Trusts (Underlying Law)

Question 1

What interest does a beneficiary of a trust have?

Answer 1

An equitable proprietary interest in the trust property

Question 2

What trusts does the rule against remoteness of vesting apply to?

Answer 2

Trusts with people or charities as their objects

Question 3

What trusts does the rule against inalienability apply to?

Answer 3

Consider when advising on
non-charitable purpose trusts

Question 4

What is the rule against remoteness of vesting?

Answer 4

A person or charity must obtain a vested interest in the trust property within a perpetuity period.

This is within 125 years unless the trust instrument expresses a shorter period.

Question 5

What is the effect of a trust which does not vest within the statutory perpetuity period?

The ‘wait and see’ rule

Answer 5

The trust is void.

It need not be clear from the outset of the trust - it subsists until it becomes apparent that the interest cannot vest within the perpetuity period

Anything done with the trust before it becomes apparent will remain valid

Question 6

What can sometimes be used to save a trust failing due to perpetuity?

Answer 6

The class closing rules can operate to exclude objects that might cause the trust to fail because their interest would vest outside the perpetuity period

Question 7

What is the rule against inalienability?

Answer 7

This only applies to
non-charitable purpose trusts.

The perpetuity period is 21 years

It must be clear from the outset that the trust will end within 21 years. In the absence of such an express clause, the trust usually fails.

However, the perpetuity period can be extended by reference to a ‘royal lives clause’ - that time onlt starts running at the death of a named period.

Question 8

What effect does a ‘royal lives clause’ have on a non-charitable purpose trust?

For example, £5,000 to my trustees on trust to maintain my grave for a period not exceeding 21 years following the death of my last surviving descendant of Queen Elizabeth II alive at the date of my death’

Answer 8

The 21 years only starts running at the death of a named person.

Question 9

What three certainties must exist for a valid express trust?

Answer 9

• Intention
• Subject Matter
• Objects

Question 10

What is the requriment that an express trust has certainty of intention?

Answer 10

An express trust is brought into existence by an intention to create it.

The required intention is an intention to impose/assume the duty which is the characteristic of the trust (e.g. hold property for X, or apply for the benefit of X)

Question 11

What is the problem with giving property to X with a “desire” that they make provision for her son?

Answer 11

It fails to show certainty of intention

A desire carries no legal obligation.

Question 12

How is certainty of intention ascertained?

Answer 12

From words spone or written, and conduct.

The courts adopt an objective approach - if X manifests an intention to impose a characteristic of a trust, they intend to create one.

For example, stating over and over again that ‘this money is as much yours as mine’ has been held to objectively give rise to a trust (joint bank account) even if the account holder did not subjectively understand (a) what a trust was; or (b) that a trust could even arise.

Question 13

What impact does the use of the word ‘trust’ have on certainty of intention?

Answer 13

The use of the word is a good indicator of intention

However, it is not determinative.

The use of the word trust/lack of the word ‘trust’ is not conclusive.

Question 14

What is the relevance of Segregation of the Alleged Trust Property for intention?

Answer 14

If there is nothing to indicate that T was to treat the property as separate from her own, that could be a strong indication that no trust was intended.

After all, a feature of a trust is that the trustee is not free to use the property entirely for her own benefit

Question 15

Can a trust be a sham?

For example, D sets up a clear trust but D at all material times regarded all the trust assets as belonging to him and had intended to retain ultimate control.

Answer 15

No.

• Where the real, subjective intentions of the settlor and trustee are to mislead or deceive, the appearance of an express trust conceals the true intentions which do not involve a trust relationship at all.
• In such cases, the subjective intentions of the parties trump the objective appearance of a trust, and the court will find the trust to be a sham.
• It will be considered to be void. Any property transferred will be held on resulting trust for the settlor.

Question 16

What are the two requirments for certainty of subject matter?

Answer 16

1. You can identify the trust property; and
2. You can ascertain the beneficiary’s interest in the trust property

Question 17

Can you declare a trust over property you do not yet have?

Answer 17

No

You cannot declare a trust over property you do not yet have

Question 18

What is the effect of leaving a ‘bulk’ of your estate?

Answer 18

No trust—‘bulk’ too uncertain and fails to satisfy certainty of subject matter if you cannot determine which assets in the residuary estate were part of the ‘bulk’ that was to be held on trust.

Question 19

What does it mean to query whether it is clear upon which property the trust bites?

How does this relate to segregation of tangible physical assets?

