Unit 2 Flashcards
Declaration of Trust
What is the test for certainty of objects for a FIXED trust?
‘Complete list test’ (IRC Broadway Cottages Trust; OT Computers v First National Tricity Finance)
List must outline all the B’s.
Evidential + Conceptual certainty
What are the formalities for a declaration of trust of land?
Signed writing (s53(1)(b) LPA 1925).
What is the relevance of Knight v Knight?
Lord Langdale said a trust could only come into existence if the 3 certainities were present.
- Certainty of intention on the part of the settlor to create the trust.
- Certainty of trust property & B’s interests (subject matter).
- Certainty as to who B is (objects).
What is Method 3 to create a trust?
(Will)
- Valid declaration of trust.
- Assets automatically vest with personal reps / trustees upon death (will must comply with s9 WA 1837).
What is the certainty of subject matter?
The trust property must be certain – a trust can only exist in relation to specific property (Westdeutsche Landesbank Girozentrale v Islington London Borough Council).
Beneficial interest must also be certain.
What is the certainty of objects?
For a trust to be valid, the identities of the beneficiary(s) must be clear – who will the trust property be transferred to?
B can be described by individual name or class.
Re Adams and Kensington Vestry [1884]
Settlor’s words must impose a duty on themselves / assigned trustee(s) to act as trustee.
Precatory words will not suffice.
What are the other reasons a trust may fail?
Administrative unworkability: discretionary trusts are void if their class of objects are too large (McPhail v Doulton).
Captiousness: no rational reason for creating the trust / rational benefit for the B’s.
What are the conditions a declaration of trust must satisfy?
- Certainty of intention
- Certainty of subject matter
- Certainty of objects
- Beneficiary principle
- Rule against perpetuities
- Declaration in writing if trust over land
Name the 3 methods to create a trust
- in his lifetime, the settlor declares himself a trustee of property for the beneficiary
- in his lifetime, the settlor transfers property to trustee(s) to hold for the beneficiary
- in his will, a testator transfers property to the trustee(s) to hold on trust for the beneficiary
How is a trust for a collection of items treated (subject matter)?
Re London Wine Co (Shipper): trusts invalid due to no segregation and so lacked certainty of subject matter.
Hunter v Moss: in the case of shares, these do not require segregation as they are identical in nature (type and value if for same company).
What is the test for certainty of objects for a DISCRETIONARY trust?
Share of D trusts are dictated by the trustees. Hence, no complete list is required – some B’s may acquire no share in the trust property at all.
‘Any given postulant test’ (McPhail v Doulton).
The trust is valid whether it can be said with certainty the individual is a member of the class of objects. Conceptual certainty.
What is certainty of intention?
S intended to make himself a trustee or assign another individual as trustee of their property they wish to put on trust.
What is the beneficiary principle?
Trusts must be created for the benefit of individuals so there is someone to enforce the trust (Morice v Bishop of Durham).
The trust must benefit the beneficiaries (Bowman v Secular Society).
What is the perpetuity rule?
Trusts cannot last indefinitely as a matter of economic policy (hinders an assets free marketability).
Trusts for indivduals are subject to remoteness of vesting (applied to contingent trusts).
Trust interests must vest within 125 years (from trusts created 6 Apr 2010) - s5 Perpetuities and Accumulations Act 2009.
