Topic 1 - Requirements for Express Trusts Flashcards
(244 cards)
1
Q
What are express trusts?
A
Trusts that can be intentionally created and can be private or public.
2
Q
What distinguishes resulting and constructive trusts from express trusts?
A
They arise by operation of law and are known as ‘implied trusts’.
3
Q
Who is the person that creates an express trust?
A
Settlor.
4
Q
What are the two broad methods of creating express trusts?
A
- Self-declaration of trust
- Transfer on trust
5
Q
In a self-declaration of trust, who becomes the trustee?
A
The settlor.
6
Q
What happens to legal title in a self-declaration of trust?
A
Legal title stays with the original owner, who holds it as trustee.
7
Q
What is created for the beneficiary in a self-declaration of trust?
A
A new equitable interest.
8
Q
What is required in a transfer on trust?
A
The settlor transfers legal title to a third party trustee.
9
Q
What does the third party trustee hold in a transfer on trust?
A
The property on trust for the beneficiary.
10
Q
Can a settlor be the beneficiary in a transfer on trust?
A
Yes, the settlor can transfer property to a trustee to hold on trust for themselves.
11
Q
What are the three certainties required for the creation of express trusts?
A
- Certainty of intention
- Certainty of subject matter
- Certainty of objects
12
Q
What is the beneficiary principle?
A
It requires identifiable beneficiaries or objects for enforceability of the trust.
13
Q
What is an exception to the beneficiary principle?
A
- Charitable purpose trusts
- Non-charitable purpose trusts
14
Q
What do perpetuity rules limit?
A
The duration of the trust.
15
Q
What are the formalities required for the creation of a trust?
A
- Declaration of the trust
- Constitution of the trust
- Registration with TRS if applicable
16
Q
What is an automatic resulting trust?
A
A default trust that arises when a transfer on trust fails, allowing the settlor to regain beneficial interest.
17
Q
What type of trust arises when a legal owner transfers property to a third party but retains beneficial interest?
A
Resulting trust.
18
Q
What are the two key categories of resulting trusts?
A
- Automatic resulting trusts
- Constructive trusts
19
Q
What is a constructive trust?
A
A trust imposed by equity in response to particular circumstances.
20
Q
What does the term ‘implied trusts’ refer to?
A
Trusts that arise by operation of law rather than by express intention.
21
Q
What is the purpose of the Trusts Registration Service (‘TRS’)?
A
To register express trusts that incur a tax liability.
22
Q
True or False: Express trusts are created deliberately.
A
True.
23
Q
Fill in the blank: A trust requires certainty in order for the rights and obligations under the trust to be _______.
A
enforceable.
24
Q
What are Vautier rights?
A
Rights allowing beneficiaries to collapse the trust and recover the property.
25
What is the purpose of automatic resulting trusts?
To ensure that surplus trust property returns to the settlor when it is unclear what should happen to it.
26
Define presumed resulting trusts.
Trusts that arise from a gratuitous transfer of property where equity presumes the transferor intended the property to be held on trust.
27
What is the presumption of resulting trust rebutted by?
Evidence that the transferor did not intend the property to be held on trust for them.
28
What is a constructive trust?
A trust imposed to correct unconscionability, arising in various circumstances.
29
What are institutional constructive trusts?
Constructive trusts arising automatically due to the conscience of a legal owner being affected.
30
List some trigger events for institutional constructive trusts.
* Preventing fraud
* Perfecting an imperfect gift or trust
* Compelling parties to perform a specifically-enforceable contract
* Profits made in breach of fiduciary duty
31
What are constructive trusts as a remedy?
Trusts awarded by a court to correct misapplication of property where a claimant can establish an equitable proprietary interest.
32
What are common intention constructive trusts?
Trusts resolving disputes over beneficial ownership of land without an express trust declared.
33
How can an express trust be created?
By declaring oneself as a trustee or transferring property to a third-party trustee.
34
Who is the settlor of a trust?
The person who creates the trust.
35
In a self-declaration of trust, who retains legal title?
The settlor, who becomes the trustee.
36
What is the difference between self-declaration of trust and transfer on trust?
In self-declaration, legal title is retained by the settlor. In transfer on trust, legal title is transferred to a trustee.
37
What are the three certainties required for creating an express trust?
* Certainty of intention
* Certainty of subject matter
* Certainty of objects
38
What does the beneficiary principle entail?
