Other Rules On Creation Of A Private Trust

Question 1

What are inter vivos trusts?

Answer 1

A trust created while the settlor is alive

Question 2

What is a self declaration of trust

Answer 2

Settlor does not convey legal title to trust property to a 3rd party but declares that they themselves hold it for the beneficiary.

Question 3

When a settlor uses a trustee, what are the 2 requirments that need to be satisfied?

Answer 3

1. The settlor must legally transfer the property to the trustee
2. The settlor must make a declaration of trust - showing intention with words or conduct satisfying the 3 certainties, beneficiary principle and perpetuity rules.

Question 4

Formality for trusts of personalty required?

Answer 4

No formal requirments needed

Question 5

Formal declaration for trusts of land?

Answer 5

Must be written evidence of the declaration of trust signed by the settlor.
Oral declaratiuon is valid if there is document evidence that is signed.

Question 6

What does constitution mean in trusts?

Answer 6

Transferring legal title to property to another.

Question 7

For self declarations, is a constitution required?

Answer 7

No as the settlor holds it themselves as a trustee.

Question 8

Rules of constitution for trusts of personalty?

Answer 8

No formal requirments

Question 9

Requirments for constitution of land?

Answer 9

Transferror must execute a transfer deed and must be registered with the land registry.

Question 10

Constitution required for trusts of shares?

Answer 10

Transferor must sign a stock transfer form and register this with the company.

Question 11

Constitution for chattels

Answer 11

Must intend to transfer the chattels and must deliver them to the donee

Or

Transfer the chattels in a deed.

Question 12

Constitution for legal title to a bank account

Answer 12

Provide a signed, written notice of the transfer to the bank

Question 13

What happens if the rulkes of constitution are not followed?

Answer 13

Trust is deemed to be incompletely constituted

Question 14

What happenbs if a trust has been improperly constituted?

Answer 14

Equity will not finish the job of setting up the trust correctly.

Question 15

Why will equity not assist a volunteer

Answer 15

If a gift fails, equity will not assist the volunteer as they provided no consideration in return as it was merely a gift and not a contract

Question 16

5 exceptions to equity will not assist a volunteer

Answer 16

1. The every effort test
2. Donatio mortis causa - death bed
3. Fortuitous vesting - strong v bird
4. Proprietary estoppel
5. Unconscionability

Question 17

What is the every effort test?

Answer 17

The trust will be constituted and enforceable where the settlor has done everything in their power to divest trust property.
Eg for shares or land transfers, they have complted all the necessary documents and handed it to the relevant authorities but these authorities have not completed the tyransfer before the transferor died

Question 18

What is a donatio mortis causa?

Answer 18

A gift made by a person in contemplation of an impending death, also known as a death bed gift.

Question 19

When will a donatio mortis causa be enforceable?

Answer 19

1. The donor delivers the property to the donee in contemplation of imminent/impending death
2. Gift will be enforceable immediately on the person dying.
3. The donor dies

Question 20

How will property be delivered in donatio mortis causa?

Answer 20

Handing the item over - eg jewellery
If handing the item is not possible handing over the keys is sufficient eg for cars and land.

Question 21

What is fortuitous vesting?

Answer 21

The donor intends to make a gift but die before they can transfer the gift. In this case the donee must have also been the personal representative of the donor by will or law.

Question 22

When will equity allow a fortuitous gift to be perfected?

Answer 22

If the donor has not changed their intention to gift the property to the donee before they die, equity will allow the gift to be perfected and the trust will be valid.

Question 23

3 requirments for proprietary estoppel?

Answer 23

1. There was an assurance - eg allowing someone to use their car and not asking them to stop
2. The donee relied on that assurance
3. The donee suffered a detriment because they relied on that assurance

Question 24

What is the unconscionability exception

Answer 24

If a gift is imperfect, it may be enforceable as it would be unconscionable for the donor to go back and change their mind on the promise of the transfer of the gift.