For example, wine bottles, gold, diamonds

Answer 19

If property is said to be held on trust (e.g. a bottle of wine) the specific property must be clear.

It is insufficient to have multiple as ‘part of a bulk’ and assume that any could satisfy the condition of certainty.

For example…

• London Wine Co > Wine Company allowed people to purchase wine and they store it. The purchased bottles were not segregated from the rest of the stock. There was no trust since the subject matter of the trust was uncertain.
• Goldcorp > A company dealing in gold had not segregated specific parcels of bullion to the individual purchasers, but held it in bulk and handed certificates of sale to their customers. No trust.

This rule does not change for tangible assets whether the items are fungible (identical and interchangeable) or non fungible (different)

Question 20

D owns 100 tangibe diamonds.

They are non-fungible since they each contain different cuts and qualities.

Does D have to make it clear which diamon is held on trust?

Answer 20

Yes, for certainty of objects, tangible non-fungible items need to be segregated.

If it isn’t clear which exact diamond is held on trust, the trust fails.

Question 21

How are shares treated for certainty of subject matter?

For example, A owns 950 shares in a company with 1,000. A makes an oral declaration of trust in favour of B in respect of 50 shares. Is this void?

Answer 21

No. The trust is not void for uncertainty despite not knowing which exact 50 shares constitute the trust property.

This is because shares are intangible and fungible.

Shares are not separate pieces of property, and so it is nonsense to talk about specifying particular shares in a declaration of trust

Question 22

What happens if a trust fails due to uncertainty of subject matter?

Answer 22

• If A purported to declare himself a trustee, A would remain legally and beneficially entitled to that property as if no declaration had been made.
• If A purported to transfer legal title to uncertain property to B to hold on trust, then the disposition of legal title to B would fail, and A would remain legal and beneficial owner.
• If A transferred certain property to B, but B was to hold an uncertain portion of it on trust for C, then B would hold all the property on resulting trust for A.

Question 23

What is the certainty of objects requirment?

Answer 23

The declaration of trust must make it sufficiently clear who are the beneficiaries or what is the object to which the trust property is to be applied.

The declaration of an object trust will fail if the description of the object to which the trust property is to be applied is too vague to enable the court to enforce it.

Question 24

What is a fixed trust?

Answer 24

A trust under which the trustees are required to distribute the trust property to the beneficiaries in the proportions identified by the trust document.

The trustees have no discretion as to which people are to benefit from the trust and in what proportions

Question 25

What is the certainty of object test for fixed trusts?

Answer 25

Complete List Test

The fixed trust is valid only if it is possible to ascertain the identity of every member of the class (i.e. to make a complete list) of potential beneficiaries.

This requires….

• Conceptual certainty > The precision of language used by the settlor to define the classes of person whom he intends to benefit need to be clear.
• Evidential Certainty > The objects of a fixed trust will be evidentially uncertain if it is impossible to list all the members of the class at the appropriate time. Every member needs to be listed.

Question 26

For the complete list test, is a trust for ‘my old friends’ conceptually certain?

Answer 26

No

A fixed trust for the settlor’s ‘old friends’ in equal shares would be likely to be conceptually uncertain because of so many different interpretations

Question 27

Can a trust for ‘relatives’ be sufficiently certain to satisfy conceptual certainty requirments?

Answer 27

Whilst unclear, the best view is that it is conceptually certain if it refers to “next of kin” or “nearest blood relations” so that a complete list could be formed.

Question 28

If a trust is created for “John” but the settlor knows four John’s, can there be concpetual certainty for a fixed trust?

Answer 28

No since it must be possible to identify the intended John.

Question 29

For the complete list test, what is the ascertainability requirment?

Answer 29

So long as the class is conceptually certain (e.g. we can make a list of everyone), the fact that it may be difficult to ascertain the whereabouts or continued existence of some of its members is irrelevant.

For example, a trust for “nephews and nieces” will not be void if one of the nephews emigrated to Canada and hasn’t been seen for 40 years. So long as the list can be drawn up, they need not ascertain his whereabouts.

Question 30

What is a condition precedent?

Answer 30

If a trust that initially seems conceptually uncertain such as ‘my old friends’ includes a condition such as ‘to allow my any old friends who may wish to do so to purchase any of my pictures” it may be saved.

It is not necessary to draw up a complete list of friends, and any persons who can prove that, by any reasonable test, they were friends of the testator would be entitled to exercise the option.

Question 31

What is a discretioanry trust?

Answer 31

The trustees holds the trust property on trust for member or members of a class of beneficiaries as they shall in their absolute discretion determine.