A trust must have identifiable beneficiaries who can enforce the trust.
39
What is a fixed trust?
A trust where the entitlement of the beneficiaries is fixed by the settlor.
40
What is a discretionary trust?
A trust where trustees have discretion to distribute between the objects of the trust.
41
What rights do beneficiaries of a fixed trust have?
Equitable proprietary rights that can be asserted against third parties.
42
What do beneficiaries of a discretionary trust possess?
They have a hope that the trustee's discretion will be exercised in their favor but do not have proprietary rights.
43
What personal rights do beneficiaries have?
* Right to compel proper administration of the trust
* Right to sue trustees for breach of trust
* Right to be informed of their entitlement once vested
44
What is the significance of certainty of objects?
It ensures that the objects of a trust are identifiable, allowing enforceability of obligations.
45
What can beneficiaries do if trustees act outside their powers?
Beneficiaries can sue the trustees for breach of trust
## Footnote
Compensation will be paid back to the trust fund rather than the individual.
46
What rights do objects of discretionary trusts have?
Objects can enforce the trust by asking the court to ensure discretion is exercised
## Footnote
They have no right to request that discretion is exercised in a particular way.
47
What is a fixed trust?
A trust where trustees have no discretion in distribution; must distribute as directed by the settlor.
48
Describe a fixed trust with one beneficiary.
Trustee holds the entire trust property for one beneficiary who has personal rights against the trustee.
49
What are the entitlements of multiple beneficiaries in a fixed trust?
Each beneficiary has proprietary rights and personal rights against the trustee, entitled to fixed shares.
50
What is a successive interest trust?
A trust involving a series of consecutive interests in trust property.
51
Define life interest trust.
A type of successive interest trust where a beneficiary receives income during their lifetime.
52
What is the role of an income beneficiary in a life interest trust?
The income beneficiary is entitled to the income produced by the trust property.
53
What is a capital beneficiary?
The beneficiary entitled to the capital held on a successive interest trust.
54
What happens in a life interest trust example where A receives income for life and B receives capital?
A receives income during their lifetime, and B receives the house after A's death.
55
What is a discretionary trust?
A trust where trustees have discretion over the distribution of trust property among potential beneficiaries.
56
Explain the rights of objects in a discretionary trust.
Objects have no equitable interest until discretion is exercised; they can ensure proper exercise of powers.
57
What is a power of appointment?
A right to choose who, from a specified class of objects, receives property.
58
Differentiate between fiduciary and personal power of appointment.
Fiduciary power is given to a trustee, while personal power is given to someone not required to consider exercising it.
59
What indicates a discretionary trust rather than a power of appointment?
Imperative wording such as 'must' suggests a discretionary trust.
60
What is a vested interest?
A current right to property; nothing more needs to happen for the beneficiary to become entitled.
61
Define contingent interest.
An interest in property conditional upon the occurrence of an uncertain future event.
62
What is the difference between vested in possession and vested in interest?
Vested in possession is a current right to current enjoyment; vested in interest is a current right to future enjoyment.
63
Give an example of a vested interest.
A woman has a life interest in a house, with the remainder to her son.
64
What happens if a son has a contingent interest and dies before the mother?
The son's interest cannot pass to his estate; instead, the charity would receive the property.
65
What is a gift-over?
A provision that dictates what happens to property if a power is not exercised.
66
What is a 'gift-over' in the context of trusts?
A provision in favour of a charity that indicates the son’s interest is contingent.
## Footnote
A gift-over indicates that the property will not pass to the son if he predeceases the mother.
67
Can a contingent interest exist without a gift-over?
Yes, a contingent interest can exist without a gift-over.
## Footnote
The use of the word ‘if’ indicates that the son’s interest will not survive his death.
68
How can capital and income be distinguished?
Capital is like a tree, while income is the fruit produced by the tree.
## Footnote
Capital assets may produce income regularly, like rent, interest, or dividends.
69
Provide examples of capital assets.
* Land
* Bank account
* Shares
70
Provide examples of income generated by capital assets.
* Rent
* Interest
* Dividends
71
What does it mean for a beneficiary to be absolutely entitled?
The beneficiary has full rights to the trust property without any other claims.
## Footnote
This means they are the sole beneficiary of the trust property.
72
What is the difference in entitlement to income between adult and minor beneficiaries?
