Updated_Trusts_and_Equity_Flashcards
What is equity?
Equity is a flexible system designed to mitigate the rigidity of common law, focusing on fairness, justice, and discretion, operating on the conscience of the legal interest holder (e.g., Westdeutsche Landesbank v Islington).
Name two maxims of equity.
- Equity will not perfect an imperfect gift (Strong v Bird).
- Equity follows the law (Re Diplock).
What is a trust?
A trust is a relationship where property is held by a trustee for the benefit of a beneficiary, splitting the legal title (trustee) from the equitable title (beneficiary).
What are the types of trusts?
- Express Trusts: Intentionally created (fixed or discretionary).
- Implied Trusts: Includes resulting and constructive trusts.
What are the three certainties required to form a valid trust?
Certainty of intention, certainty of subject-matter, and certainty of objects (Knight v Knight).
What is the difference between a fixed trust and a discretionary trust?
Fixed Trust: Beneficiaries and their shares are predetermined (IRC v Broadway Cottages).
Discretionary Trust: Trustees have discretion in distributing assets (McPhail v Doulton).
What is the significance of Re Rose in trust constitution?
It established the ‘Every Effort Principle,’ where a trust is valid if the settlor has done all they can to transfer legal title, leaving only third-party actions outstanding.
What is the rule against perpetuities?
A legal rule limiting the duration of trusts to ensure property is not tied up indefinitely, typically for a maximum of 125 years under modern UK law.
What does the case Pennington v Waine illustrate?
Equity may uphold a gift if revocation would be unconscionable, even if legal formalities are incomplete.
What is the ‘beneficiary principle’?
A trust must have ascertainable beneficiaries to be valid, ensuring enforceability (Re Endacott).
What are express trusts?
Trusts intentionally created by the settlor, either inter vivos or testamentary.
What is a discretionary trust?
A trust where trustees have the discretion to decide how to distribute assets among beneficiaries.
What is a resulting trust?
An implied trust arising when an express trust fails or when property is not entirely disposed of (e.g., Vandervell v IRC).
What is a constructive trust?
A trust imposed by equity to address unconscionable conduct, such as in Keech v Sandford.
What is the ‘is or is not’ test?
A test used in discretionary trusts to ascertain whether an individual is within the class of beneficiaries (McPhail v Doulton).
