Webcasts Flashcards
(43 cards)
What are the requirements for a valid express trust?
- capacity to make the trust
- three certainties I.e.bintention, subject matter and objects
- compliance with legal formalities
- constitution of the trust
How can you have sufficient capacity to make a trust?
The settlor must be aged over 18 and must have the necessary mental competence (which differs depending on the circumstances). If giving away a large part of the estate, the larger the asset the greater degree of understanding required.
What are the three certainties?
Intention, subject matter and objects, they must all be present for a valid trust (Knight v Knight).
What is certainty of intention?
The settlor must intend to create a trust.
What is certainty of subject matter?
The nature and extent of the property is clear and the interests of the beneficiaries can be ascertained.
What is certainty of objects?
It must be clear who the beneficiaries are.
In relation to the creation of express trusts, which of the following statements is not correct?
A) a trust can be created orally or even from actions from the individuals concerned
B) in order to be valid an express trust must always satisfy the 3 certainties
C) a trust may be created by deed or in a will
D) there is no age limit for the creation of express trusts
E) in addition to complying with the rules on capacity and three certainties, the rules of formalities and constitution must also be present
D in order to comply with capacity the settlor must be 18 or over.
How do we determine whether something is intended to be a gift or a trust?
Scrutinise the words used either in writing or orally as well as all relevant circumstances.
Does the word trust need to be used for it to be valid?
No (Paul v Constance) also supported by the maxim equity will look to the intention not the form.
When looking at the wording to determine if something is a trust or a gift, what must we consider?
The wording used must be clear and unambiguous and they must indicate a trust is intended.
What type of words will fail in being clear and unambiguous?
Hope, wish or desire the property to be dealt with in a certain way (Lambe v Eames).
Why did the courts find there was a trust in Comisky but not in Re Adams?
The wording was ambiguous in Comisky however there was a further provision which said it would go to his nieces in any event, the circumstances as a whole showed an intention to create a trust. The wording in re Adams ‘do what is right’ was too ambiguous.
Give a case example of when a trust was used in a commercial context?
Re Kayford which was a mail order company. When it started to get into financial difficulty it out money received from customers into a separate bank account with the intention of keeping it separate from the general funds of the company. A trust was successful.
Which of the following words or phrases are unlikely to indicate intention to create a trust? A) will distribute B) to divide equally C) in the hope that D) to hold E) in the certain knowledge
C
In a commercial context, particularly involving the insolvency of a business, a creditor or customer of the business may argue that they are the beneficiary of a trust and if successful, this would put them in a secure position. Which of the following statements is correct?
A) placing funds into a separate bank account is essential for a trust to arise in a commercial context
B) restrictions on the receipients use of the funds, on its own, can be enou to create a trust
C) if there is a written agreement in place between the parties which does not mention a trust being created then this means there can be no express trust in existence
D) is a bank account is set up and named as a trust account for customers then this will be sufficient to create a trust
B
What must you consider when deciding there is certainty of subject matter?
- the property which is to be subject of the trust must be clearly defined I.e. 200 shares in Boots Plc
- the beneficial interests in the property must be clear I.e. We can work out who is to get what
What was said in re Kolb with regards to identifying the property for trust?
That it must be clear and unambiguous. ‘Blue chip securities’ in this case was too vague and therefore there was no certainty of subject matter.
Would it be sufficient for someone to say the beneficiary was to receive a reasonable income from the properties?
Yes. Re Golay said they could determine what would be a reasonable amount with reference to her previous standard and cost of living.
What is a remainder provision?
Where someone will say give X to A and the remainder to B (Palmer v Simmonds - it failed as the courts were unsure which part of the property was to be passed on through the husbands will). The correct way would be to write X to A for life, remainder to B.
What is the issue in relation to trusts over u allocated assets and give a case example?
If there are a large number of assets they should be segregated from the general stock to be identifiable. Re London Wine Company was a wine company who would store wine for customers. It became insolvent and the courts had to determine if the customers were entitled to their wine. Held not as they were all held together with other wines and they were unable to determine what belonged to whom.
What was so important about the Hunter v Moss case?
It was distinguished from Re London Wine Company as they had said these were intangible assets and as all of the shares were exactly the same (ordinary shares) then that was fine.
What happens to property if there is uncertainty of subject matter?
The property would fall back into the estate of the testator, be an absolute gift to the first person named in the clause or it may never leave the testators estate if it is not sufficiently defined.
Which description in a will would not satisfy the test for certainty of subject matter?
A) 20 of my shares in C Limited to Jane
B) most of my jewellery to be given to Karen
C) the remainder of my estate
B
Certainty of the beneficial share is an important aspect of the rule on certainty of subject matter. Which of the following does not satisfy the test for certainty of the beneficial shares?
A) £50,000 to my cousins, Rowan and Tom in equal shares
B) my 3 vintage cars to Jim and Bobby, Jim must select one for himself and then Bobby can have the other 2
C) I leave my share portfolio to my wife during her lifetime and then to my grandchildren in equal shares thereafter
D) £20,000 for the former employees of my company in such shares as my trustees shall decide
E) none of the above fail the test
E