Adults are entitled to receive income as it arises, while minors may not be entitled to receive it directly.
## Footnote
Trustees may have a power to apply income for the benefit of minors.
73
What is a vested interest?
An interest in capital that is secured and not contingent on any conditions.
## Footnote
For example, a daughter has a vested interest in a house held in trust for her.
74
What is meant by 'intermediate income'?
Income generated during the period before the beneficiary's capital interest vests in possession.
## Footnote
It is attached to the capital interest.
75
What is a contingent interest?
An interest that depends on a specific condition being met, such as reaching a certain age.
## Footnote
Example: a house held in trust for a daughter if she reaches the age of 21.
76
Define a successive interest trust.
A trust that involves separate beneficial interests which follow each other over time.
## Footnote
One beneficiary may have an interest in income followed by another beneficiary with an interest in capital.
77
What is the rule in Saunders v Vautier?
A sole adult beneficiary with a vested interest can direct the trustee to transfer legal title, ending the trust early.
## Footnote
This applies only if the beneficiary is absolutely entitled.
78
What are the implications of the absence of a gift-over in a trust?
It can indicate that the property is intended to pass to the beneficiary without conditions.
## Footnote
This was illustrated in the case of Saunders v Vautier.
79
Can multiple beneficiaries exercise Saunders v Vautier rights?
Yes, if each has a distinct interest that can be severed without impacting others.
## Footnote
This includes fixed trusts in equal shares.
80
What limitations exist on exercising Saunders v Vautier rights?
Beneficiaries cannot interfere in the administration of a trust while it subsists.
## Footnote
They can either collapse the trust or allow trustees to continue their duties.
81
What are the three certainties necessary for the creation of an express trust?
* Certainty of intention
* Certainty of objects
* Certainty of subject matter
82
What is certainty of intention?
An intention to impose or assume the duty characteristic of a trust, necessary for its creation.
## Footnote
It differentiates an express trust from resulting or constructive trusts.
83
How can a person's intention to create a trust be ascertained?
From their words and conduct, objectively assessed.
## Footnote
The intention is determined by whether they manifest a duty characteristic of a trust.
84
What role does the word 'trust' play in determining intention?
The use of 'trust' is a good indicator of intent but is not conclusive.
## Footnote
A transaction may be characterized differently by the parties involved.
85
What is a good indicator that a person intends to create a trust?
The use of the word ‘trust’
## Footnote
However, its presence or absence is not determinative.
86
Does the characterization of a transaction as a trust conclusively determine its nature?
No, it is not conclusive
## Footnote
The substantive rights and duties created by the transaction are what determine its nature.
87
What is a key determining factor in several important cases regarding the creation of a trust?
Segregating or earmarking assets
## Footnote
This can serve as evidence of an intention to create a trust but is not necessary or conclusive.
88
What was significant about the case Paul v Constance regarding the intention to create a trust?
The repeated use of the phrase ‘this money is as much yours as mine’
## Footnote
The couple's actions and context were also important in establishing trust.
89
What must be considered to ascertain certainty of intention in a trust case?
The specific facts of the case, including words and conduct
## Footnote
Context is vital in interpreting intentions.
90
What is the significance of the case Mussoorie Bank Ltd v Raynor?
It demonstrated that vague or uncertain subject matter can negate the intention to create a trust
## Footnote
The indeterminate nature of the trust property led to the conclusion that no trust was intended.
91
In Lyell v Kennedy, what indicated that a trust existed?
The payment of money into a separate bank account
## Footnote
This was seen as indicative of a trust rather than a personal claim by Kennedy.
92
What did the court conclude in Paul v Constance regarding Dennis's intention?
Dennis intended to create a trust for Doreen
## Footnote
His repeated statements and their joint financial activities supported this conclusion.
93
What was the key issue in Re Kayford Ltd (in liquidation)?
Whether the sum in the separate bank account was held on trust for customers
## Footnote
The court found that it was held on trust due to the intention to refund customers.
94
What was the court's conclusion in Re Lehman Brothers International (Europe)?
Clients were not mere creditors; Lehman held post-administration receipts on trust for them
## Footnote
The court emphasized the importance of preserving proprietary rights.
95
What was the outcome in Modelboard Ltd v Outer Box Ltd regarding the proceeds of sale?
There was no trust; the plaintiff had a charge over the proceeds
## Footnote
The plaintiff was deemed a secured creditor, not a beneficiary of a trust.
