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Flashcards in Constitution of a Trust Deck (57)
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What are the three certainties?

Intention, subject matter and objects.


What kind of intention is needed to create a trust?

Imperative wording demonstrating an intention to create a legally binding obligation, rather than precatory language merely indicating moral or family obligations.


What is the test of certainty re subject matter?

Both the trust property and the beneficial entitlement must be clearly defined and identifiable with respect to objective criteria


What is the difference between fungible and non-fungible goods re the test of certainty of subject matter?

Where the trust property is fungible, it is not necessary that the specific property subject to the trust must be capable of identification and specific segregation.


Difference between fixed and discretionary trusts for certainty of objects?

1. Fixed trust - need both conceptual and evidential certainty (complete list).
2. Discretionary trust - need only conceptual certainty (is or is not).


What is the impact of "administrative unworkability"?

Where a trust for conceptual and evidential uncertainty nevertheless fails because it is unworkable - e.g. where the class of objects is too large


When is a power invalid?

If it cannot be said with certainty whether any individual is or is not a member of the class. Okay if it is impossible to ascertain EVERY member of the class.


Who has the burden of proving membership of a class of objects?

The person claiming to be a member


What happens if trust fails for want of certainty?

Becomes a gift to the trustee


What happens if a trust fails for uncertainty of subject matter?

The trust is void; i.e., beneficial title remains with the settlor since no valid conveyance.


What happens if a trust fails for uncertainty of objects?

Trustee holds on resulting trust for the settlor.


Difference between inter vivos and testamentary trusts re formalities?

Inter vivos - informal unless other specific formalities apply (e.g. trusts of land)
Testamentary - must be in writing, signed by testator and attested to by two witnesses (S.9 Wills Act)


Effect of oral declaration of trust over land?

Trust is unenforceable, but will be valid if evidence in writing post-declaration (backdated to date of declaration)


Necessary formalities for disposition of a pre-existing interest? Effects of non-compliance?

Must be in writing signed by the disponent or an agent with authority to do so. Disposition will be VOID.


2 exceptions to the requirement for signed writing for disposition of a pre-existing equitable interest (Vandervell 1; and Neville v Wilson)?

Where the beneficiary can collapse the trust under Saunders v Vautier and transfer the trust property directly - then an oral instruction to transfer the title to a third party will still be valid.
Where the beneficiary contracts to assign an equitable interest - provided this complies with Walsh v Lonsdale, there will be a constructive trust in favour of the transferee, falling within S.53(2).


What is the difference between declaration and constitution?

Declaration = declaration of beneficial interest, which splits the legal and beneficial ownership.
Constitution = properly vesting legal title in the trustee,. An improperly constituted trust will be void and unenforceable, for equity will not perfect an imperfect gift.


Three ways to constitute a trust?

1. Transfer of legal title
2. Self-declaration of trust (no constitution since legal title does not move)


If the donor intended an absolute gift, but failed to effectively transfer the property, what happens?

No gift and no trust.


If the settlor intends to create a trust by transfer, but fails to vest the legal estate in the
trustees, what happens?

No trust.


Formality for constitution of trust over land?

Must be by deed (S.52(1) LPA 1925) - (i) deed by name; (ii) writing; (iii) signed; (iv) witnessed; (v) delivered; and (vi) registered


Formality for constitution of trust over shares (3 steps)?

S.1 Stock Transfer Act -
1. Sign stock transfer form
2. Send form to Companies Registrar with the relevant share certificates
3. Registration of transferee as new shareholder (then title transfers)


Formality for constitution of trust over chattels (2 steps)?

1. Deed of gift or
2. Actual delivery + intention to transfer


Formality for constitution of trust over an equitable interest?

Must comply with S.53(1)(c) LPA 1925 - signed writing at the time of the disposition, by the disponent


Formality for constitution of a trust over a chose in action?

Transfer must comply with S.136 LPA 1925 - in signed writing with written notice to the debtor


Exception in Re Rose to the rule that equity will not perfect an imperfect gift?

Where the transferor has used the correct form of transfer and has done everything in his power to perfect the transfer such that the remaining steps are beyond his control (i.e. gift must be irrevocable)


Apply Re Rose to registered land?

Once all executed documents are stamped and handed to transferee, the gift is complete in equity even before registration


Exception in Strong v Bird to the rule that equity will not perfect an imperfect gift?

(i) when the donor intends to make a gift during his lifetime
(ii) but fails to vest the legal title in the donee, the gift may still be perfected if
(iii) legal title fortuitously becomes vested in the donee because he becomes executor of the deceased donor's estate,
(iv) provided that the donor had a continuing intention to make the gift up until his death.


When will proprietary estoppel give effect to an imperfect gift?

Where there has been a sufficiently clear and unequivocal representation, relied upon to the detriment of the representee, so that it would be unconscionable to go back on the representation


Four requirements for the donatio mortis causa exception to apply?

1. Gift is made on contemplation of death which the donor believes to be imminent
2. Gift conditional upon death and
3. Actual or constructive (e.g. handing over title documents) to the donee,
4. then the death of the donor is sufficient to perfect title PROVIDED delivery is sufficient to transfer title.


What is a covenant to settle and when is it enforceable?

A promise to create a trust before the trust is constituted - enforceable if supported by consideration and therefore a binding contract