Topic 2 - Essentials of a Trust Flashcards
(30 cards)
Knight v Knight
Facts of the Case
The case involved a will left by Lord Luxborough. He made his will leaving the property to his brother, Thomas Andrew Knight and in tail male to his male descendants. But if there were none, the property was to pass to the “next descendant in the direct male line of my late grandfather, Richard Knight of Downton”. However, he also stated:
“I trust to the liberality of my successors to reward any others of my old servants and tenants according to their deserts, and to their justice in continuing the estates in the male succession, according to the will of the founder of the family, my above-named grandfather”.
Judgment
The court held that the will did not create a valid trust because it lacked the necessary certainties. Lord Langdale MR, who delivered the judgment, established the three certainties required for a trust to be valid.
Edward v Carter
Principles
A minor can affirm or repudiate a contract of marriage within a reasonable time after coming of age or at the attainment of majority. Thus, marriage contract is voidable on the part of the minor and can be affirmed or repudiated upon coming of age within a reasonable time.
Case Summary
It was held that an infant who was party to a marriage settlement could no longer repudiate it at the age of twenty-four because he had already passed the infancy age.
Re Kayford
Key Facts and Issue:
Kayford Ltd, a mail-order company, received advance payments from customers for goods not yet delivered.
The company, facing financial difficulties, segregated these payments into a separate bank account.
The question was whether the funds in the separate account were held on trust for the customers or as part of the company’s general assets for creditors.
Decision:
The court determined that Kayford Ltd’s directors’ actions, including opening a separate account and labeling it a “trust account,” demonstrated a clear intention to create a trust over the customer funds.
This indicated that the funds were to be held for the specific benefit of the customers, not as part of the general assets available to creditors.
Shaw & Ors v Taylor & Ors
The testator directed his trustees to use an unspecified property for the building of a hall “which shall be and remain for the absolute use of my country men of Lagos community forever”. The court held that the intention to create a trust was clear.
Re Adams V Kensington
There is no trust where the donor couples his gift with a request, entreaty or recommendation to the donee and giving th edonee the discretion of either acceding to the request or not.
Facts: A testator gave all his real and personal estate unto and to the absolute use of his wife, and assigns, <in full confidence that she would do what was right as to the disposal thereof between his children, either in her lifetime or by will after her decease= Issue: Was there a trust created with the wife as the trustee and the children as beneficiaries?
Mussoorie Bank v Raynor
Similar fact with Re Adams… But this was decided before Re Adams.
Re Johnson
There is no trust where the testator provides that “ I request that my mother will on her death leave the property or what remains of it… to my sisters.”
Re Green
The word, “I particularly desire that my brother share shall at his death pass to his sons” does not create trust.
Re Barton
Where the testator disposes his property wishing that is be used in a certain way, a trust is not created.
Internal Revenue Board v Broadway Cottage
Case Summary
The settlor created a trust and directed that the income from the trust fund should be used to benefit all or any of those falling within the classes of beneficiaries listed in a schedule to the deed. It was not possible to list all the possible beneficiaries to this trust, but it was clear that two specific beneficiaries were within one of the named classes. Accordingly, they argued that the trust was sufficiently precisely defined, and should not fail for uncertainty of objects.
Held:
Jenkins LJ stated ‘It must, we think, follow from the appellants’ concession to the effect that the class of ‘beneficiaries’ is incapable of ascertainment, and we understand them not to dispute, that the trust of the capital of the settled fund for all the beneficiaries living or existing at the termination of the appointed period, and if more than one in equal shares, must be void for uncertainty, inasmuch as there can be no division in equal shares amongst a class of persons unless all the members of the class are known . . . The trust of income during the appointed period as actually declared by clause 8 is not in those terms, but is a trust to apply such income for the benefit of all or such one or more of the settlor’s wife and the beneficiaries as the trustees in their discretion think fit, and the question in the case is, in effect, whether the power of selection thus conferred on the trustees saves the trust from uncertainty having regard to the concession made by the Crown to the effect that, while the trustees can never discover all the beneficiaries, they can always tell whether a given individual is or is not one of the beneficiaries, and can therefore, with certainty, confine any payments they think fit to make to persons qualified as beneficiaries according to the terms of the schedule. If the class of beneficiaries was an ascertainable class, it would or might be possible to imply a trust in default of distribution by the trustees for all the members of the class in equal shares, and that would be a trust that the court could control and execute. But, as the class is unascertainable, no such trust can be implied. Again, if the class was ascertainable, it would or might be possible for all the beneficiaries to join in a demand for the execution of the trust by the distribution of the whole income amongst themselves in equal shares, and proper for the court to recognize and enforce that demand as made by all the persons beneficially interested in the subject-matter of the trust. But, as the class is unascertainable, no such demand is possible. Short of the whole class, no beneficiary or collection of beneficiaries can claim execution of the trust, for the trustees are under no duty to any particular beneficiary or beneficiaries, short of the whole class, to make any distribution to him or them of the whole or any part of the income; and such duty as the trust purports to impose on them towards the class as a whole is illusory, since the whole class can never be ascertained.
Comiskey v Bowring-Hanbury, [1905] AC 84
The testator transferred his property by his will to his widow, subject to the following terms:
In full confidence that she will make such use of it as I should have made myself and that at her death she will devise it to such one or more of my nieces as she may think fit and in default of any disposition by her thereof by her will. I hereby direct that all my estate and property … shall at her death be equally divided among the surviving said nieces.
The widow asked the court to determine whether she took the property absolutely or subject to a trust in favor of the nieces.