96
What are the two distinct requirements of certainty of subject matter in trust creation?
* The trust property requirement
* The beneficial entitlement requirement
## Footnote
Both are necessary to establish an express trust.
97
What happens if trust property is identified by description?
The trust will fail for uncertainty if the property cannot be ascertained
## Footnote
For example, a trust of the ‘bulk’ of an estate is invalid.
98
Can a trust be created over some items from a larger quantity without identifying specific items?
No, if specific items cannot be identified, the trust will fail
## Footnote
This has led to extensive case law on the matter.
99
What are 'net assets' of a company?
An abstract monetary sum representing the difference between the value of its assets and its liabilities.
100
Is it possible to create a trust over some items from a larger quantity of similar items without identifying specific items?
No, it presents a question of certainty of subject matter.
101
Can a trust be declared over 20% of the settlor’s 100 ordinary shares in a company?
Yes, it does not require identifying specific shares.
102
What is the issue with declaring a trust over a specified number of items from a larger mass?
It creates uncertainty about which specific items are held on trust.
103
What happens if the beneficiary has a fractional share in every asset?
They share in any profits or losses from the sale of the assets.
104
What is the difference between tangible and intangible assets?
Tangible assets are physical (e.g., diamonds), while intangible assets do not exist in physical form (e.g., company shares).
105
Define 'fungible' assets.
Identical and readily exchangeable assets.
106
Are diamonds considered fungible or non-fungible?
Non-fungible.
107
What is the legal validity of a trust over tangible, fungible assets?
It requires identifying specific assets forming the subject matter of the trust.
108
What is the beneficial entitlement requirement?
It must be possible to ascertain the nature and extent of the beneficiary’s interest in the trust property.
109
What happens if a power to determine beneficial entitlement is not exercised?
The trust may fail due to uncertainty.
110
What is the significance of the case 'Boyce v Boyce'?
It illustrates that a trust can fail for certainty if a power is not exercised due to unforeseen circumstances.
111
What was established in the case 'Re Golay’s Will Trusts' regarding 'reasonable income'?
It suggests that a trust can be valid if 'reasonable income' is an objective yardstick.
112
What was the outcome of 'Re London Wine Company (Shippers) Ltd'?
The company did not hold any wine on trust for customers due to failure to allocate specific wine.
113
What did 'Hunter v Moss' determine about trusts of shares?
It established that a trust of 50 shares was valid without identifying specific shares.
114
What principle was reinforced in 'Re Goldcorp Exchange Ltd'?
Similar reasoning as in 'Re London Wine' regarding identification of specific trust property.
115
What is the difference in treatment between tangible and intangible assets in trust law?
Intangible, fungible assets can form a valid trust without specific identification, while tangible assets cannot.
116
What is the main problem with applying the principles from 'Hunter' to tangible fungible assets?
It raises questions about why shares are treated differently from tangible fungibles like gold.
117
How does Briggs J's approach in 'Re Lehman Brothers International' differ from Hunter?
It reconceptualizes the trust as a beneficial co-ownership share in the fund rather than specific assets.
118
What is Briggs J’s approach in Lehman Brothers regarding the creation of a trust?
The trust takes effect as a trust of all the shares, with the beneficiary having a fractional interest in every one of them.
## Footnote
This contrasts with Hunter's approach, which identifies the trust as concerning only specific shares.
119
According to Hunter, how does a trust take effect when shares are not specifically identified?
As a trust of 20 specific shares, with the remaining 80 shares unaffected.
## Footnote
Hunter's approach treats the shares as specific, thus preserving the distinction between identified and unidentifiable shares.
120
What is the significance of the case Re Lehman Brothers International (Europe) [2009]?
It illustrates the effects of Briggs J’s reconceptualisation of trust intentions and the nature of shares as fractional interests.
## Footnote
The case highlights the judicial approach to interpreting trust intentions in relation to shares.
121
What are the three certainties necessary for the creation of an express trust?
* Certainty of intention
* Certainty of subject matter
* Certainty of objects
## Footnote
Certainty of objects is one of these three certainties and is crucial for trust enforcement.
122
What does certainty of objects refer to in the context of express trusts?
The need for the objects of a trust to be certain for the trust to be regulated and enforced by the court.
## Footnote
Objects typically refer to people, although trusts can also be created for permitted purposes.
