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Equity and Trust > What is Equity and Trusts? > Flashcards

What is Equity and Trusts? Flashcards

1
Q

What is Equity?

A
  • Fairness and justice
  • “Gloss” on the common law
  • Enforces those rights and duties not recognised by the common law
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2
Q

What are the Equitable Maxims?

A
  • Equity will not suffer a wrong to be without a remedy
  • Equity follows the law - unless for exceptional reasons
  • He who comes to equity must come with clean hands -> This means they must’ve acted in good favour.
  • Equity will not allow a statute to be used as an instrument of fraud
  • Equity Acts in personam -> Against a person to do something or not do something
  • Equity will not asssist a volunteer - Equity will not help someone unless there is given consideration
  • Equity gives remedy for wrongs and to do this, you can create a motion of trust.
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3
Q

What is the impact of equity?

A
  • It is an Important impact of a trust -> Creates content of a trusts
  • New laws (Trust/fiduciaries)
  • New remedies; A remedy to make one doing something
  • Injunction
  • Specific performance (Someone to do something)
  • Recission
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4
Q

A brief history of Equity

A
  • In medieval times, an action could only be brought if it fell within a writ.
  • The King had discretion to interfere for discretionary releif, which he delegated to the chancellor.
  • In medieval times, the chancer was a religious post, role of chancellor today was a religiion one.
  • This developed into the court of chancery
  • The judicature Act of 1873 and 1875 fused the two systems of law.
  • Equity set a principle called the ‘Equitable maxims.’
  • Conflict of the two systems of work, it was not working.
  • All courts can now do common law and equity.
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5
Q

The Development of the trust

A
  • “Greatest and most distinctive achievement.”
  • Originated with the medieval use - a device whereby A transferred property to B (A good friend?) for the use of C (a third party)
  • Hence a division of ownership - management seperated from enjoyment of property
  • “Use” became “trust” overtime.
  • Common law is blind to the existence of the trust so no remedies available at common law if the good friend failed to carry out the ‘moral’ terms of the arrangement.
  • Resort to chancery for a remedy
  • Equity cannot interfere with the legal title but can ensure the good friend (trustee) complies with his/her obligations
  • Trust is the development to right or wrong
  • Equity cannot change legal ownership and cannot affect who is the legal owner.
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6
Q

What is a settlor?

A

Someone who creates a trust

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7
Q

What is testator/testatrix?

A

Someone who creates a trust by a way of their will.

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8
Q

What is a inter-vivios trust?

A

This is created one alive.

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9
Q

What is Testamentary trust?

A

This is created in a will. A testamentary trust is a trust which arises upon the death of the testator.

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10
Q

What is a trustee?

A

This is one with legal ownership of the property

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11
Q

What is a beneficiary?

A

This is the person who enjoys the company and equitable force if the company doesn’t do their job correctly.

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12
Q

What is a trust instrument?

A

This is a document that creates a trust set out who is a trustee and beneficiary’s.

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13
Q

What is a trust?

A
  • Creation of equity (opposing equitable obligation)
  • No universally accepted definition
  • Equitable obligation.
  • Blinds a person (Trustee) if the trustee don’t do what they are suppose to do then the beneficiary can take them to court.
  • The court can also stop them from doing something which is a remedy of reduction.
    -Deal with property (Trust property). This can be money, shares, items and the right to a debt.
  • For the benefit of persons (beneficiaries) Who may enforce the obligation.
  • Sepeates title to property
    -> Legal title (Trustee)
    -> Equitable title (Beneficiary)
  • Trust is a creation of equity
  • The key feature of a trust is that it seperates who looks after the trust property and who has the benefit of the trust property.
    It separates who has the legal entitlement to property.
  • If a trustee does not behave property as a trustee, then the beneficiary can bring this into action a court of interest.
  • Equity allows the beneficiary owner to legal this force.
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14
Q

Who creates a trust?

A

The person who creates a trust is called a settlor.

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15
Q

Which terminology relates to death?

A

Testamentory trust

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16
Q

What will you be if you put a trust into a will?

A

A testator and testatrix

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17
Q

How would you create a trust?

A

You would have to transfer the legal ownership to the trustee.

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18
Q

Who has a legal interest?

A

A trustee

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19
Q

Who has the legal title?

A

A beneficiary

20
Q

Is it a trust if Sam gives Priyanka £100,000?

