Trusts/Wills: EXTRA Flashcards
Certainty of objects: 2 tests for different types of trust
i. For fixed interest trusts: complete list test
ii. For discretionary trusts: any given postulant test
Certainty of objects: elements of complete list test
Must be possible to draw up complete list of every beneficiary
If Bs are class of people, need:
1. Conceptual certainty-description of class clear and objective
2. Evidential certainty-have evidence to identify all Bs that will benefit
Certainty of objects: elements of any given postulant test
Administrative unworkability-will be if so hopelessly wide as not to form anything like a class (depends on size of trust)
Capriciousness-will be if no rational reason for trust/no rational basis on which trustees can exercise discretion to distribute trust prop
Certainty of subject matter: requirements
i. Clear, specific description of trust property (Groups of objects must be described unless identical and intangible (ie. Shares NOT wine))
ii. Certainty/description of beneficial interest in that property (unless trust made for group then shares assumed equal)
What property passes outside the will/intestacy?
- Joint property (survivorship)
- Life Insurance policy for named B
- Pension benefits for named B
- Equitable interest in trust prop (passes under terms of trust)
When does the presumption of knowledge and approval not apply even though theres due execution and capacity? (4 situations)
Blind
Illiterate
Hasn’t signed personally
Suspicious circumstances
How can a contents of a will be challenged via intention
- Force/fear (via actual/threatened injury)
- Fraud (eg. After being misled by pretence)
- Undue influence (where freedom of choice overcome by intolerable pressure (ie. Coercion not persuasion)
- Mistake-all/ part of the will was included by mistake
Intestacy: what is NOT included in the personal chattles a spouse will get
Money/securities for money thats solely a business investment
Intestacy: how long must a spouse/civp survive the intestate to get anything form their estate
28d or estate passes as though they’ve predeceased
Do witnesses of a will have to sign in each others presence
no, just the testators
5
How can a gift in a will fail?
- Uncertainty
- B witnesses will
- Divorce/dissolution
- Ademption (no longer have prop/not substantially the same)
- Lapse (B dies)
When can extrinsic evidence be used to est testators intention
to INTERPRET will insofar as its ambiguous, meaningless or ambiguous in the circumstances
Can a court rectify/rewrite a will?
Can rectify NOT rewrite if will fails to carry out intention because of:
1. clerical error
2. failure to understand instructions
When is the court is likely to find that revocation was conditional on the substitute wording taking effect?
Where the testatrix adds substitute wording
If a testator uses ‘my’ to describe an object of a gift in a will, what can the court do?
court could interpret this as meaning the gift is of the prop which the testator owned at the date of the will
When can reconstruction of a destroyed will be effective?
if it was destroyed by mistake/accident
Elements of common intention constructive trust
- Common intention
a. Express
b. Inferred (Direct contrib to purchase OR significant contribution to mortgage payments
OR Indirect payments of household expenses enabling mortgage to be paid) - Detrimental reliance
a. Express
b. Inferred: conduct will show detriment
For a common intention constructive trust: what counts as detrimental reliance?
EXPRESS: paying mortgage, improvements, domestic if substantial
IMPLIED: conduct will show (if FINANCIAL only)
Difference in courts approach to quantifying beneficial interest under resulting, common intention constructive and proprietary estoppel?
- RESULTING: proportionate to financial contribution
- CICT: what was intended OR if cant be ascertained, what would be fair having regard to the whole course of dealing
- PE: reasonable in all the circumstances, considering assurances made, nature of detriment sustained from reliance on those assurances.
In the absence of express trusts, how are trusts of the family home usually determined
Common intention constructive trust
Is it possible for a beneficiary to be appointed an agent of the trust?
No
Issue to consider when investing trust fund in bonds?
Many bonds viewed primarily as income- producing investments, with little capital growth so may favour life tenant if JUST invest in bonds
What are NOT classed as an investment (for a trust fund)?
○ ‘Run around’ car-decreases in value
○ Betting on horses
○ Unsecured loans (unless trust doc permits)
When does the 6 year time limit for bringing a claim for breach of trust run for a beneficiary whose interest is in remainder?
From when their interest falls into possession
When does the 6 year time limit for bringing a claim for breach of trust run for a minor beneficiary?
When they turn 18 (or when the life tenant dies if their interest is in remainder)
What is accessory liability?
A breach of trust, which the defendant assisted, the defendant acting dishonestly (the test for dishonesty being objective).