123
Why is certainty of objects important for the administration of a trust?
If it is not possible to say who the objects are, it may not be possible to properly administer the trust.
## Footnote
This can lead to the failure of the trust if the objects cannot be identified.
124
What is required for certainty of objects in a fixed trust?
A greater degree of certainty is required, including knowing exactly who is to benefit and how much they are to receive.
## Footnote
Uncertainty in a fixed trust can lead to the trust failing in whole or in part.
125
How does certainty of objects differ between fixed trusts and discretionary trusts?
Discretionary trusts allow for a less stringent test of certainty since trustees do not need to identify all objects.
## Footnote
This flexibility is due to the nature of discretion given to trustees.
126
What is the role of the donee of a power of appointment in terms of certainty of objects?
The donee is not required to exercise the power and does not need to identify all potential objects of the power.
## Footnote
This reflects the discretionary nature of the power and the associated flexibility.
127
What is a fixed trust?
A fixed trust is one where each beneficiary has a definable interest in the trust fund.
128
What happens if there is uncertainty as to the intended beneficiary in a fixed trust?
The trust will fail.
129
Can a fixed trust with multiple beneficiaries still operate if one or more beneficiaries are uncertain?
Yes, if the identifiable beneficiaries have a beneficial entitlement not dependent on the uncertain beneficiaries.
130
What is the ‘complete list test’ in the context of fixed trusts?
It requires trustees to be able to draw up a complete list of all beneficiaries when distributing the trust fund.
131
Define 'conceptual certainty'.
'Conceptual certainty' refers to the precision of language used by the settlor to define the class of persons intended to benefit.
132
What is ‘evidential certainty’?
'Evidential certainty' refers to the evidence enabling trustees to identify the objects of the trust.
133
What is required for a power of appointment to be valid?
It must satisfy the test of certainty of objects.
134
What is the ‘is/is not test’?
It requires a trustee to be able to say with certainty whether any given individual is or is not a member of the class.
135
What is the role of trustees in discretionary trusts?
Trustees must exercise their discretion and consider the range of possible beneficiaries.
136
True or False: Trustees of discretionary trusts must identify all potential beneficiaries.
False.
137
What does the ‘is/is not test’ imply for discretionary trusts?
Trustees do not need to draw up a complete list of objects but must satisfy the test.
138
What is the significance of McPhail v Doulton [1971] AC 424?
It established that discretionary trusts are subject to the same test of certainty of objects as fiduciary powers of appointment.
139
What does evidential certainty require in practice?
Claimants must prove to trustees' satisfaction that they are within the class.
140
What is the consequence of administrative unworkability in discretionary trusts?
The trust could be void if the class of beneficiaries is too wide.
141
What did Lord Wilberforce state about the class of beneficiaries in McPhail?
A discretionary trust is void if the class is so wide that it does not form 'anything like a class'.
142
What was the outcome in Re Baden’s Deed Trusts (No 2) regarding 'relatives'?
The term was agreed to be conceptually certain, but judges disagreed on its specific meaning.
143
What is the presumption of resulting trust?
It applies when there is no certainty of intention to create a trust.
144
Fill in the blank: A discretionary trust must have _______ for the trustees to perform their obligations.
conceptual certainty
145
How do trustees determine if a claimant meets the definition of a beneficiary?
Claimants must provide evidence, such as birth certificates or employment records.
146
What does it mean if a trust fails for evidential uncertainty?
It means that the trust cannot be validated due to lack of proof regarding beneficiaries.
147
What is the relationship between evidential certainty and the validity of discretionary trusts?
Evidential uncertainty does not necessarily invalidate a discretionary trust if a substantial number of beneficiaries are identifiable.
148
What is a key requirement for the effective administration of a trust?
Certainty of objects must be satisfied.
149
What is the presumption that applies if there is no certainty of intention to create a trust?
The presumption of resulting trust applies
## Footnote
This presumption can be rebutted by evidence showing an intention to gift the property.
150
What happens if there is a clear intention to create a trust but uncertainty of subject matter or objects?
The trust fails and an automatic resulting trust arises for the settlor
## Footnote
The intended trustee cannot keep the property in such cases.
151
What are the three certainties required for a trust to be valid?
* Certainty of intention
* Certainty of subject matter
* Certainty of objects
152
In testamentary arrangements, what is the effect if it is clear that a person is intended to receive property but unclear if they are a trustee?
