Trusts

Question 1

What is a trust?

Answer 1

A legal arrangement where assets are held by one party (the trustee) for the benefit of another (the beneficiary)

Question 2

Who is the settlor?

Answer 2

The person who creates the trust and provides the assets

Question 3

Who is the trustee?

Answer 3

The person or entity responsible for managing the trust assets for the benefit of the beneficiary

Question 4

Who is the beneficiary?

Answer 4

The person or group who benefits from the trust assets

Question 5

What is an express trust?

Answer 5

Created intentionally by the settlor through a trust deed or other agreement

Question 6

Trusts arise when…

Answer 6

the legal and equitable interests of the property are divided

Question 7

Trusts are either…

Answer 7

Express or implied

Question 8

What can exist in trust property?

Answer 8

A variety of different interests

Question 9

A trust relationship can be identified when…

Answer 9

The legal title is owned by one person (the trustee) ad the beneficial interest is held by another (the beneficiary)

Question 10

The trust provides for…

Answer 10

a legal owner to be able to deal with property for the benefit of those who cannot or do not want to deal with it themselves

Question 11

What are express trusts made up of?

Answer 11

Private and Public trusts

Question 12

Private trusts are created for…

Answer 12

the benefit of private individuals or classes of individuals

Question 13

What are public trusts?

Answer 13

Trusts which benefit members of the public

Question 14

How are express trusts made?

Answer 14

Expressly by the settlor. Can be inter vivos (made during the lifetime of the settlor) or testamentary (made through the settlor’s will to take effect upon their death)

Question 15

What is the settlor referred to as after their death?

Answer 15

Testator/testatrix

Question 16

What happens in a fixed trust?

Answer 16

The beneficiaries and their interests under the trust are clearly specified

Question 17

What happens in a discretionary trust?

Answer 17

The property is held on a trust by the trustee who has some discretion (choice) over who, within the specified class is to benefit, what their share of the trust property will be, or both

Question 18

What are bare trusts?

Answer 18

When a property is left on trust and the trustee has no discretion or contingencies. Trustee’s only duty is to hold the property for the beneficiary

Question 19

What are protective trusts?

Answer 19

Trusts aimed at preventing an irresponsible beneficiary from wasting trust property

Question 20

What does s.33 Trustee Act do?

Answer 20

Beneficiary is given a life interest which is determinable (can be forfeited) on given events

Question 21

What can interests be?

Answer 21

Vested or contingent

Question 22

An interest under a trust is said to…

Answer 22

Vest in the beneficiary when the beneficiary has a present right over the trust property

Question 23

Vested interest can be either to …

Answer 23

a present right to a present interest, or a present right to a future interest

Question 24

It is important that a vested interest is…

Answer 24

owned by the beneficiary

Question 25

What happens to the interest if the beneficiary dies?

Answer 25

The interest will pass with their estate

Question 26

What is a contingent interest

Answer 26

Conditional

Question 27

What are implied trusts?

Answer 27

Those which are not expressly created

Question 28

What types of implied trusts are there?

Answer 28

Resulting, Constructive and Statutory

Question 29

What are statutory trusts?

Answer 29

- Statutory provisions impose a trust - When a person dies without leaving a valid will - The Administration of Estates Act 1925 provides for settlement of the estate for family members are assumed intention of the deceased

Question 30

When do resulting trusts arise?

Answer 30

- Where there has been a failure to validly create a trust - Property is voluntarily transferred to another or purchased in the name of another. Based on presumed intention of the resulting beneficiary

Question 31

What are constructive trusts?

Answer 31

- Based on the presumed intention of the parties

Question 32

What does a trust create?

Answer 32

A legally enforceable right for the beneficiary and a legally enforceable obligation for the trustee

Question 33

What does a power provide?

Answer 33

For the donee of the power to use property in a certain way, but this power is not enforceable

Question 34

Trust powers

Answer 34

- A trustee has powers given to them within the trust, such as the power to invest - There are also dispositive powers, meaning that the trustee can give (appoint) property to the beneficiaries from the trust property

Question 35

What are not part of a trust, but a 'mere' power?

Answer 35

Fiduciary duties.

Question 36

What does it mean by 'mere power'?

Answer 36

Something that can be done but does not need to be done; something valid but enforceable

Question 37

The person who may benefit from the power...

Answer 37

cannot make the fiduciary exercise the power, but can make sure the fiduciary considers exercising the power, and the donee of the power must not act unreasonably in making the decision to exercise the power

Question 38

A fiduciary power...

Answer 38

is a power that is held by a person who is in a fiduciary position, such as a trustee. It's the status of the donee of the power that makes it a fiduciary power

Question 39

Who is the power of appointment given to?

Answer 39

A person who has no fiduciary obligation

Question 40

How can the power of appointment be further complicated?

Answer 40

By a range of objects which are within the class of potential people who may benefit from the exercise of the power

Question 41

What is a general power?

Answer 41

Can be executed to anyone in the world, including the donee and the donor

Question 42

What is a special power?

Answer 42

Exercisable for anyone of a defined class

Question 43

What is the difference between a testator and a testatrix?

Answer 43

Gender