustees surrendered their discretion the court could carry out the purpose. (The courts do not recognise trusts that they cannot enforce!).

Question 35

What is the cy-près doctrine?

Answer 35

The cy-près doctrine allows the wishes of a donor to charity to be carried out even if the original purpose of the gift has failed. For the doctrine to apply, the new purpose should be as close as possible to the original purpose. The rule is that any surplus trust assets/money will be applied to another charitable purpose by way of a scheme, established by the court or the Charity Commission.

The cy-près doctrine applies both to lifetime gifts and gifts by will.

Example: A man died leaving a will in which he made a substantial gift to a charity for the welfare of stray dogs ‘for its general charitable purposes’. The charity has merged with another charity set up to protect the welfare of all animals.

Question 36

There are 5 circumstances in which a charitable trust’s original purpose can be changed - what are they?

Answer 36

1. Original purpose cannot be fulfilled;
2. Surplus funds;
3. Property from other trusts are combined, so as to be used more effectively;
4. The original class of persons (to benefit) is no longer relevant or suitable;
5. The purpose has: (i) been adequately provided in other means; (ii) cased to be charitable in law; (iii) ceased to provide a suitable and effective method of using property.

Question 37

If you leave a gift to an unincorporated association (e.g. a local social club), how would you (or your Personal Representatives) obtain good receipt for this gift?

Answer 37

You are effectively giving the gift to all members of the club (as its an unincorporated association), so ALL MEMBERS would need to give good receipt.

Question 38

What sort of will is created by the following:

The trust states that the woman’s children should receive the income of the trust during their lifetimes, with the capital passing to the woman’s grandchildren ‘in such shares as my trustees may in their absolute discretion determine’.

Answer 38

A life interest trust, as the woman’s children have a RIGHT to income during their lifetime.

(So the distribution of capital is discretionary, but not the income).

Question 39

Precatory wording is not enough to create a trust (lack of certainty of intention), but what about in the case of wills?

Example: A testator makes a financial gift in his will. The clause reads ‘to my wife, in full confidence that she will make a fair distribution of the money to our children’.

Answer 39

This is deemed to be an outright gift to the testator’s wife.

Question 40

If a woman makes a gift in error (she forgot she previously gave both her children £500, and accidentally gives another £500 to her youngest child to “make it even”) - what happens?

Is it void, held on constructive trust for the woman, or subject to a resulting trust in favour of the woman?

Answer 40

The gift will be held on a constructive trust in favour of the woman.

The gift was made in error as the woman expressed a clear intention to benefit her children equally rather than to favour one.

Question 41

A man makes a declaration of trust over his house in favour of his adult children, who do not live with him. He appoints two trustees but fails to complete any of the documentation required to transfer legal title to the property before his death.

Which of the following correctly states the position with regard to the constitution of the trust?

a) As legal title has not been transferred to the trustees, the trust is not constituted.

b) As trustees have been appointed, the trust is constituted.

c) The trust is constituted as the man has made a declaration of trust. incorrect

d) Although the trust was not fully constituted, equity will perfect the gift on the man’s behalf following his death.

e) As the beneficial interest has been transferred to the trustees, it is not necessary to transfer the legal title in order to constitute the trust.

Answer 41

a) As legal title has not been transferred to the trustees, the trust is not constituted.

In order to constitute the trust, the legal title must be transferred to the trustees to hold upon trust.

Re Rose is not invoked because he has not done everything in his power to transfer legal title.

Question 42

The trust deed of a fixed interest trust states that trust property should be distributed to two named beneficiaries once they reach the age of 21. One beneficiary is to receive 75 per cent, the other 25 per cent. The trustees ask for advice. They note that the beneficiary who is to receive the larger share is in a much stronger position financially and wish to vary the proportions to reflect this fact.

What, if anything, can the trustee do?

Answer 42

The trustee cannot vary the trust and must distribute in accordance with the terms of the trust.

The court would not be able to grant them discretion to do so (it flies in the face of the trust, and it is not just and equitable to manipulate a trust because you disagree with it!)

