trusts

Question 1

melville v nobles trs

Answer 1

trustees may be liable if they do not properly invest funds, low yield, low risk (19 years parking reciept)

Question 2

clarke v clarke trs

Answer 2

same as melville; poor investment decisions led to trustee being liable to losses (held shares for years)

Question 3

raes v meek

Answer 3

counters melville; trustees liable for being taking a high risk, poor investment decision - trustee should maintain the same amount of diligence as he would his own affairs

Question 4

trustee must not borrow from trust case

Answer 4

perston v perston trs

Question 5

trustee must not buy from trust case

Answer 5

university of aberdeen v magistrates of aberdeen (bought land at full market value however still held liable)

Question 6

case explaining auctor in rem suam (and define it)

Answer 6

this means the trustee acting as ‘actor in their own cause’; must not place himself in position where his interests as a trustee and individual conflict
case: martin v city of edinburgh

Question 7

hardie v morrisson

Answer 7

trust purposes that are too obscure will be void (‘free though’ bookshop case) - unsure of trustor intention

Question 8

mccaig v university of glasgow

Answer 8

trust purposes with no substantial human benefit (contrary to public policy) will be void (statues of family on tower)

Question 9

describe liferent

Answer 9

a subordinate real right to use someone’s property for life and enjoy its benefits

Question 10

define fiar, fee and liferenter

Answer 10

fiar is the owner of the property, the ownership itself is called the fee, and the holder of the subordinate real right of use is called the liferenter

Question 11

how is a liferent created

Answer 11

by grant or reservation, and writing is required under RWSA s.1(2)(b).
grant is where the owner grants/confers a liferent on someone else, whereas reservation is where the owner reserves himself a liferent

Question 12

what is a trust

Answer 12

a legal relationship where property is vested in one person (trustee), who has a fiduciary duty to administer the property to another (beneficiary) for their benefit

Question 13

types of trust (5)

Answer 13

inter vivos, mortis causa, public trusts, private trusts, and discretionary (allow trustee broad discretion of administration, must still have defined purposes)

Question 14

anderson v smoke

Answer 14

trust purposes cannot be too wide (particularly in discretionary trusts) and must set out defined class of persons e.g. my children

Question 15

what does contra bonos mores refer to

Answer 15

trust purposes which are ‘against good morals’ will generally be invalid, commonly relating to marriage or religion

Question 16

2 exceptions to the usual decision making process of trustees (where majority decision goes)

Answer 16

1. if trust deed states appointment of trustees is JOINT then decisions must be unanimous
2. if truster has appointed a SINE NON QUA trustee then no decision is effective without their consent

Question 17

impact of insolvency on: trust, trustee, truster, beneficiary

Answer 17

trust - can be sequestrated
trustee - no impact on trust (holding only)
truster - generally no impact - exception gratutious alienation
beneficiary - their benefical interest becomes available to creditors

Question 18

variation of a private trust leading to termination:

Answer 18

miller trs v miller; allowed the partial/complete termination of a trust at request of a single beneficiary, if he is over the age of 16 despite what is held in trust deed

Question 19

termination of trusts (3)

Answer 19

1. revocation by truster (due to involvency or if the trust deed allows such)
2. by trustees (rare but can happen under s.9-11 LRMPS Act 1990)
3. by beneficaries (Miller case - through variation or completion of trust purposes)

Question 20

what is the decision making process in public trusts?

Answer 20

• unable to seek unanimous consent of all potential beneficaries, therefore majority of trustees can make decisions
• court can use cy-pres schemes which allows them to vary purposes in manner as close as possible to the intention of truster

Question 21

what is a good phrase to start a trust question with:

Answer 21

assuming the trust deed is silent on this matter.. (ALWAYS look at trust deed first)

Question 22

what is a quorum?

Answer 22

the minimum umber of people in attendance in order for that group to take official action

Question 23

wyse v abbot:

Answer 23

must consult all trustees in decison making, unless impossible to do so

Question 24

case for trust purpose invalid because contra bones mores

Answer 24

blanthwayt v baron crawley

Question 25

duties of a trustee:

Answer 25

• cannot use for personal advantage
• must not be an auctor in rem suam
• not borrow or buy from trust
• must make wise investment decisions, and see appropriate advice