Beneficial Entitlement

Question 1

The Beneficiary Principle

Answer 1

• A trust must have a beneficiary, this is because the beneficiary is the person who is able to hold the trustee to account
• If there is no enforceable obligation, the trustee can do what they want = not compatible with notion of a trust.

Question 2

Exceptions to the beneficiary principle

Answer 2

• Charitable and non-charitable purpose trusts.

Question 3

Certainty of objects

Answer 3

• Objects of a trust = beneficiaries
• Needs to be certainty as to objects.
• Court cannot enforce obligations if they are not clear.

Question 4

Fixed Trust

Answer 4

• A trust in which the entitlement of the beneficiaries is fixed by the settlor
  A fixed interest trust

Question 5

Discretionary Trust

Answer 5

• A trust under which the trustees have a discretion to distribute betweeen objects of the trust.

Question 7

Fixed trust overview

Answer 7

• Equitable proprietary rights.
• These rights are assets which are capable of sale or other forms of transfer and can be asserted aginst third parties.
• eg if trustee gives away trust property, beneficiary can assert their equitable rights agaisnt the new legal owner.
• Rights may be vested (have a current right), or contingent (right is conditional)

Question 8

Discretionary trust

Answer 8

• Objects of a discretionary trust do not have proprietary rights
• Until discretion is exercised, discretion may be exercised in favour of any object.
• Cannot assert their rights against third parties
• Although they do have sufficient interest in trust proeprty to compel its return to the trust fund.