In that situation, no beneficiary owns any part of the trust fund unless and until the trustees have exercised their power

Question 32

What is the certainty of object test for discretionary trusts?

Answer 32

The Given Postulant Test — it needs to be possible to determine with certainty whether any given postulant is or is not a member of the class.

Question 33

Does the Given Postulant Test (Is/Is Not Test) require conceptual certainty?

Answer 33

The class always has to be conceptually certain.

• Friend are too conceptually uncertain
• Deserving is too conceptually uncertain
• Relatives are conceptually certain indicating common ancestors
• Employees and Children are conceptually certain

Question 34

Does the Given Postulant Test (Is/Is Not Test) require evidential certainty?

Answer 34

This is problematic since the judges in Baden 2 each gave differing opinions.

Sachs LJ is the widley accepted view that “the court is never defeated by evidential uncertainty”

Simply, once the class to be benefited is conceptually certain it then becomes a question of fact to be determined on evidence whether any postulant has on inquiry been proved to be within it.

If someone doesn’t come forward and prove they are in the class, they are not in it.

Question 35

Can a a discretionary trust be void because of administrative unworkability?

Answer 35

Yes

In West Yorkshire it was held that even if one conceded that there was conceptual clarity, a trust with 2.5 million potential beneficiaries is administratively unworkable.

If the class is too wide, a discretionary trust will fail.

This is not a problem for fixed trusts/

Question 36

What is a mere power?

Answer 36

‘Mere powesr’ grant the holder of the power the ability to exercise it, but without any requirement to do so

For example, “‘£100,000 to my trustees to distribute if they see fit to anyone in the world.”

Question 37

What happens if a trust fails due to uncertainty of objects?

Answer 37

If A transferred title to B to hold on trust, and the trust failed for certainty of object, then B would hold that title on resulting trust for A

If A purported to declare a trust over his house for uncertain objects, A would remain legal and beneficial owner of his house.

Question 38

Can a settlor declare a trust without formalities?

Answer 38

Generally, yes - no formalities are required.

Writing, though desirable, is not essential

However, s.53(1)(b) LPA requires that declerations for **trusts of land **have to be manifested and proved by writing.

Question 39

What is the formality requirment for declaring a trust of land?

Answer 39

Section 53(1)(b) applies only to land and requires that a declaration of trust must be manifested and proved by some writing signed by some person able to declare such trust or by his will

The deceleration does not have to be in writing, it only has to be proved in writing

Question 40

What does it mean for a trust of land to be ‘proved’ in writing?

s.53(1)(b) LPA

Answer 40

The necessary evidentiary writing can take the most diverse forms and be provided at any time

It can be a done at any point after the decleration.

For example, a letter written 2 years later is sufficient to satisfy s.53(1)(b) LPA

Question 41

What is the effeect of failing to comply with the evidentiary requirment of writing per s.53(1)(b) LPA for a trust of land?

Answer 41

Non compliance does not make the transaction wholly void but merely unenforceable.

This means the beneficiary can only enforce their rights after the point of writing. However, after this point they can enforce their right and any breaches since the decleration.

For example, A declares a trust in favour of B in May. Signs in December. B cannot enforce their rights until Decemeber. However post-december they can enforce any breaches since May.

Question 42

What if a settlor for a trust of land never manifests and proves it by writing?

s.53(1)(b)

Answer 42

Simply the trust does not become enforceable and the beneficiary will not be able to asser any interest over the land.

However, this is subject to the Principle in Rochefoucauld

Question 43

What is the Principle in Rochefoucauld and how does it impact trusts of land and s.53(1)(b)?

Answer 43

The principle is that equity will not allow a statute enacted to prevent fraud to be used as an instrument of fraud and so the court will allow oral evidence to prove the express trust, despite s 53(1)(b) requiring written evidence.

Despite academic discussion as to how this operates, if oral evidence is accepted to prove the trust of land the following may result…

• Two Party Scenarios: A gives their land to B, for B to hold on trust for them. B denies the existence of a trust. If it is proven that a trust was meant to exist, even without written proof, a Constructive or Resulting Trust will arise.
• Three Party Scenarios: If A declares a trust for C (and declares B as trustee) then if B denies the trust (he gave it me outright) then B holds the land on resulting trust for A, who will then be able to terminate the trust and recover the property (Solomon v McCarthy)

Question 44

What is constitution?

Answer 44

For a trust to be effective, it is not enough simply to declare the trust; it is also necessary to ensure that title to property has been vested in the trustee or trustees.

