trusts law

Question 1

when is a trust enforceable

Answer 1

when the settlor has:
a. made a valid declaration of trust
b. put assets in the trust

Question 2

what is a fixed interest trust

Answer 2

trustees have no discretion as to how trust property is distributed

Question 3

what are the three certainties

Answer 3

a. intention
b. subject-matter
c. object
- fixed interest: must be able to draw up list of beneficiaries
- discretionary trust: given postulant test applies

Question 4

can you create a trust over future property

Answer 4

no

Question 5

what happens where a trust fails on certainty of object

Answer 5

it creates a resulting trust in favour of the settlor

Question 6

when is a trust with settlor as trustee validly constituted

Answer 6

when they declare themself trustee

Question 7

when is a 3rd party as a trustee trust validly constituted

Answer 7

when settlor has declared them so and has taken steps to put title in hands of trustee

Question 8

how does settlor create trust in land

Answer 8

execute deed and give it to trustee or registry

Question 9

how does settlor create trust in shares

Answer 9

electronic system or share transfer form and send to trustee

Question 10

how does a settlor create a trust in money and chattels

Answer 10

by delivering them to the trustee

Question 11

exceptions to ‘equity does not assist a volunteer’

Answer 11

a. where trustee was executor and trust failed before death
b. the every effort test

Question 12

what is the inalienability rule imposed on purpose trusts

Answer 12

capital cannot be locked away for more than 21 years

Question 13

valid charitable purpose trust

Answer 13

a. be for charitable purpose
b. have sufficient public benefit
i. clear and identifiable
ii. not unreasonably restrictive
c. be exclusively charitable
i. not political or make profit

Question 14

valid non charitable purpose trusts

Answer 14

a. Re Denley trust where declaration identifies individuals who will benefit
b. trusts of imperfect obligation - valid but unenforceable

Question 15

when is a resulting trust presumed

Answer 15

a. voluntary transfer of personalty where transferor retains equitable benefit
b. voluntary transfer of land where additional evidence indicates trust
c. purchase money cases

Question 16

when does presumption of advancement apply

Answer 16

a. father gifting child
b. person in loco parentis gifting child
c. husband gifting wife
d. fiancé gifting fiancée where they subsequently marry

Question 17

how to prove CICT on a jointly owned property

Answer 17

a. evidence agreement or common intention
b. on which they relied
c. to their detriment
d. court considers whole course of dealing

Question 18

how to prove CICT on solely owned property

Answer 18

demonstrate common intention on which claimant relied detrimentally
a. contribution to purchase / mortgage price
b. express can have domestic evidence of detrimental reliance

Question 19

what is proprietary estoppel

Answer 19

a. legal owner created expectation that claimant would receive interest
b. claimant relied on this assurance to their detriment
note - court may refuse remedy if unreasonable delay in bringing claim

Question 20

how may a trustee retire

Answer 20

via deed

Question 21

when can a trustee retire without a replacement

Answer 21

a. where 2 trustees or a corp left
b. retire by deed
c. other trustees consent by deed

Question 22

when may court remove or appoint a trustee

Answer 22

if it is in the best interests of the trust

Question 23

which beneficiaries may remove or appoint a trustee

Answer 23

one who is absolutely entitled unless its excluded by trust instrument

Question 24

when may a trustee be replaced

Answer 24

a. dead
b. outside country for 12 months
c. disclaim
d. unfit
e. incapable or minor

Question 25

when is power of maintenance applicable under s31

Answer 25

for maintenance, benefit or education of a beneficiary under 18 where no prior interest to income exists

Question 26

when is power of advancement under s32 applicable

Answer 26

for the beneficiaries benefit, if prior interest holders have given permission

Question 27

what duty of care are trustees under

Answer 27

that of an ordinary prudent man of business managing his own similar affairs (higher for paid trustees)

Question 28

what is the general power of investment

Answer 28

trustees must invest property as if they absolutely own

Question 29

to what must trustees have regard when investing

Answer 29

a. suitability and diversification
b. obtain and consider proper investment advice

Question 30

what is a trustee’s fiduciary duty

Answer 30

not to make a profit, place himself in conflict or act for his own benefit wihtout informed consent of beneficiary

Question 31

trustee defences to personal claim

Answer 31

a. exclusion in trust instrument
b. acted honestly and reasonably
c. had the knowledge and consent of beneficiaries

Question 32

what is intermeddling

Answer 32

where a 3rd party acts as a trustee, they will be liable for any losses caused

Question 33

what is knowing receipt

Answer 33

where 3rd party received property in breach of trust for their person benefit and their knowledge makes it unconscionable

Question 34

how does tracing work with an innocent volunteer

Answer 34

only traceable if property in original form / clean substitution / mixed asset & first money out is first in