Express Trusts: Types Flashcards

Question

re: fixed interest trust (successive interests) what does the life tenant receive and what interest do they have?

Answer 1

i.e. they will receive income generated from TP or live in a property during their lifetime or other expiry date specified in the trust This is a vested limited interest which is in possession (i.e. she can enjoy the trust income now)

Answer 2

* R will either have a vested interest or a contingent interest (below)

Answer 3

* Trusts that create this interest are called life interest trusts or interest in possession trusts

Answer 4

* The benefit of this type of interest is it allows someone to enjoy the trust without giving them outright ownership of the TP

Answer 5

* If R does not have to satisfy any conditions, they will have a vested interest in the trust capital from the creation of the trust * This is postponed until the LT’s death/right to enjoyment expires * If R dies before the LT, R’s interest will form part of their estate

Answer 6

* If R has to satisfy any conditions, they will have a contingent interest * This will become a vested interest once the conditions are satisfied * i.e. ‘I give my shares in ASDA to hold on trust for my wife, remainder to my son Adam should he survive my wife and reach 25 years old’ o Two conditions i) reach 25 years old ii) survive his wife.

Answer 7

* If the condition(s) aren’t satisfied, their interest will fail and will revert back to S on resulting trust

Answer 8

i.e. Ts have discretion to distribute the TP as they see fit o Bs are called ‘objects’ until chosen by T

Answer 9

o Bs are called ‘objects’ until chosen by T

Answer 10

an object will only become a B once selected by T, then their interest (usually) becomes vested

Answer 11

* Objects have no right to the TP, only a right to be considered by T * They have no beneficial entitlement until chosen by T * Once selected by T, their interest will usually become vested

Answer 12

a trust to achieve an objective which does not identify any individuals. These can be: o Charitable (called a ‘charitable trust); or o Non-charitable (often called a ‘purpose trust’)

Answer 13

o Charitable (called a ‘charitable trust); or o Non-charitable (often called a ‘purpose trust’)

Answer 14

1. I give £400k on Trust for residents in Bath > individual trust because the TP is for a class of Bs. 2. I give £400k on Trust to promote good citizenship > purpose because the TP is to promote a purpose. 3. I give £400k on Trust to promote good citizenship amongst my relatives > purpose because Bs are identified, but the TP is not directly for them. It is to advance a cause.

Answer 15

NCPTs often fail due to the beneficiary principle and rule against alienability

Answer 16

* i.e. TP cannot be locked in trust for more than 21 years

Answer 17

A NCPT will offend RAA, unless: o It stipulates an end date within 21 years / ‘as long as the law allows’; or o Ts are able to spend all the TP in order to end the trust they key is to look out for ‘income’ and ‘maintenance’ as this suggests ongoing obligation

Answer 18

‘I give £40k to Ts to use the income to maintain the hall’ > Ts would need to lock capital away to do this. The trust does not specify an end date within 21 years. The trust would be void. ‘I give £40k to Ts to use build a hall’ > Ts can spend the TP and bring the trust to an end at any time. Trust will be valid.

Answer 19

if it is a Re Denley Trust or a trust of imperfect obligation

Answer 20

Requirements: o Trust’s purpose is sufficiently clear and gives rise to a tangible benefit; o Persons due to benefit are ascertainable (use: given individual test) o The trust does not offend the rule against alienability i.e. ‘I give £50k on trust for building a gym for use by employees of ASDA’

Answer 21

* If satisfied, those who will benefit are given standing to enforce T’s duties

Answer 22

because there is no specific beneficiary to enforce them

Answer 23

i.e. trusts for care of specific animals and trusts to maintain tombs and graves

Answer 24

* These trusts will not offend BP and will be valid, but if Ts did not fulfil their duties (i.e. distributing TP), the trust could not be enforced o S would need to go to court and claim the property for themselves * Trust must comply with rule against alienability

Answer 25

The trust will need to be established as a charity by the Charity Commission: o It must be for charitable purposes; o It must have sufficient public benefit; and o It must be exclusively charitable

Answer 26

* CTs are exempt from the beneficiary principle and rule against alienability

Answer 27

1) Does it have a charitable purpose? 2) Is it for public benefit? a. Is there an identifiable benefit? b. Is it for the public or restricted group?, i.e.: i. Prevention or relief of property ii. Advancement of religion iii. All other charitable purposes 1. Sufficient number of people 2. Personal nexus 3. Class within a class 4. Do not exclude the poor 3) Is it exclusively charitable? a. Charitable purposes only? b. Political activity incidental?