A trust can be constituted in two ways:

• By declaration of oneself as a trustee or
• By transfer of property to trustees.

Question 45

How is a self declearation of trust constituted?

Answer 45

A self decleration of trust does not require any transfer since the legal title is already vested in the settlor

It is automatically constituted the second the settlor says ‘I hold my laptop on trust for Jim’

Question 46

When does constitution take place for trusts created in a will?

Answer 46

A testementary trust is constituted after the death of the testator when their PRs obtain legal title by way of the will

Question 47

When does constitution take place for lifetime trusts (intervivos trusts) that are not self-declerations?

Answer 47

Legal title must be transferred using the correct method

Question 48

How is a trust for land constituted?

Answer 48

Registered land transfers must be made by deed and registered.

Legal title passes (and the trust is constituted) on registration of the new legal owner.

Question 49

How is a trust of shares constituted?

Answer 49

When the transferor signs the stock transfer form and sends it to the company who enters the new shareholder.

Legal title passes (and the trust is constituted) when the transferee is registered in the companys register of members.

Question 50

How is a trust of choses in action such as money in bank accounts constituted?

Answer 50

They are transferred by notices in writing to the debtor or bank.

Legal title passess (and the trust is constituted) when the bank/debtor recieves notice.

Question 51

How is a trust of chattel constituted?

This includes physical money (cash)

Answer 51

Chattel may be transferred either by (a) deed; or (b) delivery with evidence of intention to transfer.

Question 52

What is the effect of constituting a trust?

Answer 52

The disposition is irrevocable.

Once a trust is constituted, the settlor ceases to have any beneficial or legal interest in the trust property.

The trustee has legal title and holds it on trust for the beneficiary (or if it is a self-decleration, the settlor only has legal title and holds it on trust for the beneficiary)

Question 53

What is the effect of a failed constitution?

Answer 53

If trust property is not vested in the trustee, the trust is void

If legal title has not passed, the settlor can change their mind.

Question 54

What is the rule in Milroy?

Answer 54

Unless A completes the formalities to transfer legal title to B, B will not acquire legal title, and the trust will not be constituted

Question 55

What are the five exceptions to ‘equity will not perfect an imperfect gift?’

Answer 55

• Settlor or donor has done everything necessary to transfer title - Re Rose
• Where it is unconscionable for the transferor to change his mind - Pennington v Waine
• Strong v Bird - the intended donee is appointed the testator’s executor or administrator
• Proprietary estoppel - donee acts to his detriment in reliance
• Donatio mortis causa - a deathbed gift, but fails to transfer property as planned

Question 56

What is the Re Rose exception to Milroy?

Answer 56

Where a settlor has done everything within his power in order to render a transfer effective but something has yet to be done by a third party, the transfer will be immediately valid in Equity.

For example, A wanted to transfer legal title to shares to B. A had executed the share transfer form, and delivered it to B but died before they were registered. Since A did all she could, equity intervened

Question 57

What is the extension of Re Rose principle?

Choithram > Unconscionability

Answer 57

Re Rose principle has been extended to apply even where the settlor or donor had not done everything necessary to effect a transfer of title, but where the settlor or donor had done enough to effect the transfer such that any attempt to deny validity of transfer would be considered to be unconscionable.

Factors indicating ‘enough’ include:
* clearly wanting to make the gift
* executing documents that would have sufficed had they have been handed

Pennington has been applied to cases concering houses with defective TR1 forms.

Question 58

What is the exception deriving from Strong v Bird to Milroy?

Answer 58

Though equity will not help to vest the intended trust property in the trustee , its help is not needed when the property has become vested in him.

When this has happened, equity will enforce the trust, even though it would not have helped to constitute it.

Thius applies if the intended donee is appointed the testator’s executor or administrator

Question 59

What is Donatio Mortis Causa and how does it create an exception to Milroy?

Answer 59

The doctrine may apply where S attempts to make a deathbed gift, but fails to transfer property as planned to the donee.

The gift is regarded in equity as having made a valid transfer, and thus holds the subject matter of the planned gift subject to a constructive trust for the donee.

Question 60

What are the requirments for a Donatio Mortis Causa?

Answer 60

1. Donor must have made the gift in contemplation, though not necessarily in expectation, of their impending death
2. Donor must have delivered to the doneethe subject-matter of the gift, or the means or part of the means of getting at that subject-matter
3. the circumstances must have been such as to establish that the gift was to be absolute and complete

Question 61

What is a successive interest trust?

