Trusts

Question 1

What is a private trust?

Answer 1

All non-chatitable trusts

Question 2

What is an express trust?

Answer 2

Intentionally created by the settlor (person creating the trust)

Question 3

What does inter vivos mean?

Answer 3

During the lifetime of the settlor

Question 4

What is a trustee?

Answer 4

Holds the legal title of the trust assets and are under a duty to administer the assets for the benefit of the beneficiaries

Question 5

What are the three certainties?

Answer 5

Requirements of a valid trust:

• Certainty of intention
• Certainty of subject matter
• Certainty of objects

Question 6

What will the court look at to ascertain intention?

Answer 6

Maxim - ‘equity looks to the substance rather than the form’

Intention/ conduct

Question 7

What is UNLIKELY to show intenton to create a trust?

Answer 7

Precatory words:
* expressing in confidence
* wish
* belief
* hope
* reccomendation
* ‘I have no doubt’

NO TRUST unless the whle document shows intention to create a trust

Precatory = absolute gift ONLY

Question 8

What is a gift over in default of appointment?

Answer 8

Settlor gives trustee discretion on distribution of the trust property = mandatory obligation

Includes an alternative gift/ instruction if failure to distribute

Question 9

When can informal words/ actions create a trust?

Answer 9

Series of declarations and conversations

e.g opening a bank account

Case law - awarded trust 50/50 split

Question 10

What amounts to intention to create a trust in the absence of words/ document? Example.

Answer 10

Conduct:
Keeping money in a seperate bank account evidence of a company creating a trust

Question 11

What will NOT amount to certainty of subject matter?

Answer 11

If the property is not described with sufficient certainty e.g ‘bulk of my residuary estate’

Question 12

What is the residuary estate?

Answer 12

Everything left after all debts/ taxes have been paid in full and all gifts distributed.

Question 13

What is the subject matter of a trust?

Answer 13

• Property under a trust
• Beneficial entitlement of each beneficiary (how much entitled to)

Question 14

When will the court use an objective assessment for certainty of subject matter?

Answer 14

‘reasonable income’ = sufficiently certain

Question 15

How do tangible assets have certainty of subject matter?

Answer 15

Property under a trust is clearly identified by separation

no segration customer = unsecured creditor (not entitled to order)

Question 16

How do intangible assets have certainty of subject matter?

Answer 16

If the assets are similar - no need for segregation

Question 17

What is certainty of objects?

Answer 17

Certainty on who the beneficiaries are

Question 18

What is a fixed trust?

Answer 18

Beneficiary is entitled to a specific share of the trust property

Question 19

What is a discretionary trust?

Answer 19

Trustees have disretion on whether or not to pay any member of a defined class of beneficiaries

Beneficiaries have no automatic right to payment ONLY to be considered.

Question 20

What is the test for certainty of objects in a fixed trust?

Answer 20

Ascertainability test - possible to compile a complete list of all beneficiaries

Question 21

What is the test for certainty of objects in a disctretionary trust?

e.g employees and their relatives

Answer 21

Individual ascertainability test - said with certainty an individual is/ isn’t a member of the class

Question 22

What issues arise when acertaining certainty of objects

Answer 22

• Conceptual uncertainty
• Evidential uncertainty
• Administrative workability
• Gifts to individuals answering a particular description - one-person test

Question 23

What is conceptual uncertainty?

Answer 23

Words used to describe beneficiaries are too vague = trust void

Question 24

What is considered conceptually uncertain?

Answer 24

• ‘friends’
• ‘relatives’
• ‘family’
• ‘dependants’

Question 25

When is there NO conceptual uncertainty?

Answer 25

* Settlor gives information to identify the class e.g 'Facebook friends' * Settlor gives someone discretion to decide who is within the class

Question 26

What is evidential uncertainty?

Answer 26

Cannot determine who fits the description of a beneficiary due to lack of evidence = trust fails

Question 27

What is extrinsic evidence?

Answer 27

Facts/ information used outside of a written document (will/deed) Will stop a trust bing evidentially uncertain.

Question 28

What is administrative workability?

Answer 28

Trust will fail where the definition of beneficiaries is too wide to form a class | e.g a population

Question 29

What is the one-person test?

Answer 29

Where the entitlement of beneficiaries does not effect the size of each gift. Conceptual certainty is NOT required. | e.g series of individual gifts

Question 30

What happens if one of the certainties is not met?

Answer 30

Trust fails - property goes back on resulting trust to the settlor

Question 31

What formalties are required for a trust fo personalty?

Answer 31

No formalities required | Can be through words/ conduct/ intention

Question 32

What formalities are required for trusts fo realty?

Answer 32

S53(1)(b): * Evidenced in writing * Signed by settlor * Oral = date is the date of oral declaration * Unenforceable if not complied with

Question 33

What happens if formalities of a realty trust are not complied with?

Answer 33

Trust is **unenforceable** NOT void (prevent trustee from gaining unjust enrichment) Trustee will hold on RESULTING trust only | if the trust was void, trustees could try to keep the property

Question 34

When will an oral trust satisfy the formalities?

Answer 34

If the declaration is later written & signed (date of oral declaration is the date of the trust)

Question 35

When will a testamentary trust be valid?

Answer 35

Executed in accordance with the Wills Act 1837: * In writing * Signed by testator * attested by 2 independent witnesses in the testator's presence

Question 36

When is the transfer of equitable interest under a trust valid?

Answer 36

S53(1)(c): * Subsisting equitable interest (already separated from legal title) * Applies to trusts of personalty or realty * In writing * Void is if not complied with (NO TRANSFER * Signature by an agent with authorisation is valid

Question 37

What are the methods to dispose of an equitable interest?

Answer 37

1. Assigning to a third party 2. Direct trustees to hold the property for a third party 3. Contract for valuble consideration to assign the equitable interest 4. Declare oneself a trustee of such an interest

Question 38

How can a beneficiary asisgn their interest to a third party?

Answer 38

Comply with S53(1)(c) or void