trusts law Flashcards
how does an implied trust arise?
it arises by operation of law
what are the 2 types of implied trusts?
resulting trusts and constructive trusts
what is a testamentary trust?
created via a will
what is an inter vivid trust?
these are created in the lifetime of the settlor
what are the 2 different ways that an express trust can be created?
self declaration of trust and transfer of trust
what is a self-declaration of trust?
requires settlor to manifest an intention to hold one of their assets on trust for the beneficiary. once trust has been created, settlor remains legal owner of asset but is divested of their beneficial interest.
what is a transfer on trust?
requires settlor to transfer property to a third party and manifest an intention that the third party should hold the property on trust for the beneficiary.
what are the 3 certainties?
1) certainty of intention
2) certainty of subject matter
3) certainty of objects
what is the beneficiary principle?
there needs to be identifiable beneficiaries or objects (if there isn’t there is no one to enforce the trust)
requires objects of the trust to be legal persons
what is a fixed trust?
trust in which the entitlement of the beneficiaries is fixed by the settlor (fixed interest trust)
what is a discretionary trust?
trust under which trustees have a discretion to distribute between objects of the trust
what proprietary rights does a beneficiary of a fixed trust have?
- their right may be vested or contingent
- assert against 3rd party
- can dispose of interest
- right to terminate trust (Saunders v vautier)
what personal rights does a beneficiary of a fixed trust have?
- compel administration
- be informed
- sue trustees for breach
what is a life interest trust?
a successive interest trust, where beneficiary receives income during their lifetime, and another beneficiary becomes entitled to capital after the income beneficiary’s death
what is an income beneficiary?
beneficiary entitled to income produced by a successive interest trust (income beneficiary of life interest trust = life tenant)
what is a capital beneficiary?
beneficiary entitled to capital held on a successive interest trust (known as remainder man)
what is a discretionary trust?
trustee has distributive discretion - settlor determines the potential beneficiaries and then trustee determines who from within that class is to receive what sum.
what is the key difference between powers of appointment and discretionary trusts?
powers of appointment are powers that give the donee complete discretion on how to exercise those powers (can choose whether to even use their power or not).
are powers of appointment trusts?
no they are not trusts, but it is common for trusts to include powers.
what is a fiduciary power of appointment?
power of appointment given to a trustee. trustee doesnt need to exercise it bit must periodically consider whether to do so.
what is a personal power of appointment?
power of appointment given to someone who is not a trustee. they are not even required to consider exercising it
what 3 factors should you consider when deciding if something is a discretionary trust or a power of appointment?
1) ‘must’ suggests discretionary trust whereas words like ‘may’ suggest power of appointment
2) if discretion has been given to third party (not trustee) it is power of appointment, not discretionary trust
3) presence of a gift-over indicates power of appointment (because it means power doesnt need to be exercised) but lack of a gift-over is not determinative
what is a vested interest?
have current right to enjoy property
what is contingent interest?
has conditions on it