UK Contract and Trust Legislation Flashcards
If they do not have capacity the contract could be?
Void - the contract is unenforceable
Voidable - the contract cab continue in force unless and until one of the parties decides that they do not want to be bound by it.
What are ways an individual can lack capacity to contract?
- Under 18
- Bankruptcy
- Mentally Incapable
- Drunk
POA - There are specific, general and lasting POA. Which one doesn’t get revoked if the person becomes incapable?
Lasting
Who looks after your will?
Personal Representative
Executor - Obtain grant or probate from valid will
Administrators - Obtain letters of administration from courts (no valid will)
What is a deed of variation?
When the beneficiary has been left money but decides they want to give it to someone else eg. Kids. Has to be done in 2 years after death.
When a will is deemed invalid what happens?
A letter of administration is written.
What happens if someone dies without a valid will?
Dying intestate if you have a spouse and no kids, the spouse gets it all. If you have children some goes to them too.
What are the two types of property and give an example?
Real Property - land and buildings
Personal Property - Chattels (personal possessions)
What is the difference between joint tenancy and tenants in common?
Joint tenancy - on the death of one party, total ownership goes to the other.
Tenants in common - On the death of one party, ownership goes to the beneficiary.
What is an alternative to bankruptcy?
Inability to pay debts does not have to lead to bankruptcy, they can file an IVA Individual voluntary arrangement.
What is the main difference with bankruptcy and insolvency?
Bankruptcy is an individual and insolvency is about a company.
Insolvency doesn’t have to lead to liquidation, what can you do instead?
- Informal arrangement
- Company voluntary arrangement (CVA)
- Administration
How much debt is needed to make a bankruptcy order?
Anything in excess of £5000
Name the 3 ways trusts can be created?
Deed
Will (on death)
Statute (on death, but with no will. Sometimes if joint tenants)
What are the duties of trustees? Name 4
- Comply with terms of trust
- Take control of the trust property
- To act impartially between the beneficiaries
- Duty to keep accounts
- Duty to provide information
- Duty of care (common law, statutory duty of care - Trustee act 2000)
Name the 3 types of beneficial interest.
- Absolute vested interest
- Life interest
- Remaindermen
What is Remainderman?
The beneficiary will receive the capital of the trust fund on the death of the life tenant.
What is a reactive protector?
Reacts to the actions of a trustee.
What is a proactive protector?
Take initiative and instigate actions.
What does a protector do?
Overseas the trustee and makes sure they are acting in the benefit of the beneficiary.
What is a Bare trust?
There is a named trustee as a nominee only. Thay take legal control until the beneficiary wants access to the assets. They do have to be 18 years old.
Who might use a Bare trust?
Grandparents may use for grandchildren. (grandchildren can gain access at 18)
What is an interest in possession trust?
Life interest trust .-
Life tenant - If you name spouse as life income, they will gain all the income of the portfolio until she dies. The capital however remains the same.
Remainderman - receives capital when life interest ends
Often property gets puts in. Life interest get to live in the property but can’t sell it. When the life interest ends the remainderman gets the property and can sell it.
What is a power of appointment trust?
A trust which allows the trustee to appoint beneficiaries and vary the terms of the trust.
Commonly used for life assurance policies written in a trust as it minimises Inheritance charges.