Answer 61

These involve a series of consecutive interests in the same trust property.

For example, a life interest trust has the life tenant beneficiary (they recieve income during the lifetime) with the remaindermen becoming entitled to the capitcal after the life tenants death.

Question 62

What characterises the objects of a discretionary trust in relation to their beneficial interest?

Answer 62

The objects are only potential beneficiaries

They have no equitable interest in the trust property until the discretion is exercised by the trustees in their favour.

However, they have a right to ensure trustees exercise their powers correctly

Question 63

Compared to mere powers, what characterises a discretionary power?

Answer 63

Imperative wording such as ‘must’ suggest a discretionary trust

‘trustees must exercise their discretion in favour of….’

Powers are characterised by ‘may’ and ‘could’

Question 64

Can a trustee of a discretionary trust choose not to exercise their power?

Answer 64

No. The trustee of a discretionary trust must exercise the power but have distributive discretion such as how to distrubute amongst the class of objects.

Question 65

What is a vested interest?

Answer 65

A current right to property.

Question 66

What is a contingent interest?

Answer 66

The interest is conditional upon the occurrence of an uncertain future event. They become vested if satisfied.

The beneficiary has no entitlement unless and until the condition is satisfied

Question 67

What is the basic rule in Saunders v Vautier?

Answer 67

A sole adult beneficiary of sound mind, with a vested interest in trust property, can direct the trustee to transfer legal title to them, bringing the trust to an end early

Question 68

What is the extension to Saunders v Vautier?

Answer 68

It has been extended to cases involving multiple beneficiaries - not just sole beneficiaries

If each beneficiary has a distinct interest in the trust property, which can be severed without impacting others, they can separately exercise their Saunders v Vautier rights.

For example, a trustee holds £2,000 for A and B in equal shares, to be distributed when they reach 25.
A is 17. B is 18.

Both have a vested interest in the trust fund with a fixed share of £1,000.

B, as an adult, can exercise her saunders right.

A can exercise his saunders right when he turns 18. If he does not, the trustees will hold it until he turns 25.

Question 69

When can beneficiaries with a contingent interest exercise saunders v vautier rights?

Answer 69

Beneficiaries with contingent interests can only exercise their saunders rights if they act together with all the people who share the beneficial interest in the property.

Even if no object has a vested interest, they can be treated as a single object in whom the interest bests so long as they are (a) all adults of a sound mind; and (b) all agree to collapse the trust.

Question 70

What are the two exceptions to the beneficiary principle that trusts need certainty of objects?

Answer 70

1. Charitable Purpose Trusts
2. Non-Charitable Purpose Trusts > ‘Endacott Exceptions’

Question 71

What are the benefits of a charitable trust?

Answer 71

• No need to comply with beneficiary principle
• No limit on duration (they can exist in perpetuity)
• Cy-Pres Doctrine allows trust property to be applied for other chariable purposes even if the specific trust fails
• Tax benefits

Question 72

How can a trust be a ‘non-charitable purpose trust?’

Answer 72

The purpose trust must fall within one of the narrow Re Endacott exceptions

Question 73

What are the 12 heads of ‘charitable purpose’ under the Charities Act that a ‘charitable purpose trust’ must fall within?

Answer 73

• Prevention or relief of poverty
• Advacement of education
• Advancement of religion
• Advancement of health - saving lives
• Advancement of citizenship, community development
• Advancement of arts, culture, heritage, science
• Advancement of amateur sport
• Advancement of human rights or religious, racial harmony and diversity
• Advancement of environmemntal protection
• Advancement of animal welface
• Promotion of efficient armed forces, police, fire, ambulance, rescue services

Question 74

What if a charitable purpose doesn’t fall within one of the 12 heads?

Answer 74

There is a wide additional category (s.3(1)(m)) recognising that some charitable purposes may not be within one of the 12 heads.

Question 75

Can a trust be a ‘charitable purpsoe trust’ if it has a non-charitable incidental or subsidiary purpose?

Answer 75

Yes

So long as the ‘main’ purpose falls within one of the 12 heads, subsidiary and incidental non-charitable purposes to not make the trust ineffective

However, if the purposes can be seperated, the court will sever the trust and attempt to only recognise the charitable part. However, the amount allocated to each purpose has to be quantifiable.

Question 76

What are the three requirments for a charitable purpose trust?

Answer 76

• Be for a chariable purpose (12 heads)
• Satisfy a public benefit test
• Be wholly and exclusively charitable

Question 77

How does the Charities Act public benefit test work?

