Untitled Deck

Question 1

What is a trust?

Answer 1

a legal arrangement where one person (the trustee) holds and manages property or assets for the benefit of another person (the beneficiary).

Question 2

Which persons are required for a trust?

Answer 2

• Settlor: creates the trust
• trustee: administers the assets
• Beneficiary: is entitled to benefit from trust

Question 3

Why are trusts created?

Answer 3

• Managing assets for minors (children too young to handle their inheritance)
• Protecting family wealth by ensuring it’s used wisely and for specific purposes (like education)
• Estate planning to manage taxes and pass on wealth efficiently

Question 4

What is a private trust?

Answer 4

It is a trust that is not charitable

Question 5

Who is a settlor in the scope of trust law?

Answer 5

It is the person creating the trust

Question 6

What does inter vivos mean in the scope of trust law?

Answer 6

during the liftime of the settlor

Question 7

in what ways can a settlor create a trust?

Answer 7

in many ways:
* through a trust instrument (in writing)
* through a will (in writing)
* by words
* by conduct

Question 8

How does a court determine whether a trust has been created?

Answer 8

Through construction of the written document, the words or conduct

Question 9

What is a testamentary?

Answer 9

It is a trust created in a will

Question 10

Who is the testator?

Answer 10

the person who created the will

Question 11

Who is a trustee?

Answer 11

He holds the legal title of the trust assets and is under a duty to administer the assets for the benefit of the beneficiaries

Question 12

Who is the beneficiary in the scope of trust law?

Answer 12

The person entitled to benefit from the trust; holds the equitable title to the trust assets and has beneficial interests

Question 13

To create a valid trust, the settlor must ensure that all … certainties are present

Answer 13

three

Question 14

What are the three certainties?

Answer 14

• Certainty of Intention
• Certainty of Subject Matter
• Certainty of Objects

Question 15

What is the certainty of intention (trust law)?

Answer 15

There must be a clear intention by the person creating the trust (the settlor) to establish a trust.

The settlor’s words or actions should show they want the trustee to manage the assets for the benefit of the beneficiary. Phrases like “I wish” or “I hope” might not be strong enough to show a clear intention

Question 16

What is the certainty of subject matter?

Answer 16

The trust property (or subject matter) must be clearly defined.

It should be clear what specific assets or property are included in the trust, so the trustee knows exactly what they’re responsible for. If it’s too vague, the trust might fail

Question 17

What is the certainty of objects?

Answer 17

The beneficiaries (or objects of the trust) must be clearly identifiable.

The trust must specify who will benefit from it, or at least provide a clear group or class of people from whom the beneficiaries can be identified

Question 18

“What does equity looks to the substance rather than the form” mean?

Answer 18

In cases involving fairness (equity), courts prioritize the true intention and purpose behind an action or transaction rather than just its formal structure or wording

Question 19

What are precatory words?

Answer 19

Words expressing confidence, wish, belief, desire, etc.

Question 20

Is the use of precatory words likely to result in the creation of a trust?

Answer 20

No.

There is lack of certainty of intention

Question 21

What does “gift in default of appointment” mean?

Answer 21

In trust law, it refers to a provision made for a situation where someone with a power of appointment fails to exercise that power.

The “gift in default” then specifies who should receive the property or assets if the person with the power of appointment does not make a decision or appointment.

Question 22

Does the usage of the term “trust” create a trust?

Answer 22

It depends on the context.

The court must determine the settlor’s true intention.

Question 23

How can a trust be created through words?

Answer 23

The intention to create a trust must be clear

Question 24

What is the residuary estate?

Answer 24

Everything that is left in a deceased’s estate after:
* all debts have been paid
* all taxes have been paid
* all** specific and non-specific gifts** have been distributed

Question 25

What does "class of beneficiaries" mean in the context of trust law?

Answer 25

There is more than one beneficiary in a trust, but the settlor has not identtified each and every beneficiary (e.g. "my grandchildren")

Question 26

What is a fixed trust?

Answer 26

Each beneficiary is entitled to a specific share of the trust property

Question 27

What is a discretionary trust?

Answer 27

The trustees have a discretion on whether or not to pay any member of a defined class of beneficiaries. --> the beneficiaries have **no automatic right to payment**

Question 28

What is the individual ascertainability test? (trust law)

Answer 28

It is a legal test to **determine whether** the** beneficiaries** of trust **can be identified with certainty**

Question 29

Where is the individual ascertainability test used (trust law)?

Answer 29

In **discretionary trusts**. *Can it be said with certainty that any given individual is or is not a member of the class?*

Question 30

What is conceptual uncertainty?

Answer 30

The **words used by the settlor** to describe the beneficiaries are **too vague for the courts to apply**

Question 31

What is evidential uncertainty?

Answer 31

It is **impossible** to **determine** exactly **who fits the definition of beneficiary** due to **lack of evidence**

Question 32

What is administrative unworkability?

Answer 32

The description used by the settlor is clear, but the **definition of beneficiaries** is **too wide to form a class**

Question 33

What are the three certainties required for a valid trust?

Answer 33

The three certainties are certainty of intention, certainty of subject matter, and certainty of objects.

Question 34

What is 'certainty of intention' in trust law?

Answer 34

It means the settlor must clearly intend to create a trust, shown through words or actions that demonstrate the intent.

Question 35

What are 'precatory words,' and how do they affect trust creation?

Answer 35

Precatory words express a wish or hope but are usually insufficient to create a trust, as they lack the clear intent required.

Question 36

How can 'certainty of subject matter' be achieved in a trust?

Answer 36

The property subject to the trust must be clearly defined, so there is no ambiguity about what is included in the trust.

Question 37

What is the difference between tangible and intangible assets in the context of trust subject matter?

Answer 37

Tangible assets require segregation to be certain, while intangible assets like shares can be part of a trust without segregation.

Question 38

What is 'certainty of objects' in trust law?

Answer 38

Certainty of objects means the beneficiaries of the trust must be identifiable, ensuring they are ascertainable to enforce the trust.

Question 39

What is the 'class ascertainability test' for a fixed trust?

Answer 39

The class ascertainability test requires that all beneficiaries can be listed for the trust to be valid.

Question 40

What is the 'individual ascertainability test' for a discretionary trust?

Answer 40

This test checks if it can be determined whether any given individual is or is not a member of the class of beneficiaries.

Question 41

What happens if a trust lacks certainty of intention, subject matter, or objects?

Answer 41

If any of the three certainties are missing, the trust fails, and the property is usually returned to the settlor or their estate.

Question 42

What is 'conceptual certainty' in trust law, and why is it important?

Answer 42

Conceptual certainty ensures that terms used to describe beneficiaries are clear and unambiguous, allowing the trust to be enforceable.

Question 43

What is 'evidential certainty' in the context of a trust?

Answer 43

Evidential certainty means there is enough evidence to determine who fits the beneficiary description, even if the term is conceptually clear.

Question 44

What is 'administrative unworkability' in trust law?

Answer 44

Administrative unworkability means a trust fails if the class of beneficiaries is too large or vague to be practically managed.

Question 45

What is a 'gift in default of appointment'?

Answer 45

It is a fallback provision ensuring the property goes to specific beneficiaries if the person with a power of appointment doesn’t make a choice.

Question 46

How does the court treat informal words and actions regarding trust intention?

Answer 46

Informal words or actions can show intent to create a trust, as long as the intention is clear and doesn’t rely solely on formal language.

Question 47

What role does 'extrinsic evidence' play in resolving evidential uncertainty?

Answer 47

Extrinsic evidence, like records or documents, can clarify who the beneficiaries are if there is evidential uncertainty in the trust terms.