T&E I Intention, Subject Matter and Formalities

Question 1

Explain Three certainities

Answer 1

Intention, subject matter and objects(beneficiaries)

Question 2

Explain intention

Answer 2

Donors must have the necessary mental capacity. Level of capacity is proportional to the value/size of the gift (Re Beaney)

Question 3

Explain Subject matter

Answer 3

Must be a tangible benefit that can be enforced

Subject: the subject matter of trust is certain if the settlor provides a workable formula: reasonable income (Re Golay)

Question 4

Explain Object

Answer 4

those who will/may benefit must be certain (excerpt for a Denley’s trust, charitable trust and honorary trust)

Question 5

Explain segregation of subject matter

Answer 5

Must segregate tangible items of trust property from like items e.g. vintage wine (Re London Wine Company (shippers) Ltd). No Segregation is needed for intangible items if items are indistinguishable e.g. identical shares (Hunter v Moss)

Question 6

Explain beneficiary principle

Answer 6

There must be identifiable human beneficiaries who can enforce the trust

Question 7

Explain formalities for declaration

Answer 7

for a land interest to be transferred into a trust, the declaration must be evidenced in writing, signed by the transferor (s.53(1)(b) LPA 1925)

No formalities needed for other interests

Question 8

Explain rules against perpetuity

Answer 8

For discretionary trusts: the rule against remoteness of vesting - max 125 years

For non-charitable purpose trusts: rule against alienability - limited to 21 years, or allow the trustees to spend all trust capital on the purpose

Question 9

Requirement for the establishment of a gift

Answer 9

three certainties

if involves land, the declaration must be evidenced in writing and signed by the settlor.

Question 10

Requirements for the establishment of trust with self as trustee or with someone else as trustee

(4)
FRIC

Answer 10

formalities for declaration
identifiable human beneficiaries who can enforce the trust
rules against perpetuities
three certainties

Question 11

Definition of a bare trust

Answer 11

This is called a ‘bare trust’ because the trustees hold on to trust for a sole adult beneficiary possessing full mental capacity absolutely (with no limitations or conditions attached). This is an unusual type of trust because the trustees must handle the trust property as the beneficiary dictates. Indeed, the beneficiary
can end the trust at any time, by demanding that the trustees transfer legal title to him so that he becomes the outright owner (Saunders v Vautier (1841)

Question 12

Correct formalities to constitute a trust with chattels

Answer 12

physical delivery (Re cole) or deed

where physical delivery is impossible, the transfer can be confirmed by deed (Jaffa v Taylor Gallery Ltd)* Painting in northern Ireland and trustees elsewhere far away

Question 13

Correct formalities to constitute a trust with shares

Answer 13

1 complete and sign stock transfer form;
2 send STF and share certificate to transferee
3 transferee must send documents to the company to register the new owner

Question 14

Correct formalities to constitute a trust with land

Answer 14

must be done by deed. the deed must be sent to LR and notify the LR as new legal owner (s.52(1) LPA 1925)

the deed must say it is a deed, in writing, signed witness and delivered as a deed (s.1 LP(MP)A 1989)

Question 15

Correct formalities to constitute a trust with equitable interests s.53(1)(c) LPA 1925

Answer 15

in writing
signed by person disposing of the interest/an authorised agent or in will

does not work for
resulting trusts
constructive trusts and
proprietary estoppels

Question 16

What does it mean by ‘equity will not assist a volunteer’?

Answer 16

if the gift is defective/imperfect (not properly constituted, equity cannot assist to infer that there was the intention to establish the trust. Equity will not construe a trust from an invalid gift (Milroy v Lord)

Question 17

Exceptions where equity may still deduce an intention for the trust and considers the trust valid if there is an imperfect gift

(7) I SEDUCE

Answer 17

Equitable Interests

Strong v Bird (Fortuitous Vesting)
Every effort test
Donatio Mortis Causa
Unconscionability
Choithram International SA v Pagarani
Estoppel (Proprietary )

Question 18

Comment on the rule in Strong v Bird

Answer 18

On death of donor, donee can claim legal title if
Transfer fails due to not satisfying formalities
The intention was to make an immediate gift by donor (Re Freeland)
the intention remains unbroken till death (Re Gonin)
Donee becomes executor/PR/administrator of donor

Question 19

Comment on Every effort test

Answer 19

If the donor has done everything required of them to transfer the property and has put the property outside the donor’s control. an imperfect is enforceable

Question 20

Define Donatio Mortis Causa test

Answer 20

if the donor
delivers the property to a donee while in contemplation of imminent or impending death

with the intention that the property be given to the donee if the donor dies and be returned if the donor survives

the donor dies.

the belief must be of imminent risk of death (unexpected air crash cannot be imminent because it could not be objectively contemplated, it was merely possible

Question 21

Define

Unconscionability in construing an imperfect gift as valid

Answer 21

gift may be enforceable if it would be unconscionable for the donor to go back on their intention, even though the property has not been transferred

Pennignton v Waine
Settlor declared to the auditor he wanted to transfer shares to his nephew. STF was signed and sent to the auditor. Auditor told nephew nothing else needed to be done. Settlor died and the gift was incomplete. held that it would be unconscionable not to treat the transfer as complete, even though it fails the every effort test.

Question 22

explain Choithram International SA v Pagarani

Answer 22

If the transfer is defective, the court will hastily and officiously to defeat a gift. Rather, may interpret gift as a trust if the settlor is a trustee

the settlor made a trust orally with shares of the company and declared himself and the other six people as trustees. He orally stated that he would not constitute the trust with correct formalites. held trust correctly constituted

Question 23

Explain exception for transfer of equitable interest

Answer 23

if interest is under a bare trust, and the beneficiary directs the trustee to transfer the equitable estate with the intention of transferring the legal estate, then formalities for land transfer is not required and oral instruction will be sufficient (Vanderveil v IRC)

This will only apply if the legal estate is being transferred (Zeital v Kaye)