Held:
The intention of the testator was to transfer the property absolutely to his widow for life and, after her death, one or more of his nieces was or were entitled to benefit, subject to a selection by his widow. Failing such selection, the nieces were entitled equally. This appeared to be merely a moral obligation on the wife; however, the House of Lords held (by a majority) that a trust had been created. This is because the entire instrument must be construed (you must look at the whole document, and not just the phrase in isolation). Having expressed that the property would be dealt with in full confidence (and thus looking like a moral obligation), the settlor went on to say that he directs that the property should be held on trust so this showed there was not just a moral obligation. ‘[E]ven if you treat the words in confidence as only expressing a hope or belief, the will would run thus: I hope and believe that she will give the estate to one or more of my nieces, but if she does not do so, then I direct that it shall be equally divided between them. I think that is a perfectly good limitation. The true antithesis I think is between the words such one or more of my nieces as she may think fit and the words equally divided between my surviving said nieces.’ It has been suggested that a more obvious construction is to say that the widow took a life interest; a power of appointment of the remainder and that there was a gift to the nieces equally in default of appointment.
Contrast with Re Adams and Kensington Vestry, [1884] 27 Ch D 394
Re Bridgen’
where unmarried testatrix directed; “in case of my unmediated decease, [wish E and H to possession of all my possessions to be held in trust after my death and divided equally amongst all my relations” when she died her parents were still alive and she had no brothers.
Although her first sister predeceased her but their children survived her. It was held that the estate should be divided equally among the persons who would have been entitled under the Administration of Estate Act if the testatrix had died intestate.
Re William,
a wife gave all her property to her husband “absolutely knowing that he is fully aware of my intention that at his death all my possessions are to be sold and given to the All Souls church. Hastings… I am aware of my husband’s intention to bestow his possession at his death on the same All Souls Church” the wife died intestate four years later. The parochial church council claimed the wife’s property while the next of kin of the husband claimed that he had taken the property absolutely from the trust. It was held that the husband knew of the content of the wife’s will before she made her will even after making the will but kept silent impliedly agreeing to carry out her wishes giving rise to an equitable obligation to carry out the wife’s wishes which the court will enforce.
Ali v. Ali (1942) 8 W.A.C.A. 1
The words “I leave in charge”, which was contained
in a will came up for adjudication in, whether they
were capable of creating a trust. While the trial judge and the West African Court
of Appeal, held that a trust was created, the Privy Council decided otherwise, on
the ground that the words used are not the ones widely used and that construing
the will of the testator as a whole, no trust was created
Re Bridgen
A trust may also arise from the presumed intention of the settlor.
Case Summary
An unmarried testatrix directed; in case of my unmediated decease, I wish E and H to possession of all my possessions to be held in trust after my death and divided equally amongst all my relations” when she died her parents were still alive and she had no brothers. Although her first sister predeceased her but their children survived her. Held:
It was held that the estate should be divided equally among the persons who would have been entitled under the Administration of Estate Act if the testatrix had died intestate. Tag- Implied Trust
Palmer v Simmonds”
where the subject matter of the trust was “the bulk of my said residuary estate”
Sprange v Bernard
a testatrix gave a property to her husband “for his use and at his death, the remaining part of what is left, that does not want for his use,” to be divided between a brother and sisters; the husband took absolutely.
Curtis v. Rippon
a testator left all his property to his wife
“trusting that she would in fear of God, and in love to the children committed to her care, make such use of it as should be for her own and their spiritual development and temporal good, remembering always according to circumstances, the church of God and the poor.” The court held that the wife was absolutely entitled to the property because no specific
Boyce v. Boyce”
where a testator devised two houses to trustees on trust to convey one to Maria “whichever she may think proper to choose or select” and the other to Charlotte.
Maria having predeceased the testator, it was held that Charlotte had no claim as it was uncertain which of the two houses she was to take
Re Golays Will Trusts
, ‘ a direction to executors that a legatee was to receive a reasonable income…” was declared valid, the court holding that the testator intended the yardstick the court would apply and there was therefore no uncertainty.
Re Gesterner’s Settlement [1953] 1 Ch 672
, Harman J had to consider the validity of a power given to trustees to distribute among a very wide class, including directors and employees or former employees of a large number of companies, with a gift over in default. Since membership of the class constantly fluctuated, it was impossible to draw up a list of the entire class at any one time.
He held that it was not necessary to know all the objects in order to appoint, and that it was not fatal that the entire class could not be ascertained.
Gulbenkian’s Settlements [1970] AC 508
, trustees were given a power to apply income from the trust fund to maintain, among others, any person in whose house or in whose company or in whose care Gulbenkian may from time to time be residing, and there was a gift over in default of appointment. In upholding the power, the House of Lords held that the individual ascertaina-bility test was the applicable test for powers: a power would be valid if it could be said with certainty whether any given individual was or was not a member of the class, and would not fail simply because it was impossible to ascertain every member of the class.
Re Coatest
a power conferred by a testator on his wife as follows” if my wife feels that I have forgotten any friend I direct my executors to pay to such friend or friends as are nominated by my wife a sum not exceeding 25pounds sterling per friend with a maximum aggregate of 250 pounds sterling so that such a friend may buy a small memento of our friendship” was held valid. There is no duty to distribute but only a duty to consider and consequently it is not necessary that all the possible members of the class should be considered, it is sufficient if it can be ascertained whether any individual is a member of the class or not* even if no list of members of the class can be made.
Saunders v Vautier
Establishes the rule which permits that on the concurrence of the all beneficiaries, so long as they are adult and sui juris, the trust agreement may be terminated and such resettled or distributed