A

This is NOT a trust
- There is no beneficiary.
- You haven’t split the legal and equitable interest which is the key to the trust

21
Q

Is it a trust if Jessica gives Alex £100,00 to hold on trust for Lucy?

A

This IS a trust
- It is given to Alex to hold onto
- This is an interval trust

22
Q

Is it a trust if Terrence writes in his will “I will leave £100,000 to Kevin on trust for Bianca” ?

A

This IS a trust
- This is a testamentary trust.

23
Q

What is the role of a trustee?

A

A role of a trustee is managing that trust
- Trustee are on duty to invest it with blind shares.

24
Q

Mr Levinson gave his daughter Cora a lot of money when she married Robert. When Mr. Levinson died, he left his estate to his wife Martha for life, his son Harola in remainder.
Can Martha give Cora more money?

A
  • Martha has a life interest because it says ‘Martha for life.’
  • This is a equitable interest
  • Martha will receive the income and the interest of bank account
  • Martha can only give money from the income because that’s all she is entitled to.
  • Martha cannot give any capital to Cora because capital is the estate, the money .
  • The income is thhe money reduced from that.
    Money receieved is income.
25
Q

What is a vested interest?

A

This is when the beneficiary is already entitled to the interest

26
Q

What is contingent interest?

A

This is the beneficiary must meet a condition to become entitled to the interests (e.g. age, or on their marriage)
- Once the condition is met, the contingent interest becomes vested.

27
Q

What is a intervival trust?

A

This is trusts we create in our lifetime

28
Q

What are private trusts for?

A

They are for specific interest.

29
Q

What is public trust for?

A

This is for charitable trust.

30
Q

What is express trust?

A

This is a person on about what they decide and what they are creating.

31
Q

What are all trusts?

A

They are either fixed or discretionary.

32
Q

What is fixed trust good for?

A

This is when the settlor and testator know how much money they will receive and know what they want to do.

33
Q

To Dalziel to hold on trust for my grandchildren in equal shares.

Is this fixed or Discretionary trust?

A

This is a FIXED TRUST
- Although it did not give a percentage,
- it is on equal amount towards how many grandchildren there is.

34
Q

To Jemima to hold on trust for Lucy 50%, Parveen 25%.

Is this a fixed or Discretionary trust?

A

This is a FIXED TRUST
- It sets out what percentage each child will receive.
- Shares are in percentages.
- It is possible to have a fixed trust without equal shares.

35
Q

To Sophie to hold on trust to pay for my grandchildren’s education in such amount she considers the grandchildren’s need.

Is this fixed or Discretionary trust?

A

This is a DISCRETIONARY TRUST
- It does not state how much each child will receive
It is in the trustee discretion to decide how much each is.

36
Q

What is Co-ownership land?

A

This is where 2 or more own land, they are the equitable owners.

37
Q

What is minors?

A

This is under the age of 18
- cannot own anything, has to be left in trust for them until they reach age of 18.
- Trust is created automatically.

38
Q

What is tax -saving?

A
  • When we died, if the value is over a certain threshold is heavily taxed.
  • Try and avoid tax. Inheritance tax.
  • If you put it in a trust, so you no longer own it so you will be subject to tax
  • Flexible way to provide for family
39
Q

What is secrecy?

A

This is a public document
- Anyone can pay a small fee and see what is in their will.

40
Q

What is pensions?

A

This is income after we retire
- Managed by trustee.
- A trust comes into play when one or more people come into land.

41
Q

What are private trust?

A

They are named individuals or a class of individuals

42
Q

What are public trusts?

A

Trusts to promote a charitable purpose

43
Q

What are the classes of private trusts?

A

Express Trust: Intentionally created by the settlor.
Implied trust: Not created expressly by the settlor but arise by implication or operation of law.

44
Q

What are secret trust?

A

They are created by a will.
- Appear to leave an outright legacy to X but in fact an earlier agreement had been entered into whereby X agreed to hold the legacy on behalf of someone else. Can be a fully secret or half-secret trust.

45
Q

What are the types of implied trust?

A
  • Constructive trusts > Based on the presumed intention of the parties. Arise by operation of law and imposed where justice and conscience require it.
  • Resulting trust > Arise in 2 Main circumstances. Where an express trust fails and property results back to the settlor.
    Where A buys property but registers it in B’s name, B is presumed to hold the property on resulting trust for A (Presumed).

Equity and Trust (6 decks)

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