6.1 Creations and Requirements of an Express trust

Question 1

Express Trusts are created by?

Answer 1

Created through the express intention of the settlor

Question 2

Name the types of express trusts

Answer 2

bare trusts, fixed trusts, discretionary trusts and interest in possession / life interest trusts

Question 3

How are implied trusts created?

Answer 3

Arise by the operation of law, not the express intention of the settlor unlike an express trust

Question 4

What are the main types of implied trusts?

Answer 4

statutory trusts, resulting trusts and constructive trusts

Question 5

Inter vivos trust means

Answer 5

type of trust that was created during the settlors lifetime

Question 6

Testamentary trust

Answer 6

trust that is contained in the will of the testator and takes effect upon their death

Question 7

What three elements to express trusts require to be valid?

Answer 7

• certainty of intention
• certainty of object
• certainty of subject matter

Question 8

If there is no certainty of intention, what will be created?

Answer 8

The trustee can take the property as a gift free from the trust

Question 9

Certainty of subject matter?

Answer 9

Object within the trust

Question 10

Tangibles are

Answer 10

physical objects

Question 11

For certainty of subject matter, tangibles must be

Answer 11

Segregated from other property of the same type

Question 12

Intangibles such as shares do not need to be (to achieve certainty of subject matter)

Answer 12

Segregated from the other shares where each share is of equal value

Question 13

Certainty of objects

Answer 13

The beneficiaries within the trust

Question 14

Would a trust identifying ‘my friends’ as the object fail for lack of certainty?

Answer 14

Yes. It must always be possible to identify whether a particular person or individual is a member of the class

Question 15

The test for certainty of objects with a fixed trust

Answer 15

Complete list test. Trustees must be able to identify all potential beneficiaries

Question 16

The test for certainty of objects with a discretionary trust

Answer 16

Any given postulant test
Trustee must be able to say with certainty whether a particular person is a member of the class of objects

Question 17

A class of objects must be (in terms of size)

Answer 17

Administratively workable. Cannot be too large that it cannot be worked

Question 18

Where the intention and subject matter is certain but the objects are uncertain, what is the result?

Answer 18

A resulting trust back to the settlor

Question 19

What is an income in possession trust?

Answer 19

Where the beneficiary has entitlement to the net income produced by the trust property or has immediate use of the trust property

Question 20

When the beneficiary enjoys a interest in possession trust for their own life, they are known as

Answer 20

a life tenant and the interest in possession is known as a ‘life interest’

Question 21

Remainderman of interest in possession trust

Answer 21

the residual beneficiary when an interest in possession trust comes to an end

Question 22

What is a discretionary trust?

Answer 22

Trustees are given discretion

Question 23

What is a fixed interest trust?

Answer 23

Trustees have no discretion, the settlor determines precisely the shares and beneficiaries

Question 24

When does a trust become constituted?

Answer 24

When the legal title is transferred to the trustees and becomes vested

Question 25

Equity will not

Answer 25

Assist a volunteer or perfect an imperfect gift

Question 26

An estate in land trust will be created by

Answer 26

a deed

Question 27

A trust based on shares will be created by

Answer 27

A stock transfer form which must be sent to the company's registrar along with the relevant share certificates

Question 28

Exceptions to the rule that equity will not assist the volunteer (4 in total)

Answer 28

1. transferor has done everything in their power to effect the transfer 2. fortitous vesting 3. proprietary estoppel applies 4. there is a gift in contemplation of death (donatio mortis causa)

Question 29

The requirements for the exception to the rule equity will not perfect an imperfect gift: transferor has done everything in their power

Answer 29

1. the settlor must have used the correct method to transfer their property to the trustees 2. the settlor must have done all that they can for the trust to take effect and the failure to complete the transfer is on the part of a third party

Question 30

Unconscionability is another

Answer 30

exception to the rule that equity will not perfect an imperfect gift, where the transferee has acted in reliance

Question 31

Fortious vesting is

Answer 31

an exception to the rule that equity will not perfect an imperfect gift failure to complete the transfer but the transferor holds the legal title

Question 32

Gift in completion of death

Answer 32

donatio mortis causa deathbed gifts are an exception to the rule that equity will not perfect an imperfect gift

Question 33

The settlor is the

Answer 33

Person who creates the trust

Question 34

Inter vivos trust

Answer 34

Translates as in their lifetime

Question 35

is reasonable income a sufficiently certain subject matter

Answer 35

Yes. It is possible to objectively determine a “reasonable income” based on the cost of living and the courts are capable of making an objective determination.