Question 43

The trust deed contains a condition which states that the children will forfeit their beneficial interest if they take citizenship of a country other than England. One of the children has left the UK and has been resident in Germany for several years and was granted German citizenship shortly after the trust was made.

Does the child have a beneficial interest or not?

Can the other beneficiaries consent for her to keep her beneficial interest?

Answer 43

The beneficial interest was given subject to a condition which has now been breached. She has no interest under the trust.

The other beneficiaries cannot override this with consent - this would fly in the face of the trust.

Question 44

A man makes an oral declaration of trust, stating that he will now hold the family home, which is in his sole name, on trust for the benefit of his spouse and children.

What is the status of the trust?

Answer 44

The trust is not enforceable. As it is a trust of land, it must be in writing and signed by someone capable of declaring the trust: the settlor with legal title or a trustee.

Question 45

If you are over 18 and your beneficial entitlement under a DISCRETIONARY trust has fully vested - are you able to claim your right?

EG: 2 beneficiaries ask for 1/10 of the trust where there are 10 beneficiaries?

Answer 45

The beneficiaries can ask for money (as the trustees have a fiduciary duty), they have no entitlement to any set share of the trust fund as it is subject to the discretion of the trustees.

Question 46

A settlor wishes to set up a charitable purpose trust for the benefit of retired employees of a company who are living in poverty.

Which of the following correctly describes the status of the trust?

a) The trust will not be charitable. Employees of a single company would not be a sufficient number of members of the public for this purpose.

b) The trust will not be charitable as it is not for a charitable purpose.

c) The trust will be charitable if it can be shown that the employees in question are in genuine need.

d) The trust will be charitable as it is for the relief of poverty.

e) The trust will be charitable. Employees of a company would be regarded as a sufficient number of members of the public for this purpose

Answer 46

e) The trust will be charitable. Employees of a company would be regarded as a sufficient number of members of the public for this purpose.

A trust which is intended to relieve poverty will have a charitable purpose if it is for the benefit of the public. Employees of a particular company would be enough to satisfy this condition.

(Contrast this with a Re Denley non-charitable purpose trust, e.g. T wishes to leave money for a sports field for the tangible benefit of his company’s former and present employees).

Question 47

A woman promises to give a gift of cash to her son but dies before she can do so, leaving a will which appoints her son as her executor. Her son is not the residuary beneficiary.

Which of the following correctly states that position with regard to the gift of cash?

Answer 47

Legal title has passed to the son in another capacity (his capacity as executor), perfecting the gift.

Question 48

A woman is a beneficiary of a discretionary trust set up to provide for the five grandchildren of the settlor ‘until such time as they complete their education’. She received one-fifth of the trust’s income while at university but this ceased once she graduated from her first degree and got a job. She has now been made redundant and asks the trustees to resume payment of her share of one-fifth of the trust income until she secures further employment.

Can the trustees do this?

Answer 48

No, Discretionary trusts allow trustees to determine which beneficiaries receive money and in what proportions. However, as the trust deed states that payments may be made up until the beneficiaries complete their education, the trustees do not appear to have any discretion to make further payments to the woman in the circumstances. If the woman were to, for example, take a postgraduate qualification, it might be possible to make further payments under the trust and it is not necessarily the case that her entitlement has ceased altogether.

Her entitlement has not immediately ceased just because she has graduated (see above re. possibility of further qualifications).

Question 49

If there is a surplus of money at the end of a trust’s lifetime or purpose (e.g. a trust of money to put children through high school education and they have all turned 18), where does the surplus go?

Answer 49

Surplus is held on resulting trust for the settlor / settlor’s estate.

Question 50

A woman has died leaving a gift to each of her four nephews provided they are members in good standing of a named religious organisation. The will authorises the executors to request that a senior member of the religious organisation act as an expert and confirm that each of the nephews meets the required condition if they are uncertain.

Can the executors rely on the authority of an expert in determining who satisfies the condition for the gift?

Answer 50

Where a gift is made subject to a condition precedent, it will not always be possible to ascertain whether the condition is met by potential beneficiaries. It is possible for the will to nominate a suitable expert to determine which beneficiaries, if any, meet the condition and are entitled to receive the gift.