Important rules for trusts

Question 1

Beneficiary Principle

Answer 1

Morice v Bishop of Durham
* each trust must have at least one human beneficiary
* trusts that are too vague must be declared void
* the trust will fail if it is vague about whether the trustees are under a duty or a power

Question 2

Constitution

Answer 2

• Re Bowden: trust cannot be unmade by the settlor
• Turner v Turner: With no beneficial interest (or reserved power) the settlor cannot bring proceedings against the trustee for breach

Question 3

Saunders v Vautier

Answer 3

• Beneficiaries can override the settlor’s intention
• The rule helps us to map out the balance of power between trustees and beneficiaries

Question 4

The rule against remoteness of vesting

Answer 4

• Time limit over when the beneficial interest must vest
• Common law rule: maximum period is ‘life in being plus 21 years’
• Rationale: to anyone personally known to the settlor (live in being) plus next generation, permitting delay until they reached the age of majority
• Perpetuities and Accumulations Act s5: maximum duration is 125 years

Question 5

The rule against perpetuities

Answer 5

• A settlor cannot create a perpetual trust
• Common law rule: maximum period is ‘life in being plus 21 years’
• Perpetuities and Accumulation Act 2009, s18
• Void if not unequivocally certain that it ends within the period vs probable it will end on balance of probabilities