Trust 5 Formalities & Constitution

Question 1

What happens with a discretionary trust and a power of appointment where the class of objects is too wide?

Answer 1

Discretionary = void
Power = remains valid

Question 2

What formalities are there to create an express trust of land?

Answer 2

Manifested and proved
- By some writing (evidence of intention and its terms)
- Signed by some person able to declare such trust (or by will)

Question 3

What if there is no written evidence?

Answer 3

The trust is unenforceable NOT void. This means that if, later, the transfer is evidenced in writing, the beneficiaries will be able to enforce their rights going back to the original date of creation of the trust.

Question 4

What are the cases on oral agreements of land?

Answer 4

• A sold to B on the oral agreement that B would hold it on trust - held constructive trust created as would otherwise be fraud.

Question 5

What formalities are there to create an express trust (not of land)?

Answer 5

No real formalities, just must satisfy requirements e.g. certainties

Question 6

What are consequences of not complying with formalities to create a trust in land?

Answer 6

Renders the trust unenforceable (not void): beneficiary can’t enforce rights until requirements are satisfied & when they are, can enforce rights in respect of period before

Question 7

What happens if formalities to create a trust are never satisfied?

Answer 7

• Trust remains unenforceable subject to anything rendering it unconscionable for settlor to deny the trust
• For transfer on trust, if settlor also makes no attempt to constitute, will be unenforceable and void for lack of constitution subject to unconscionability

Question 8

What is constitution?

Answer 8

Transfer of legal title

Question 9

How is constitution achieved for cheques?

Answer 9

• Cheques: endorsing cheque by signing on back

Question 10

How is constitution achieved for registered land

Answer 10

• Registered Land: valid deed, registration

Question 11

How is constitution achieved for shares,

Answer 11

• Shares: sign stock transfer form & send to company; title passes when named entered in register

Question 12

How is constitution achieved for choses in action (debts and money in a bank account),

Answer 12

• Choses in Action: notice in writing to debtor/bank

Question 13

How is constitution achieved for chattels?

Answer 13

• Chattels: by deed or gift; deliver with evidence of intention

Question 14

What is effect of constitution?

Answer 14

Disposition is irrevocable - settlor ceases to have any legal or beneficial interest in property

Question 15

When will constitution fail for trust property? And for gifts?

Answer 15

Trust: if not vested in trustees
Gift: if legal title hasn’t passed

Question 16

What is the doctrine of equity will not assist a volunteer?

Answer 16

Equity won’t compel a settlor to transfer legal title i.e. won’t perfect an imperfect gift or treat it as a self-declaration of trust if constitution fails

Question 17

What was Milroy v Lord and others

Answer 17

• tried to transfer shares to a trust but didn’t fill in share transfer form. Therefore, gift failed.
• father put cheque in baby’s hand saying it was for B but didn’t endorse cheque - no gift and no trust as intention was gift

Question 18

What are the exceptions to principle of equity won’t assist a volunteer?

Answer 18

1. Re Rose
2. Fortuitous Vesting
3. DMC

Question 19

What is the principle in Re Rose?

Answer 19

Transfer of shares/land effective in equity once transferor has done everything in their power to effect transfer

• Correct method of transfer used
• Transferor did everything w/in their power
• Documentation in hands of person capable of effecting transfer/transferor has put matter beyond their own control

Question 20

Would sending docs to your solls for them to deal with be within Re Rose?

Answer 20

No - Sending it to solicitor is not doing everything as solicitor agent of transferor

Question 21

Would sending docs to the donee for them to deal with be within Re Rose?

Answer 21

Yes

Question 22

What is the principle of unconscionability in relation to Re Rose?

Answer 22

Might also apply where unconscionable not to do so - proprietary estoppel
1) Assurance (you’ll have the shares Harrold)
2) Reliance (Harold became a director)
3) Detriment (Harold took on duties as director)
Must be unconscionable to go back on assurance

Question 23

What is fortuitous vesting?
(Strong v Bird)

Answer 23

The intended recipient of a gift is also the PR of transferor’s estate, so gift is perfected on death

• Intention to make immediate gift
• Intention must continue until donor’s death
• Intended donee becomes executor of donor’s estate

Must relate to existing property, not future

Question 24

What case covers immediate gift for Strong v Bird?

Answer 24

• A promised car to B but it needed to be repaired
• A then lent car to C

Gift from A to B not immediate

Question 25

What case covers continuing intention for Strong v Bird?

Answer 25

• Mother promised daughter house
• M gave D a cheque instead
• D became executor
• No gift as intention changed when cheque was given

Question 26

What is a DMC?

Answer 26

Gift made in contemplation of death
Gift:
- made in contemplation of imminent death
- conditional on death
- Delivery of property (not necessarily transfer of legal title, just part with control - can be constructive e.g. keys to a locked box containing deeds)

Note: unlike fortuitous vesting DMC does not require the gift to be immediate, just IF dies.

Question 27

What is the case for DMC

Answer 27

• keys to box containing deeds to house = enough

NOTE (keys to house would not be enough)

Question 28

To make a trust of land, does the declaration and writing have to be contemporaneous?

Answer 28

No, just need evidenced in writing.

Question 29

What happens if there is no evidence in writing of a trust of land

Answer 29

The trust is unenforceable but not void. This means the beneficiary can’t enforce their rights unless and until the trust is evidenced in writing.

Question 30

If a trust in land is later recognised in writing, can the beneficiary sue in respect of the time between declaration and the written evidence of that declaration?

Answer 30

Yes. The declaration acts retroactively.

Question 31

Does a trust in land always need to be evidenced in writing?

Answer 31

No, only express trusts need do so. Resulting and constructive trusts do not need to be evidenced in writing

Question 32

Does an imperfect gift or trust create a valid trust

Answer 32

No,
- an imperfect gift does not make a trust (I.e. not taking a step required to transfer ownership) and
- if title doesn’t move to the trustees then the trust is imperfect and void.