Express Trusts Flashcards
What is equity?
Separate from common law, for justice and fairness to both parties
What is a trust?
Trust is an arrangement where a trustee holds the property for the benefit of another.
Who is the settlor?
Person who creates a trust. Selects the trustees, beneficiaires and property, lays out the terms.
How is a trust property held and owned?
Legal title goes to trustee, equitable or beneficial title goes to beneficiary
Why use a trust?
Ensure that the control is on the trustee, protects it for young beneficiaries. More versatile and sophisticated than gifts, can impose conditions.
What is an express trust?
Trusts that the settlor EXPRESSLY intends to create - to benefit individual or to achieve a puropse
What are implied trusts?
Arise even though there has not be any express intention on the settlor.
Resulting trusts
Constructive trusts
What are resulting trusts?
Implied trust
Implied in situations where it is PRESUMED that the settlor would have indeed such a trust.
What is a constructive trust?
Implied trust
Implied in order to achieve a FAIR RESULT between the parties involved.
How can trusts be created?
In lifetime (lifetime trusts), or through a will (will trusts).
In lifetime - must make a valid declaration, and ensure that the property is put in that rust with the right transfer to the trustee.
For the will: take effect on their death, make a valid declaration of trust in the will, and direct that title to trust property will be put in the hands of the truste
What is the residuary estate?
What remains of the settlors property on death, after tax, specific legacies and debts etc.
What must be placed in a declaration of trust for it to be valid?
Identify of Trustees
Identify of property that is to be held (subject-matter)
Identify of beneficiaires (name or by description) (object)
Identify the powers and duties that the trustee have (if not, will be statute powers)
What are fixed interest trusts?
Trustees have NO DISCRETION as to how the trust property is to e distributed between beneficiaires. Settlor has stipulated once and for all the portions etc.
What are discretionary trusts?
Gives the trustees a discretion as to the amounts any person May receive, or particular people receiving it
What are the 3 certainties?
Certainty of intention - clear that it is a trust
Certainty of subject matter - clear what property is being held, and what the interests are for each beneficiary
Certainty of objects - clear WHO the beneficiaries are
What must be in certainty of intention?
Intention and words that impose a DUTY on someone to ac as a trustee.
Doesn’t have to specifically say “on trust”
What happens if there is no certainty of intention?
Likely that it is a gift, not a trust. Therefore no trust is made. Law rely on presumptions to wrk out legal result.
What are the 2 aspects of certain of subject matter?
Trust property must be described with certainty - must be identically.
Settlor must define the beneficiaries interest with certainty - if silent, it is shares equally. If shares as trustee sees fit, is certain. If NOT- “generous amount”, this is NOT cetain.
What happens if there is no certainty of subject matter?
If settlor intends to create trust with THEMSLEVES as trustee, but there is no certainty of trust property, NO TRUST.
If settlor transfers property to 3rd party and declares trustee over “some of it”, no trust wll be created, and 3rd party can take it all.
If settlor has appointed trustee and intended to create trust, but does not specify interests, trustee shal hold trust for the benefit of the SETTLOR under a resulting trust.
What can be the issue with certainty of objects?
If the beneficiaries are described as a class ,then fixed vs discretionary trusts must be determined.
Fixed interest trust: complete list test, must be possible to draw up a complete list of each adn every beneficiary. Must have conceptual certainty and evidential certainty.
For discretionary trusts: a complete list is not needed, but the trustees DO NEED TO ensure that they are distributing it to the right people.
What is the given postulant test?
Given individual test - used for discretionary trusts to determine the certainty of object (beneficiaries).
“Can it be said with certainty whether any given postulant (individual), is or is not a member of the class of objects)”
What is the beneficiary principle?
In order for trust to be valid, a trust must be for the benefit of the individuals - individuals must be able to represent it at court.
What are the rules of perpetuities?
Reduces the view of locking away wealth, therefore prevents this, there is an acceptable period of 125 years perpetuity period.
What are the formalities required to declare a valid trust?
For wills: must be in a will that complies with wills Act (made in writing, signed by testator in joint presence of 2 witnesses, who also sign)
For lifetime: can be made orally (although not advised).
For trusts of land, must comply with LPA 1925 - must be “manifested and proved by some writing signed by some person who is able to declare such trust”
