Trust scenarios Flashcards
What is a potential resulting trust?
A trust that arises when X provides the purchase money for a property but the conveyance is taken in the name of Y unless a gift was intended.
The equitable interest is acquired by X proportional to their contribution.
What happens when X contributes to the purchase price of a property registered in Y’s name?
A potential resulting trust arises, where X acquires an equitable interest proportional to their contribution.
This principle applies unless there is evidence of a gift.
What is a constructive trust?
A trust that arises when a trustee or personal representative makes an unauthorized profit from their position, holding the profit on trust for the beneficiaries.
This ensures the beneficiaries receive the profits they are entitled to.
What is the implication of Y declaring to X that ‘the money is as much yours as mine’ regarding a bank account?
It creates a potential resulting trust, presuming intention for the property to be held in equal shares.
This reflects a mutual understanding of ownership.
What occurs when a discretionary trust is set up without instructions for the trust fund after the beneficiaries’ death?
A potential resulting trust arises, with the trust assets held on a resulting trust for the original settlor or their estate.
This ensures that the assets revert to the settlor’s estate if no beneficiaries remain.
What defines a constructive trust when A and B cohabit regarding property ownership?
A constructive trust in favor of B arises if there is a common intention that B should have a beneficial interest and B acts to his detriment based on that intention.
What is the presumption regarding property transferred to Y without consideration?
A potential resulting trust is presumed, indicating Y is holding it on trust for X unless contrary evidence exists.
This presumption exists in voluntary transfers.
What happens when a trust fails due to non-compliance with formalities?
A resulting trust arises, returning the property to the donor or their estate.
This ensures that the donor’s intentions are respected.
What is the status of funds held by X that were paid to him by mistake?
A constructive trust is created, with the funds held on trust for the original owner.
This protects the rights of the original owner.
What happens when a testator leaves property to a beneficiary with an understanding of a subsequent transfer?
A constructive trust is imposed, binding the personal representative to transfer the property as intended.
This reflects the testator’s intentions.
What is the result of an unmarried couple purchasing a house without express beneficial interest declarations?
Equity follows the law, establishing them as joint tenants both in law and equity.
This means they share equal ownership rights.
What is the outcome if A and B made mutual wills and B revokes after A’s death?
A constructive trust is created to perform the contract.
This upholds the intentions of the mutual wills.
What does equity presume when A leaves money to B in a will after owing a debt?
Equity imputes an intention to fulfill an obligation, presuming the money left satisfies the debt owed.
This presumption is rebuttable.
What is the principle when A promises B a gift but fails to complete it?
Equity will not assist a volunteer; no equity to perfect an imperfect gift unless exceptions apply.
This emphasizes the need for formalities in gift transfers.
What happens if A completed a share transfer but registration was not finished?
Rule in Re Rose applies: the gift is effective in equity once the donor has done everything in their power, creating an equitable interest for B.
Legal title remains with the donor until formal registration is completed.
What is the effect of failing legal requirements for a valid transfer when the donee is the executor?
Rule in Strong v Bird applies: if there is a clear intention to make the gift until death, equity will perfect the gift upon the donor’s death.
This ensures the donee receives the property as intended.
What principle applies when X intends to transfer shares to Y but does not complete the transfer?
Rule in Pennington: despite not observing formalities, if X intended an immediate gift and Y acted on that belief, it would be unconscionable for X to retract.
This protects the reliance interests of Y.
What is the role of a court in determining equitable interest?
A court decides:
* Whether a non-owner is entitled to a beneficial interest
* Whether a beneficial joint owner is entitled to a larger share
* Whether a tenant in common is entitled to a larger share than previously agreed
Courts intervene in disputes regarding equitable interests in property.
What is the first stage of establishing a beneficial interest through a common intention constructive trust?
Stage (1): Establishing Agreement and Detriment
* Common intention: Agreement for beneficial interest
* Detrimental Reliance: Acting to detriment based on common intention
Intention can be expressed or inferred from conduct.
What must a claimant show to establish detrimental reliance?
The claimant must show they have acted to their detriment in reliance on the common intention, which can include:
* Financial contributions
* Non-financial contributions
Contributions can be direct or indirect.
What is the second stage in quantifying beneficial interests?
Stage (2): Quantifying Beneficial Interests
* Court ascertains each party’s share when proportions are unclear
* Court infers intentions from conduct
* If intention is impossible to establish, court can impute a fair share
The burden of proof lies with the party claiming different beneficial ownership.
What are the elements required to rely on proprietary estoppel?
The claimant must satisfy the following elements:
* Assurance: Induced belief of rights over property
* Reliance: Reliance on that assurance
* Detriment: Acting to detriment based on the assurance
Detriment can include non-financial actions.
What is the test of unconscionability in proprietary estoppel?
The question is whether it would be unjust to allow the property owner, who has given the assurance, to go back on it
This principle underpins the equitable jurisdiction of courts.
