Trusts - Overview

Question 1

what is a trust

Answer 1

equitable duty relating to property

Question 2

what kind of interest does beneficiary have

Answer 2

equitable proprietary interest

Question 3

characteristics of a trust

Answer 3

• trust property
• trustee
• duty
• objects
• equitable proprietary interest

Question 3

duty of trustee

Answer 3

hold/ apply trust property for benefit of beneficiary

Question 4

subject matter of trust

Answer 4

trust property

Question 5

what does equitable proprietary interest mean

Answer 5

beneficiary can enforce their rights against 3rd parties (not all) and are protected against insolvency of trustee

Question 6

difference between legal proprietary interest and equitable proprietary interests

Answer 6

equitable proprietary interests cannot be enforced against purchaser of legal interest who does not have notice of the trust

Question 7

express trust

Answer 7

deliberately created by a settlor

Question 8

resulting and constructive trusts (aka implied)

Answer 8

arise by operation of law (imposed by the courts)

Question 9

gift on trust

Answer 9

different from a simple gift because settlor creates a new equitable interest for beneficiary

Question 10

perpetuity

Answer 10

duration of trust

Question 11

gift-over clause

Answer 11

trust instruments have mechanism for disposing of any trust property that remains at end of trust period

Question 12

what are the 2 types of perpetuity rules

Answer 12

1) rule against remoteness of vesting
2) rule against alienability

Question 13

remoteness of vesting

Answer 13

rule that a person must obtain a vested interest in the trust property within statutory perpetuity period of 125 yrs (or less if trust says). If interest does not vest within the period it is void

Question 14

rule against inalienability

Answer 14

assets cannot be tied up on trust for longer than common law perpetuity period of 21 yrs (or specified life plus 21yrs)

Question 15

when does rule against inalienability

Answer 15

non-charitable purpose trust, because as statutory perpetuity period does not (rest of trusts are normal)

Question 16

Rule in Saunders v Vautier

Answer 16

beneficiaries can collapse trust by directing that trustee transfers legal title to them or specific person

Question 17

Fixed trusts

Answer 17

trustee knows exactly what each beneficiary is to be given

Question 17

discretionary trust

Answer 17

trustee has discretion over what each beneficiary receives

Question 18

bare trust

Answer 18

trustee does not have active management functions, just holds legal title & has no discretion