General Flashcards
What is a ‘Settlor’?
The person who creates the trust is called “the settlor”. They decide who will be involved in the trust, and what its terms should be.
Who is the trustee?
The person who is holding the property for the benefit of another is “the trustee”. The trustee, as we’ve already seen, has the legal ownership of the property.
Who is the beneficiary?
The person for whom the property is being held is “the beneficiary”. The beneficiary has an equitable interest in the trust property.
Who is the testator?
It is possible for a person to create a trust only to be effective on their death. They do this by detailing the trust in their valid will. Here the person creating the trust is called the “testator” (or testatrix, if female).
What is a fixed trust?
the terms of the trust define the share of the trust property which the beneficiary will receive.
What are the four types of fixed trust?
(1) X on remainder for Y
(2) On trust for A if A attains 21, but if A dies before then B
(3) ‘On trust for Z’, where Z is a child or lacks capacity.
(4) ‘On trust for C’ where C has full capacity
What is ‘‘On trust for C’ where C has full capacity’’ called?
- Bare trust.
- Trustee MUST handle property as beneficiary dictates.
- Beneficiary can end the trust at any time, by demanding the trustees transfer legal title to them so that they become the outright owner (Saunders v Vautier).
- Bare trust also arises - ‘X for life on remainder for Y’, where X dies. Y is solely entitled to trust property.
What is a discretionary trust?
gives trustees discretion as to the amounts any beneficiary may receive and/or whether particular beneficiaries receive anything at all.
Benefits = it allows the trustees to respond to changes in circumstances when the time comes for distribution of the trust property.
What is a vested interest?
A beneficiary has a vested interest if that beneficiary exists and does not have to satisfy any conditions imposed by the terms of the trust before becoming entitled as of right to trust property.
What is a contingent interest?
if their right to that interest is conditional upon the happening of some future event.
a settlor / testator’s ability to impose a contingency age that is too far in the future is not looked on favourably by the courts (wright v gater).
What is interest in possession?
if they can enjoy the interest immediately (THIS IS NOT SAME AS VESTED).
What is an interest in remainder?
if they can’t enjoy the interest immediately, and have to wait for some other beneficiary’s right of use expires.
What is absolute vs limited interest?
Absolute interest in the capital of the trust (or in both the capital and the income).
Limited is when interest in the trust income only.
Can a beneficial interest in a trust change?
YES.
Explain the principle in Saunders v Vautier
A sole adult beneficiary, of sound mind (capacity), and with a vested interest can bring the trust to an end by asking the trustees to hand the whole trust fund over to them personally or to other trustees.
EXTENDED to multiple beneficiaries.
a group of Beneficiaries can end the trust by calling for a transfer of trust property if all the beneficiaries under are the trust who could possibly become entitled are:
(1) In existence and ascertained;
(2) are 18 or older and of sound mind;
(3) Agree to the proposed cause of action.
