Creation and Requirements of Express Trusts Flashcards
Which of the following is NOT a method of creating an express trust?
A) Self-declaration of trust
B) Transfer on trust
C) Resulting trust
D) Testamentary trust
(C):
A resulting trust is not an express trust; it arises by operation of law.
Explanation:
Resulting trusts occur when there is a failure of an express trust or where property is transferred without clear beneficial ownership.
What happens to legal title in a self-declaration of trust?
A) The settlor transfers legal title to a trustee
B) The settlor retains legal title but holds it in a different capacity
C) The settlor loses all rights in the property
D) The trustee gains both legal and beneficial title
(B):
The settlor retains legal title but holds it in a different capacity as trustee.
Explanation:
In a self-declaration, the settlor remains the legal owner but now holds the property in trust for the beneficiary.
Which of the following is NOT required for the creation of an express trust?
A) Certainty of intention
B) Certainty of subject matter
C) Registration with HMRC in all cases
D) Certainty of objects
(C):
Registration with HMRC is only required for certain trusts (e.g., taxable trusts), not all express trusts.
Explanation:
The three certainties (intention, subject matter, and objects) are fundamental to all express trusts.
What is the main purpose of the “beneficiary principle” in trust law?
A) To ensure the trust is created for a valid charitable purpose
B) To provide trustees with complete discretion over trust property
C) To ensure there is someone who can enforce the trust
D) To allow non-charitable purpose trusts to exist freely
(C):
To ensure there is someone who can enforce the trust.
Explanation:
A trust without identifiable beneficiaries (except charitable trusts) may be invalid because there is no one to enforce its terms.
Alex declares, “I hold my house on trust for my son, Ben.” What type of trust has Alex created?
A) A resulting trust
B) A constructive trust
C) A self-declaration of trust
D) A transfer on trust
(C):
A self-declaration of trust, as Alex retains legal title but holds it in trust for Ben.
Explanation:
Since Alex still holds legal title but has separated equitable ownership for Ben, this is a self-declaration.
Sophie transfers shares to Tom, instructing him to hold them for Lisa. Which method of trust creation is this?
A) Self-declaration of trust
B) Transfer on trust
C) Resulting trust
D) Constructive trust
(B):
Transfer on trust, as legal title is transferred to a third-party trustee (Tom).
Explanation:
In a transfer on trust, the settlor (Sophie) transfers legal title to a trustee (Tom) for a beneficiary (Lisa).
James writes in his will, “I leave my house to my brother on trust for my children.” What type of trust is this?
A) Inter vivos express trust
B) Testamentary trust
C) Constructive trust
D) Resulting trust
(B):
A testamentary trust, as it is created through a will.
Explanation:
Trusts in wills take effect upon the settlor’s death and must comply with the Wills Act 1837.
Emily intends to transfer land into trust for charity but fails to use a deed. What is the legal consequence?
A) The trust is valid
B) The trust is void for lack of proper formality
C) The trust will be upheld under equity
D) The trust is automatically registered
(B):
The trust is void for lack of proper formality, as land must be transferred by deed.
Explanation:
Under s52(1) LPA 1925, land transfers require a deed to be valid.
Which case established that “equity will not perfect an imperfect gift”?
A) Jones v Lock
B) Milroy v Lord
C) Paul v Constance
D) Richards v Delbridge
(B):
Milroy v Lord established the principle that equity will not perfect an imperfect gift.
Explanation:
This case confirmed that a trust must be fully constituted, and equity will not step in to complete a defective transfer.
A valid express trust requires certainty of intention. Which statement best describes this requirement?
A) The settlor must make an explicit statement of their wishes
B) The settlor’s words or conduct must indicate an intent to create a trust
C) The trust document must always be in writing
D) The settlor must sign a formal trust deed
(B):
The settlor’s words or conduct must indicate an intent to create a trust.
Explanation:
Certainty of intention does not require a written document in all cases but must clearly show an intent to separate legal and equitable ownership.
Which type of trust is automatically constituted upon its creation?
A) Testamentary trust
B) Self-declaration of trust
C) Transfer on trust
D) Resulting trust
(B):
Self-declaration of trust, as legal title does not need to move.
Explanation:
Because the settlor is already the legal owner, the trust is valid as soon as they declare themselves trustee.
Which statutory rule limits the maximum duration of a private trust?
A) The Rule Against Perpetuities
B) The Charities Act 2011
C) The Trustee Act 2000
D) The Wills Act 1837
The Rule Against Perpetuities limits private trusts to 125 years.
Explanation:
This rule ensures that private trusts do not last indefinitely.
In Paul v Constance, which principle was upheld?
