Trusts Law

Question 1

What is a Presumed Resulting Trust

Answer 1

Presumed resulting trusts will arise where a transfer is gratuitous and there is no evidence that the transferor intended the recipient to receive the property as a gift. This presumption may be based on an implied or an express intention which can be rebutted by evidence to the contrary.

Question 2

What is an Automatic Resulting Trust

Answer 2

An automatic resulting trust arises when a property is transferred and the transferor does not intend to make a gift or the transfer fails for some reason. The law automatically creates a trust to return the property to the transferor or their estate.

Question 3

When will the Cy-près doctrine apply?

Answer 3

a) Where original purpose has been fulfilled or cannot be carried out.

b) Where original purpose may still be workable but does not provide a use for all the property available to the trust (ie. where there are surplus funds).

c) Property from similar trusts is combined so as to be used more effectively.

d) Original purpose is no longer relevant.

e) Original purpose has been:
Adequately provided for by other means
Ceased to be charitable in law
Cease to be effective use of the property.

Question 4

What is the public benefit test for charitable purpose trusts?

Answer 4

1. There must be an identifiable benefit (the settlor’s belief as to this is irrelevant).
2. The purpose must be beneficial to the public or a section of the public. (The beneficiaries cannot be negligible in number and they cannot be beneficiaries based on their relationship to a particular individual).

Question 5

What is the general rule of perpetuity?

Answer 5

In trusts where the beneficiaries’ interests don’t vest, such as discretionary trusts or trusts which give rise to contingent interests, the trust itself could continue forever so there must be an express perpetuity clause.

Otherwise, statutory perpetuity applies of 125 years.

Perpetuity rules do not apply to charitable purpose trusts or where the beneficiary is a charity.

Question 6

What is the common law rule against inalienability?

Answer 6

This applies to non-charitable purpose trusts as the statutory rule against remoteness of vesting does not apply to them.

This rule requires that assets cannot be tied up on trust for longer than the common law perpetuity period of a specified life in being plus 21 years (or just 21 years if no life in being is specified).

This rule is strictly applied, it must be certain at the time the trust is created that it will come to an end within the perpetuity period to ensure its validity.

The life in being could be a member of the royal family - plus 21 years.

Question 7

When does legal title pass for registered land?

Answer 7

Transfer of registered land must be made by deed under s 52(1) LPA 1925 and registered with the Land Registry under s 27 LRA 2002.

Legal title passes on registration of the new owner at the Land Registry.

Question 8

When does legal title of choses in action pass following legal transfer?

Answer 8

Transfers must be made by written transfer and notice in writing to the debtor or bank.

Legal title passes once notice has been received.

Question 9

When does legal title for private shares pass following legal transfer?

Answer 9

Transfers must be made by the transferor signing a stock transfer form and sending it to the company.

Legal title passes on registration of the new member in the company’s internal register of members.

Question 10

When does legal title for chattels pass following legal transfer?

Answer 10

Transfers may take place by deed of gift or by delivery of the chattel with evidence of the transferor’s intention to transfer it.
Legal title passes at the point of transfer?

Question 11

How is legal title transferred with regards to cheques and other bills of exchange?

Answer 11

Transfer takes place by the transferor enforcing the cheque by signing their name on the back of it.

Question 12

What is the rule in Milroy v Lord?

Answer 12

Usually, no consideration is given in the creation of a trust and so the beneficiary of a trust and the recipient of a gift are both volunteers.

Equity will not assist a volunteer by compelling the settlor or do not to transfer legal title to the trustee or donee.

Question 13

What is the exception from Strong v Bird?

Answer 13

That an imperfect disposition can be made perfect where the intended recipient is a trustee or PR.

This requires an intention to create an immediate gift which continues up to the death. When the transferee obtains legal title in their capacity as executor or administrator, this will perfect the transaction.

Question 14

What is recipient liability

Answer 14

Personal liability for receiving the traceable proceeds of a breach of trust or fiduciary duty in circumstances rendering it unconscionable to retain them.

Question 15

Accessory liability

Answer 15

Personal liability for dishonestly assisting a breach of trust or fiduciary duty.

Question 16

Requirements for a receipt based claim

Answer 16

Receive the trust property
Have actual or constructive knowledge that the property was misapplied.
They received it on their own benefit, rather than merely handling or transferring it on behalf of someone else.

Question 17

Requirements for accessory liability

Answer 17

Must establish that there was a trust in existence at the material time

The trustee committed a breach of that trust

The defendant assisted the trustee to commit that breach of trust
(Assistance = plan, commit or cover up but it must be more than minimal.)
(Defendant cannot avoid liability by proving that the fiduciary would have committed the breach even if the defendant has not assisted them. )

It’s sufficient that the defendant procures or instigates the breach.

And the defendant’s assistance was dishonest.
Dishonest is determined by applying the objective standard of ordinary decent people.