Express Private Trusts

Question 1

Who creates an express trust?

Answer 1

Settlor

Question 2

Inter vivos trust vs testementary trust

Answer 2

Inter vivos trust is a trust made during lifetime.
Testamentary trust is a trust declared in a will.

Question 3

Fixed trust vs discretionary trust

Answer 3

Fixed trust is where the interests of the beneficiaries have already been defined by the settlor.

Discretionary trust is where the trustee is given discretion on how to distribute trust property.

Question 4

What are the three certainties required to create an express private trust?

Answer 4

1. Certainty of Intention
2. Certainty of Subject Matter
3. Certainty of Objects

ISO

Question 5

What is a precatory expression?

Answer 5

A hope, wish or mere suggestion that the property be used in a certain way.

Question 6

Do precatory expressions show an intention to create a trust?

Answer 6

Usually no.

Question 7

What happens when a trust is void for certainty of intention?

Answer 7

When a trust is void for certainty of intention, the property passes as an outright gift to the person who would have been the trustee.

Question 8

Will a trust for “the bulk of my estate” be valid?

Answer 8

A trust for “the bulk of my estate” will fail for lack of certainty.

Question 9

Will a trust to pay a “reasonable income” be valid?

Answer 9

Court said that a trust to pay a “reasonable income” was valid.

Question 10

Will a trust for a fractional share of an intangible asset fail?

eg. “50% of my shares in X Ltd”

Answer 10

A trust for a fractional share of an intangible asset will not fail for lack of certainty.

eg. “50% of my shares in X Ltd”

Question 11

Will a trust for “50% of my shares in X Ltd” fail?

Answer 11

No.

Question 12

Will a trust for a fractional share of tangible assets fail?

eg. “20 bottles of the wine stored in X warehouse”

Answer 12

Yes. A trust for a fractional share of a tangible asset will fail for lack of subject matter certainty (True even if all the bottles are exactly the same). Unless the assets have been segregated from the rest of the stock.

eg. “20 bottles of the wine stored in X warehouse”.

Question 13

If I make a trust for “20 bottles of the wine stored in X warehouse”, is this trust valid?

Answer 13

No. It fails for lack of certainty of subject matter.
This is true even if all of the bottles are exactly the same.

Question 14

If I make a trust for “20 bottles of wine stored in their own pile in X warehouse”, is this trust valid?

Answer 14

Yes. It is valid.

Question 15

What happens when a trust is void for uncertainty of subject matter?

Answer 15

When a trust is void for uncertainty of subject matter, the property reverts to the settlor.

Question 16

Is a trust for “my friends” valid for certainty of objects?

Answer 16

A trust for “my friends” is not valid for certainty of objects.

Question 17

Which test of objects is used for a fixed trust?

Answer 17

Complete list test.

The beneficiaries must be named in such a way that it is possible to make a complete list.

Question 18

Is a trust for “my kindest friends in equal shares” valid?

Answer 18

No. This fails because the concept is uncertain.

Question 19

Would a trust for “my former employees in equal shares” be valid?

Answer 19

Whilst it is conceptually certain, it may fail if there are insufficient records which can be used by the trustees to determine how many former employees there are.

Question 20

Which test is used for a discretionary trust?

Answer 20

Given postulant test.

Whether it can be said with certainty that a given individual is or is not a member of the class.

Question 21

What is the given postulant test?

Answer 21

Whether it can be said with certainty that a given individual is or is not a member of the class.

Question 22

Does evidential uncertainty cause a discretionary trust to fail?

Answer 22

No. Evidential uncertainty will not cause a discretionary trust to fail.

Question 23

Will a discretionary trust be valid if it is administratively unworkable?

Answer 23

A discretionary trust will fail if it is administratively unworkable.

Administratively unworkable = where the objects are too wide to form a class.

Question 24

Would a discretionary trust for all of the inhabitants of West Yorkshire (2.5 million people) be valid?

Answer 24

No it would not be valid as it would be administratively unworkable.

Question 25

What happens if a trust is void for uncertainty of objects?

Answer 25

If a trust is void for uncertainty of objects, a resulting trust in favour of the settlor or the settlor’s successors is presumed.

Question 26

What is the “beneficiary principle”?

Answer 26

The idea that a trust cannot exist without someone to enforce it and therefore it must have ascertainable human beneficiaries.

Question 27

Would a trust to “preserve freedom of the press be valid”?

Answer 27

No.
1. Purpose does not fall within requirements of the Charities Act.

2. Trust offends the beneficiary principle.

Question 28

Will a trust fail after establishment if the trustee dies, refuses to accept appointment or resigns?

Answer 28

A trust will not fail because the trustee dies, refuses to accept appointment or resigns.

Instead, the Court will appoint a success trustee unless it is clear that the settlor intended the trust to continue only so long as the particular trustee served.

Question 29

Can a minor be a trustee?

Answer 29

No. A minor cannot be a trustee.

Question 30

Is there a minimum/maximum number of trustees for a general trust?

What is the exception?

Answer 30

There is no minimum or maximum number of trustees for a general trust.

The exception is that a trust of land must have at least two trustees (because at least two trustees are required to give a valid receipt for money received on the sale of land) and a maximum of four.

Question 31

Min number of trustees for land.

Answer 31

2 (because at least two trustees are required to give a valid receipt for money received on the sale of land).

Question 32

Max number of trustees for land.

Answer 32

4

Question 33

Remoteness of Vesting Rule

Answer 33

An interest is void under a trust if it does not vest within the perpetuity period of 125 years.