It will be interpreted as a gift
## Footnote
This means no trust is imposed unless a clear intention is established.
153
What is the consequence of uncertainty as to subject matter or objects in a will?
The trust fails and property falls into residue
## Footnote
The executors will not be required to transfer legal title to the intended trustee.
154
What formalities must be considered for the declaration of a trust?
Formal requirements for creating a completely new trust
## Footnote
This applies to both self-declarations of trust and transfers on trust.
155
What are the three methods a full legal owner can deal with their property gratuitously?
* Make a gift
* Declare themselves to be a trustee
* Transfer the property on trust
156
What is a gift in the context of property?
The transfer of full legal ownership from one person (donor) to another (donee)
## Footnote
Only the formalities for transferring legal title from donor to donee need consideration.
157
What is a self-declaration of trust?
The creation of distinct legal and equitable interests in property by the legal owner
## Footnote
The legal owner becomes a trustee without changing legal ownership.
158
What must be considered when transferring legal title to create a trust?
Formalities for both the creation of the equitable interest and the transfer of legal interest
## Footnote
This applies to transfers on trust.
159
What is the key requirement of s 53(1)(b) LPA 1925 for a declaration of trust respecting land?
It must be manifested and proved by some writing signed by a person able to declare such trust
## Footnote
This is an evidential requirement.
160
What happens if the requirements of s 53(1)(b) LPA 1925 are not satisfied?
The trust becomes unenforceable
## Footnote
A trust exists from the moment it is declared but cannot be enforced until the requirements are met.
161
What is the effect of a life interest trust of land that is orally declared but evidenced later in writing?
The life tenant is entitled to income produced by the land between declaration and written evidence
## Footnote
The trust becomes enforceable once the requirements are satisfied.
162
What is a resulting trust?
An automatic trust that arises when legal title has been transferred but the trust fails for some reason
## Footnote
This can occur due to uncertainty of objects.
163
What is a constructive trust?
A trust that arises in circumstances where it would be unconscionable for the legal owner to assert beneficial ownership
## Footnote
This type of trust is exempt from the formalities of s 53(1)(b) LPA.
164
In the case of Rochefoucauld v Boustead, what was the court's decision regarding non-compliance with formalities?
The court enforced the intended express trust despite the lack of formalities
## Footnote
This case established that equity will not allow a statute to be used as an instrument of fraud.
165
What does s 9 Wills Act 1837 require for a valid will?
The will must comply with specific formality requirements
## Footnote
Non-compliance renders the will void, affecting any gifts or trusts created.
166
What is the difference between a void trust and an unenforceable trust?
A void trust cannot exist at all, while an unenforceable trust exists but cannot be enforced
## Footnote
This distinction is crucial in trust law.
167
What was the outcome of the case Bannister v Bannister?
The defendant could not deny the existence of the trust and the claimant was allowed to recover the defendant’s profit.
## Footnote
Key case: Bannister v Bannister [1948] 2 All ER 133
168
What argument did the claimant make in Bannister v Bannister regarding the oral agreement?
The claimant argued that the defendant could not rely on the oral agreement because it did not comply with s 53(1)(b) 1925.
169
What conclusion did the court reach in Bannister v Bannister?
The court concluded that the claimant held the cottage on constructive trust for the defendant.
170
In Hodgson v Marks, what was the relationship between the elderly widow and the lodger?
The elderly widow transferred her house to her lodger based on an oral understanding that the lodger would hold the house on trust for her.
171
What was the court's ruling in Hodgson v Marks regarding the trust?
The land was held on a resulting trust for the widow.
172
What complication arises in a three-party situation regarding trusts?
The trustee may deny the existence of the trust, or the settlor may request the return of the property.
173
What should Brianna do if Anmol asks her to reconvey the land after transferring it on trust for Claudette?
Brianna should seek directions from the court regarding the enforceability of the trust.
174
What does the constitution of trusts refer to?
The transfer of legal title from one party to another.
175
What is required for a gift to be constituted?
Legal title must be transferred using the correct method.
176
What is the effect of constitution on a trust?
The disposition is irrevocable and the settlor ceases to have any beneficial or legal interest in the trust property.
177
What is the leading case on constitution of trusts?
Milroy v Lord (1862) 31 LJ Ch 798.
178
What was the principle established in Milroy v Lord?