A) Equity will not assist a volunteer
B) A trust can be created without formal language if intention is clear
C) A failed gift cannot be treated as a self-declared trust
D) A secret trust must be proved by clear evidence
(B):
A trust can be created without formal language if intention is clear.
Explanation:
In Paul v Constance, the phrase “this money is as much yours as mine” showed an intention to create a trust.
Which type of trust does NOT require identifiable human beneficiaries?
A) Private express trust
B) Charitable trust
C) Bare trust
D) Discretionary trust
(B):
Charitable trusts do not require identifiable human beneficiaries.
Explanation:
Charitable trusts are enforced by the Charity Commission rather than individual beneficiaries.
Which of the following would most likely indicate a valid self-declaration of trust?
A) “I promise to give my sister £5,000 next year.”
B) “I am holding this property for my brother.”
C) “I will think about creating a trust for my nephew.”
D) “I wish to create a trust in the future for my parents.”
(B):
“I am holding this property for my brother” is a valid self-declaration of trust because it indicates present intent and separates legal and beneficial ownership.
Explanation:
For a valid self-declaration of trust, the settlor must show certainty of intention to hold property as a trustee. Future promises (A, C, D) do not create a trust, as a trust mus
What is the key distinction between express trusts and trusts arising by operation of law?
A) Express trusts arise through judicial intervention, while trusts arising by operation of law require settlor intent
B) Express trusts are intentionally created, while trusts arising by operation of law are imposed by the courts
C) Express trusts are created only in writing, whereas trusts arising by operation of law require oral evidence
D) Express trusts can be revoked at will, while trusts arising by operation of law are always permanent
(B): Express trusts are intentionally created by a settlor, whereas trusts arising by operation of law (resulting and constructive trusts) are imposed by courts in response to certain circumstances.
Which of the following is NOT a type of trust arising by operation of law?
A) Resulting trust
B) Constructive trust
C) Express trust
D) Statutory trust
(C): Express trusts are deliberately created by a settlor, whereas resulting, constructive, and statutory trusts arise by law.
What is the main function of an automatic resulting trust?
A) To ensure a trustee cannot benefit from the trust
B) To return beneficial ownership to the settlor if a trust fails
C) To impose fiduciary duties on the donee
D) To allow for secret trusts
(B): Automatic resulting trusts occur when a trust fails (e.g., due to lack of certainty of objects), ensuring the property returns to the settlor.
Amy transfers £50,000 to Brian, stating that she is “keeping the money safe” for herself. Later, Amy argues that Brian is holding the money on trust for her, while Brian claims it was an outright gift.
What type of trust is most likely to arise?
A) Express trust
B) Resulting trust
C) Constructive trust
D) Statutory trust
(B): This is a presumed resulting trust because there was no consideration given, and Brian has not rebutted the presumption that the property is held on trust for Amy.
John purchases a house but registers it in his son Mark’s name. There is no express trust declared. Later, John and Mark dispute whether Mark owns the house outright or holds it on trust for John.
What principle applies here?
A) The presumption of advancement
B) The rule in Milroy v Lord
C) The Saunders v Vautier principle
D) The beneficiary principle
(A): The presumption of advancement applies to parent-child transfers, meaning Mark is presumed to have received the house as a gift unless John proves otherwise.
Olivia transfers £20,000 to her friend Peter with no evidence that she intended a gift. What is the default presumption in equity?
A) The money is held on a presumed resulting trust for Olivia
B) The money is Peter’s absolutely
C) The money is held on an express trust
D) The money is subject to a discretionary trust
(A): Equity presumes a resulting trust unless Peter can provide evidence that Olivia intended a gift.
Which of the following scenarios would most likely give rise to a common intention constructive trust?
A) A father transfers money to his son for university fees
B) A married couple declares a trust over their property in writing
C) An unmarried couple purchases a home together, but only one partner is listed on the title
D) A trustee misuses trust funds and is ordered to return them
(C): Common intention constructive trusts often arise when cohabiting couples dispute beneficial ownership of property.
A fiduciary makes an unauthorized profit while managing a trust. What type of trust arises over the profits?
A) Presumed resulting trust
B) Automatic resulting trust
C) Common intention constructive trust
D) Institutional constructive trust
(D): Institutional constructive trusts arise automatically when a fiduciary profits from their position.
A testator’s will leaves £100,000 to an unregistered charity. The will fails to meet charitable trust requirements, so what happens to the money?
A) The trustee can keep it
B) It forms an automatic resulting trust for the testator’s estate
C) The trustee can distribute it to any charity of their choosing
D) The intended charity receives the money anyway
(B): If a trust fails (e.g., due to failure to meet charitable trust requirements), the funds return to the estate under an automatic resulting trust.
