Unit 1 Flashcards
Legal owner
(Trustee) holding the title to the asset
Equitable owner
Beneficiary
When can we encounter trusts?
Created in lifetime - inter vivos
Created by settlor
Set in deed
Capital money
They cannot have it until they die
Income money
Interests, dividends from shares rent from investment property can spend whenever
Express trusts
When someone expressly set out to achieve a trust
Fixed trusts
Split money equally between a fixed number of people, clear instructions and fixed range of beneficiaries
Discretionary trusts
Gives instructions on how to split but split in own discretion
Bare trust
Holding someone else’s money but still their money (stock brokers)
Tinsley v Milligan
- Two women in business together also partners
- sold a business or property (had joint money)
- Bought a new property with both their money but only in tinsleys name to make it look like Milligan did not own any
- they separated and Milligan panicked she would have no claim
- equity recognised she contributed to half the purchase price so entitled to half the house
Formalities required for transfer of assets (inter vivos) land
LPA 1925: requires a deed
Law of property miscellaneous provisions ac 1989 s1: (a) document to be a deed and (b) person making the deed signs the document in the presence of a witness.
LRA 1925 ss.19 and LRA 2002 s.4: registration of transferee as the new proprietor of the land now required in all cases
From July 2020: HM land registry accepts witnessed electronic signatures
Formalities for transfer of assets (company shares)
Stock transfer Act 1963 s.1: delivery of share certificate plus signed stock transfer form (CREAT electronic transfer system without this paperwork but only for some public quoted company shares. CREST users are usually stockbrokers)
Formalities for transfer of assets (banknotes, chattels)
Thomas v Times Book Co Ltd 1966
Area of law concerned: incomplete gift
Facts: Dylan Thomas delivered the manuscript to cleverdon at his office in the BBC. Thomas due to fly to USA and wanted bid Manuscript. He got it but lost it and the next day cleveredon gave him 3 copies. Poet was grateful and said that cleverdon could keep it if he found it and he found it in a pub and retained until 1961 when he sold to cox.
Thomas died in USA and letters of administration were granted to the plaintiff in this action the plaintiff made a settlement of the copyright’s in dylan thomas works.
Plaintiff said gift fails on both intention and delivery.
Held: there was delivery and gift was established.
Re Cole 1964
Man buys new home and furniture and tells wife it’s all hers. Remains in his name. Debtors come to collect it as being part of his property.
Gift of Chattels cannot be perfected by showing them to a donee and stating words of a gifts 3 requirements for a gift:
1. Intention
2. Delivery
3. Acceptance
Principle in irons v small piece
“By the law of England, in order to transfer property by gift there must be either a deed or instrument of gift or there must be an actual delivery of the thing to the donee.” Needs to be provable intention to make a gift and there must be delivery.
Jaffa v Taylor gallery Ltd 1990
Chattels can be transferred through physical delivery or by deed if physical delivery is not viable
LPA 1925 s.53 (1) (c)
A disposition of an equitable interest of trust subsisting at the time of the disposition of the same or by his agent thereunto lawfully authorised in writing or by will
Ignore
Three ways a settlor can benefit another:
1. Outright gift
2. Transfer to trustees
3. Declaration of self as trustee
Failed gifts cannot be classed as a declaration of trust
Milroy v Lord
No equity to perfect an imperfect gift.
Settlor made a deed to transfer 50 shares in the bank of Louisiana for mr Lord to hold on trust for Eleanor medley.
Settlor handed relevant share certificates to L
However shares never registered in L’s name by the bank as he failed to hand over the deed of transfer and share certificates to the bank
Registration required under company law for legal title in shares to be transferred
When settlor died the shares remained in his name
M sought to argue that the shares had been held on trust for L who then held such beneficial interest on a sub trust for herself.
Legal and beneficial title remained with settlor.
Turner LJ IN MILROY V LORD
Equity will not perfect an imperfect gift
To perfect a gift the transferor must do everything necessary according to nature of the property.
May be gifted in one of three ways:
1. Transfer of absolute title
2. Transfer to a trustee
3. Settlor declaring himself as trustee
Saunders v Vautier 1841
An adult beneficiary of a trust who is of sound mind and is entitled to the whole beneficial interest can direct the trustees to transfer the trust property to him or her. Trust will then be terminated
- testator left east India company shares in his will to trustees to accumulate the dividends until son vautier turns 25 upon which the trustees shall transfer the capital and dividends to him.
- vautrier at 21 sought a transfer of entire trust fund to himself.
HELD: vautier entitled to have entire trust fund transferred to him
Lord cottenham in Saunders v vautiers
Where a legacy is directed to accumulate for a certain period or where the payment is postponed the legatee of he has an absolute indefensible interest in the legacy is not bound to wait until the expiration of that period but may require payment the moment he is competent to give a valid discharge
Paul v Constance
There is no need for explicit words or even knowledge of the trust being created for there to be common intention to create a trust.
T separated from wife (D) and went to live with another woman (C)
T deposited money including both his and C’s bingo winnings in an account in his name from which C would also withdraw money
T told C money is as much yours as mine
When T died D claimed money in the account passed to her by intestacy
Court held:
T had created a trust over the account in favour of C
Re Rose 1952
A gift is perfected when donor has done everything in his power to make the transfer.
Rose sought to transfer shares to wife before died to avoid estate taxes
R executed share transfer form and delivered form with the share certificate to his wife.
The company delayed registering the shares in his wife’s and thus the shares remained in R’s name when he passed.
The internal revenue sued Rs eatate fir estate tax
Held. Shares are held on trust for his wife so not liable for tax.
Pennington v Waine
A donor does not need to do everything in his power for equity to perfect an imperfect gift if to recall the gift would be unconscionable.
Ada crampton (AC) intended to transfer the shares to her nephew Harold (H)
AC failed to hand over the share transfer form to the company secretary who is tasked with the registration of the share transfer but handed it over to the auditor who as agent of AC neglected to pass it to the company secretary
Ac passed away.
The shares were held on constructive trust for H.
Grey v IRC
A direction to trustee to hold on trust for another constitutes a disposition of a subsisting equitable interest within s53(1)(c) LPA 1925.
Held: the transfer occurred by oral declaration
Viscount simmonds: direction by mr hunter is a dispotuin if disposition in s53(1)(c) is to be given its natural meaning of a transaction whereby a beneficiary who has beneficial interest at beginning of transaction no longer has it at the end of the transaction
It is contended by appellants that the word disposition be given a narrower meaning and be read as if it were synonymous with grants and assignments and thus does not cover this base but there is no justification for such a narrower meaning.
Vandervell v IRC 1967
HL held that s.53(1)(c) didn’t apply where beneficial Owner who was solely entitled instructed the trustees either to regard to both the legal and equitable interest as was the case when vandervell instructed bank to transfer shares to royal college of surgeons.
That is the important part of the decision for formalities.
HL held vandervell still had to pay the tax as if the shares were still his anyway as he provided for an option for the shares to be bought back from the college.