Equity will not perfect an imperfect gift or treat a failed gift as a self-declaration of trust.
179
What happens if legal title has not passed to the donee in a gift?
The gift is imperfect and the donor can change their mind.
180
In Jones v Lock, what was the father's intention regarding the cheque?
The father intended to make an absolute gift of the cheque to his son.
181
What was the outcome of Jones v Lock regarding the cheque?
Legal title to the cheque had not transferred to the son.
182
What did Richards v Delbridge illustrate about the requirements for a valid gift?
The endorsement on the lease was ineffective to assign it, hence the gift was not validly constituted.
183
What is the relationship between constitution and certainty of intention?
If legal title has not been transferred, there must be strong evidence that the owner intended to declare themselves a trustee.
184
What are the four possible lines of exception to the rule in Milroy v Lord?
* Principle in Re Rose
* The unconscionable principle
* Fortuitous vesting
* Donationes mortis causa
185
What is the general effect of the rule in Milroy v Lord?
If legal title has not been vested in the intended recipient, the disposition will fail.
186
List the four possible exceptions to the rule in Milroy v Lord.
* Principle in Re Rose
* The unconscionable principle
* Fortuitous vesting
* Donationes mortis causa
187
What does the principle in Re Rose state regarding imperfect gifts?
Equity will not perfect an imperfect gift unless legal title has been vested in the intended recipient.
188
According to Turner LJ, what must an owner do to complete a transfer of legal title?
The owner must do 'everything necessary to be done.'
189
What was the key finding in the case of Re Rose [1952] Ch 499?
The transfer of shares was effective in equity once the transferor had done everything in his power to vest the shares.
190
What conditions must be satisfied for the Re Rose principle to apply?
* The correct method of transfer must have been used
* The transferor must have done everything within their power
* The documentation must end up with the person capable of effecting the legal transfer
191
In Mascall v Mascall [1985], what was the outcome regarding the irrevocability of the gift?
The gift was complete in equity and could not be revoked by the father.
192
What does it mean for a transfer to be irrevocable under Re Rose and Mascall v Mascall?
The transfer is irrevocable if the matter is put beyond the control of the transferor.
193
In Re Fry [1948] Ch 312, why was the transfer ineffective?
The transfer required consent from the Treasury, which was not obtained before the transferor's death.
194
What is the significance of the unconscionable principle established in Pennington v Waine?
Equity can perfect an imperfect gift whenever it would be unconscionable for the donor to resile from it.
195
What factors did the court consider in Khan v Mahmood [2021] when applying the unconscionable principle?
* K believed the house was solely his
* M intended to transfer his interest
* M's actions indicated a desire to divest himself of interest
* M represented to third parties that he did not have a beneficial interest
196
What is fortuitous vesting?
Legal title vests in the recipient through another route, often due to the recipient being the personal representative of the transferor's estate.
197
In Strong v Bird (1874), what was the ruling regarding the forgiveness of a debt?
The debt was released at common law due to Bird's appointment as executor, as he was both creditor and debtor.
198
What conditions must be met for the rule in Strong v Bird to apply to imperfect gifts?
* There must be an intention to make an immediate gift
* The intention must continue until the donor’s death
* The intended donee becomes an executor of the donor’s estate
199
What did the court determine in Re Freeland regarding the intention to make a gift?
The donor must have the intention to make an immediate gift.
200
Fill in the blank: The unconscionable principle allows equity to perfect an imperfect gift whenever it would be ______ for the donor to resile from it.
[unconscionable]
201
What did Mrs Jackson claim regarding the Hillman motor car?
Mrs Jackson claimed that Mrs Freeland had given her a Hillman motor car.
202
What was the condition set by Mrs Freeland regarding the Hillman motor car?
Mrs Freeland agreed to give the car to Mrs Jackson when it was back on the road.
203
What did Mrs Freeland do with the car before her death?
Mrs Freeland lent the car to another friend, Mrs Rodgers, for a few months.
204
What did Lord Evershed MR state about the intention of giving?
There must be an intention of giving, as distinct from an intention to give.
205
What does the fact that the car had been lent indicate?
It indicated a future intention to give, not an immediate gift.
206
What is required for a gift to be valid according to the continuing intention principle?
There must be a continuing intention to give which remains unchanged until the death of the donor.
207
What was the outcome in Re Gonin regarding the mother's intention to give her house?