Answer 28

It must seek to promote / attain at least 1 of the following purposes: 1. Prevention or relief of poverty 2. Advancement of education 3. Advancement of religion 4. Advancement of health or saving lives 5. Advancement of citizenship or community development 6. Advancements of arts, culture, heritage or science 7. Advancement of amateur sports 8. Advancement of human rights, conflict resolution, promotion of religious and racial harmony 9. Advancement of environmental protection / improvement 10. Relief of those in need become of youth, age, ill-health, disability, financial hardship or other disadvantage 11. Advancement of animal welfare 12. Promotion of efficiency for the emergency services Analogous charitable purposes

Answer 29

Grants, payment for services i.e. meal on wheels

Answer 30

School, prize funds, research, DoE

Answer 31

Missionary work, providing places of worship

Answer 32

Medical treatment/research/facilities

Answer 33

Promotion of civic responsibility, regeneration

Answer 34

Art galleries, festivals, theatres, national history

Answer 35

Local sports clubs, sport centres

Answer 36

Promotion of restorative justice

Answer 37

Conservation projects

Answer 38

Care homes, apprenticeships, drop-in centres

Answer 39

Animal sanctuaries

Answer 40

Memorials, support units, recruitment

Answer 41

Provision of facilities for social welfare, public works, agriculture, promotion of ethical standards

Answer 42

The purpose must have sufficient public benefit, i.e.: o It must have identifiable benefit(s); and o Benefit the public or a sufficient section of it

Answer 43

* Benefit must be clear and relate to the purpose of the charity * Any harm/detriment must not outweigh the benefit (i.e. a pickpocket school)

Answer 44

1. Prevention or relief of poverty 2. Advancement of religion 3. Other charitable purposes which satisfy certain requirements

Answer 45

this has a wider scope than others due to importance: o Named individuals  not charitable o ‘my family’ or ‘my relatives’  chartable

Answer 46

o Places of worship open to all, even if low attendance  charitable o Places of worship not open to all, but all members ‘live in this world and mix with their fellow citizens’  charitable o Contemplative religious groups  not charitable

Answer 47

o The number of people intended to benefit must not be negligible o ‘personal nexus’ test o ‘class within a class’ test o It must not exclude the poor from the benefit

Answer 48

Bs cannot be connected to a person / company i.e. ‘I give £10k on trust for the education of children of employees of Red Anchor Limited’  not charitable as Bs are linked by a personal nexus, i.e. their parents to the company

Answer 49

o class of people can be limited so long as the limits are legitimate, proportionate or rational i.e. it must not be arbitrary  Geographical limits are often ok.

Answer 50

i.e. charitable institutions (i.e. schools, hospitals) can charge fees so long as:  The money is put back into the charity (i.e. not profit);  They attempt to include poor people i.e. bursaries, enabling state school children to attend classes/summer school  If the fees are so high only rich people can afford them, they will likely need to do more to show the benefit to the wider public

Answer 51

a charitable trust cannot be for a political purpose, but a charitable organisation can undertake political activity which is incidental to their charitable purpose. This activity cannot become their dominant work/purpose

Answer 52

* Trusts with charitable and non-charitable purposes (inc. political) are not CTs

Answer 53

o Political purposes = supporting a political party or campaigning for a change in the law/policy/decisions

Answer 54

o i.e. Amnesty international sought to set up a trust for these purposes: 1) relief of needy persons 2) attempting to release prisoners 3) abolition of torture and 4) research. Purposes 2 & 3 would have involved campaigning for a change in law, this is a political purpose and so charitable status was not given. o i.e. Oxfam sets up a trust to eradicate poverty. As part of achieving this main aim, they seek to persuade governments to change their law. This is permissible, so long as it doesn’t become their main aim.

Answer 55

* The body can charge fees, but any profit must be put back into the charity and not paid to individuals

Answer 56

* Transfer of TP from the trust to B(s) brings the trust to an end

Answer 57

where there is a bare trust with one adult B, B can direct T transfers the TP to them which would end the trust

Answer 58

using the Saunders v Vautier rule

Answer 59

Bs can end the trust or change the terms of the trust where all Bs who could possibly become entitled:  Are in existence and ascertained;  Are aged 18 or over and have mental capacity; and  Agree to what is being proposed  Taken together, the Bs are absolutely entitled

Answer 60

anyone with a potential interest in the trust

Answer 61

using the Saunder v Vautier rule

Answer 62

yes, so long as they all agree and are over 18.

Answer 63

yes, but anyone who would inherit under a resulting must also satisfy the Saunders v Vautier requirements This is because if B(s) died, their interest would fail and pass onto someone else under a RT. Therefore, until one Bs’ interest is vested, the person who would receive under an RT will need to be consulted.

Answer 64

yes, but anyone who would inherit under a resulting must also satisfy the Saunders v Vautier requirements This is because if B(s) died, their interest would fail and pass onto someone else under a RT. Therefore, until one Bs’ interest is vested, the person who would receive under an RT will need to be consulted.

Answer 65

i.e. ‘…such of my children that reach the age of 21’ the trust will be divided between any of S’s children that satisfy the contingency. The Bs only have a contingent interest until the contingency is satisfied (upon which it becomes a vested interest). Where the interest is contingent, if Bs die, the TP will be held on RT for someone else (see below). Therefore, someone else may potentially be entitled. When one of the B’s interest becomes vested, they become absolutely entitled to the property. The effect is that no one else outside of the children can become entitled, and so ‘taken together, the Bs are absolutely entitled’

Express Trusts: Types Flashcards

(89 cards)