What is included in the ‘probate value’ of the estate
Only property vested in the PRs LESS debts/funeral expenses
Exceptions to incorrect constitution of trust
- EVERY EFFORT TEST: passed point of no return
- STRONG V BIRD:
*Intended to make immediate unconditional lifetime transfer
*Intention continued to death
*Intended trustee acquired title by becoming PR - UNCONSCIONABILITY: Settlor declares themselves one of may trustees but fails to transfer title to others, unconscionable to not make others trustees
Meaning of ‘adeems’
Asset no longer available
Meaning of ‘lapse’
Beneficiary no longer avaliable
When does the will ‘speak from’?
General rule: Date of death
If use “My” and asset is capable of being added to/subtracted from=speaks from death
If use “My” and asset is a singular asset=speaks from date of execution of will
When does the presumption of resulting trust not apply?
When presumption of advancement applies instead
Voluntary transfer of land
How can a trustee retire
- Express in trust instrument
- Without replacement if:
By DEED
Co trustees consent in deed
Leave 2 remaining (or 1 corp) - With replacement appointed in writing by person nominated in TI/continuing trustees
4 ways for trustee to be removed/REPLACED
- Trust instrument
- REPLACEMENT IN WRITING by person in Ti/continuing Ts/PR of last remaining IF dead, outside UK over 12mo, retire, refuse/cant act, minor
- REPLACEMENT BY COURT APP by Bs/Ts: if inexpedient, difficult or impractical w/o court assistance and in trusts bests interest
- Written letter by Bs if Sanders v Vauteier
AND trustees rights protected
AND leave 2
AND someone else replacing OR other trustees consent
4 ways for new trustee to be appointed
- Trust instrument
- In writing by person in Ti/continuing Ts/PR of last remaining IF not over 4 once appointed
- Court app by Bs/Ts: if inexpedient, difficult or impractical w/o court assistance and in trusts bests interest
- Written letter by Bs if Sanders v Vauteier
Trustees duties when running trust
- Act impartially between Bs
- Act personally in the running and take decisions unanimously
- Exercise discretions properly
In good faith
rationally
for purpose created
regarding all relevant matters/not irrelevant ones
regarding any legit expectations of Bs
What are fiduciary duties?
Of good faith inc:
1.No conflict rule
2. No income rule
What are 7 breaches of fiduciary duty
- Self dealing
- Competition with trust business
- Remuneration of trustees
- Retaining commission
- Retaining dir salary
- Using info/opportunity
- Fair dealing rule (buying Bs interest, undue influence presumed)
Exceptions to rule against self dealing/remuneration
- Express in trust instrument
- Court order
- All sui juris Bs give fully informed consent
- Remuneration: professional, more than 1 T and others agree in writing
Are trustees liable for defaults of attorneys or agents?
Attorneys: YES
Agents: No unless breached personal duties in appointing agent
How is an agent appointed
Select suitably qualified person
In writing
Give written policy statement
Keep arrangement under review
When can a trust fund be invested in a loan?
If secured on land
What is the nature of trustees liability between eachother?
Jointly and severally liable
No vicarious liability
Trustee defences to personal claim
- Exemption clause in TI
- Knowledge and consent of all Bs if over 18
- Acted honestly and reasonably
- Limitation (6y) and latches (C delayed claim)
Types of personal claims against 3rd parties
- Intermeddling
- Recipient liability: receive prop in breach of trust, for own benefit, requisite degree of knowledge
- Accessory liability: breach of trust, 3rd party positively assisted, dishonesty (objective)
Types of proprietary claims against 3rd parties
- Equities darling: no claim
- Innocent volunteer:clean sub= prop claim, mixed sub=proportionate share, mixed acc: Clayton and Barlow
- Wrongdoer/guilty receipt: same tracing rules as trustee
what does s33 WA provide?
Unless a contrary intention is shown, where a will contains a gift to the testator’s child and that beneficiary dies before the testator, leaving issue of their own who survive the testator, the gift does not lapse but passes instead to the beneficiary’s issue
Effect of a codicil
Republishes the will at the date of the codicil
What statutory powers do PRs have in relation to appropriating assets
Can appropriate any assets in estate in/towards satisfaction of any legacy or interest in residue provided it doesn’t prejudice any beneficiary of a specific legacy
Must get consent of legatee to who assets are appropriated
What are the rules regarding PRs and self dealing?
Fiduciary duty
Avoid conflict between duties as PR and personal self interest
Eg. CANT buy property from the estate