The mother changed her intention by writing a cheque, thus there was no continuing intention to give the house.
208
What happens if a person dies intestate?
An administrator is appointed by the court to administer their estate.
209
What principle does the rule in Strong v Bird extend to?
It extends to include personal representatives appointed independently of the donor.
210
What is a donation mortis causa?
A gift made in contemplation of death, traditionally known as a 'deathbed gift'.
211
What are the requirements for a valid donation mortis causa according to Cain v Moon?
The gift must be made in contemplation of death, conditional on death, and there must be delivery of the property.
212
In King v Dubrey, what did the Court of Appeal conclude about the elderly woman's gift?
She had no reason to anticipate dying immediately; thus, the gift was not made in contemplation of death.
213
What does the delivery of property entail in the context of a donation mortis causa?
The donor must part with 'dominion' of the property by handing it or something representing title to the donee.
214
What was the ruling in Sen v Headley regarding the delivery of property?
There was a valid DMC of the house by constructive delivery of the title deeds via the keys to the steel box.
215
What is the rule against remoteness of vesting?
It requires that a person must obtain a vested interest in the trust property within a recognized perpetuity period.
216
What is the statutory perpetuity period according to the Perpetuities and Accumulations Act 2009?
The statutory perpetuity period is 125 years.
217
What happens to any interest under a trust that does not vest within the statutory perpetuity period?
It is void.
218
What do the class closing rules in Section 8 of the Act aim to do?
They can save a trust by excluding objects whose interest would vest outside the perpetuity period.
219
What is the purpose of express perpetuity clauses in trust instruments?
They limit the duration of the trust and provide mechanisms for disposing of any trust property at the end of this period.
220
What problem does poor drafting of a trust instrument create?
It may prevent intended beneficiaries from making use of their interest under the trust.
221
What is an example of a situation where the rule against remoteness applies?
When a trustee holds property on trust for A for life, remainder to B.
222
What is the difference in perpetuity between trusts benefiting individuals and those benefiting charities?
Charitable trusts can last indefinitely without perpetuity issues, unlike non-charitable trusts.
223
What are the two forms a charity may take?
A company or a charitable purpose trust
224
Can a charitable purpose trust exist indefinitely?
Yes, it can go on indefinitely without issues of perpetuity
225
What happens to a trust with beneficiaries once the capital is distributed?
The trust is extinguished
226
How does capital vesting in charity trustees differ from beneficiaries?
Capital with charity trustees continues to be held and used unless the property runs out
227
What is the 'wait and see' rule in relation to trusts?
Trustees hold property on trust for up to 125 years while waiting for conditions to be satisfied
228
What happens if no one obtains an interest in the trust property within 125 years?
The trust will come to an end
229
What is the common law perpetuity rule?
A rule that assets cannot be tied up on trust for longer than a specified life in being plus 21 years
230
Does the common law perpetuity rule apply to charitable purpose trusts?
No, it does not apply to most trusts but remains relevant to non-charitable purpose trusts
231
What must be certain for a non-charitable purpose trust to be valid?
It must come to an end within the perpetuity period
232
What should a drafter include to ensure the validity of a non-charitable purpose trust?
An express perpetuity clause limiting the duration
233
What is an example of an imprecise limitation of a trust period?
For so long as the trustees can legally do so
234
How can the perpetuity period be extended?
By referencing a human life in being
235
Can animal lives be used as lives in being?
No, lives means human lives
236
What happens if a trust is set to maintain an animal?
It will likely be void due to uncertainty of the animal's lifespan
237
What is a valid purpose for a non-charitable purpose trust?
Maintaining a grave
238
What happens if only the income is used to maintain a grave?
The trust is void for perpetuity
239
Why is a trust for maintaining a tortoise likely to be void?
It is uncertain if the tortoise will die within the 21-year perpetuity period
240
What should all non-charitable purpose trusts include for validity?
An express perpetuity clause
241
What is a preferable clause to ensure clarity in perpetuity duration?
A clause explicitly limiting the trust to the common law perpetuity period of 21 years
242
What occurs if a trust instrument is silent on the perpetuity period?
There will be a resulting trust for the settlor or their estate
243
What is the implication of using a clause stating 'as long as the law allows'?
It is likely interpreted as the common law perpetuity period of 21 years
244
What is a Royal lives clause?
A clause that provides the perpetuity period starts running at the death of a named person