Answer 77

• The purpose must benefit the public
• Benefit has to be balanced against any detriment to the public
• It must benefit the public or a section of the public - not just a private class of individuals.
• Therefore (a) the possible beneficiaries must not be negligible in number; and (b) the quality distinguishing the class from other members of the community must not relate to a particular relationship with an individual

For example, a trust for the education of children of Tesco employees (100,000 staff) was non-charitable since the ‘benefit’ was defined by reference to the relationship with the employer.

Question 78

Can charities pursue political objectives?

Answer 78

No.

Charities cannot seek to change the law, policy or promote views of a political party.

However, charities can use political means to achieve non-political objectives. For example, a charity set up to protect the environment can conduct political activities to aim to change government policy.

For example, a trust set up by Amnesty to secure the release of prisoners was ineffective since the objective was poltiical - not just the method.

Question 79

What is the cypres doctrine?

Answer 79

Where a charitable purpose trust fails, any surplus funds will be applied to another charitable purpose by way of a scheme established by the Charity Commission or the Court.

Question 80

Is the cy-pres doctrine applicable if there has been an initial failure of a charitable purpose trust?

Answer 80

An initial failure will only givwe rise to the cy-pres doctrine (instead if resulting back to the settlor) if the settlor has shown a general charitable intention.

For example, if someone gave a charitable gift for “£5000 to provide a soup kitchen” but no sutible land could be found to make the soup kitchen, rather than fail - since there is a clear general charitable intention, it could go to benefit sick and poor in the parish.

Question 81

What are the Endacott exceptions for non-charitable purpose trusts?

When can they apply?

Answer 81

These exceptions only apply when a trust is created in a will:

Trust for…
* Maintenance of specific animals
* Erection and maintenance of monuments and graves
* Saying of private masses

These trusts must come to an end within 21 years. However a ‘royal life’ clause may be used so that time starts running from the death of someone.

Question 82

What is a resulting trust?

Answer 82

Property is held on trust for the person who transferred it or contributed to the acquisition

Simply, the equitable interest ‘results back’ to the transferor

Question 83

When will an automatic resulting trust arise?

Answer 83

Where a transfer on trust wholly or partially fails but the property has been transferred to the trustee.

Question 84

When will a presumed resulting trust arise?

Answer 84

In one of two situations:

1. Where a person gratuitously transfers property to another (Voluntary Presumed Resulting Trust); and
2. Where a person pays all or part of the purchase price for an asset (Purchase Money Presumed Resulting Trust)

Question 85

What is an automatic resulting trust?

Provide an example

Answer 85

They arise where there has been failure in the creation of a transfer on trust.

It returns the beneficial interest to the settlor, giving them Saunders Vautier rights to either (a) collapse the trust and keep the property; or (b) re-attempt the intended express trust

For example, A transfers to B for B to hold on trust but fails to identify beneficiaries. The trust fails for uncertainty of objects and the property automatically results back to A.

Question 86

When could an automatic resulting trust arise even if a trust has been validly created?

Answer 86

If it subsequently fails.

For example…
* An private express trust has run for the full 125 years perpetuity period and some property has not vested.
* The purpose of a non-charitable trust can no longer be carried out (e.g. the dog has died) but there are funds remaining

… in both, the property is held on resulting trust for the settlors estate

Question 87

When will a Voluntary Presumed Resulting Trust arise?

Answer 87

A voluntarily transferred property to B without consideration:

The court presumes that A intended B to hold the property on a resulting trust for A

This presumption can be rebutted by B with evidence that A intended an absolute gift.

Question 88

What is a Purchase Money Presumed Resulting Trust and when does it arise?

Answer 88

Where a purchaser…

• A wholly buys property in the name of B, or
• A partly joins in the purchase of property with B but in the name of that B only

it is presumed that the property is held on resulting trust for the purchaser, proportionate to the purchaser’s contribution to the purchase price

The presumption can be rebutted either by:

• establishing that the presumption of advancement applies by virtue of the relationship; or
• by defendant (B) adducing evidence that the claimant intended the defendant to receive the property outright, such as where it was intended to be a gift

Question 89

What is the presumption of advancement and how does it impact a purchase money presumed resulting trust?

Answer 89

When a father gives property to his child or wife, in the absence of any contrary indications, it is to be presumed that he intended a gift, rather than for him to have any beneficial interest in the property.

Simply, if the relationship is one of husband/wife/child then it is presumed that the property should NOT result back.

However, this can be rebutted!

Question 90

Are