Trusts 1

Question 1

What are the 3 certainties (general)?

Answer 1

1. certainty of intention
   - externally manifested,
   - take effect immediately
   - clear words
2. certainty of subject matter
   - clear of extent and nature of B’s interest
3. certainty of objects

Question 2

When would factional shares of subject matter fail/not fail?

Answer 2

Intangible/fungible Assets will not fail
- Eg 50% of shares

Tangible Assets will fail
- Eg half of wine bottles

Question 3

How can certainty of subject matter be given?

Answer 3

• Must be possible to ascertain the nature and extent of beneficiaries interest in trust property

1. Wording
   - bulk, net assets, favourite X etc. are not identifiable
   - reasonable income is approved
2. Mechanism
   - can give a mechanism to dived assets
   - Ie. A choose who gets what or A gets first choice
   - but if decision maker dies the trust fails

Question 4

What must be present for certainty of object for fixed trusts?

Answer 4

1. One beneficiary
   - conceptual and evidential certainty
2. 2+ dependant on each other
   - need complete list test
   - includes in equal shares
3. 2+ not dependant on each other
   - if one is certain and other is not then certain one still gets their share

Question 5

What must be present for certainty of object for discretionary trusts?

Answer 5

1. Must be able to carry out survey of class
2. Is/Is not test
   - conceptual certainty needed
   - evidential to be provided by potential beneficiaries
3. Not Administratively unworkable
   - ie “all people of London”

Question 6

What are the requirements for being a trustee/ who cannot be a trustee?

Answer 6

Trustee can be anyone
- Capable of acquiring and holding property for their own benefit
- Can be private person, professional person, trust corporation

Cannot be:
- a minor
- lack mental capacity

Question 7

How many trustees are required?

Answer 7

• no min/max number

Trust of Land
- must have at least 2 and up to max of 4
- because at least 2 are needed to give valid receipt for money received on sale of land

Question 8

What are the rules against perpetuity for a normal trust

Answer 8

• Interest under trust is void if it does not vest within 125 years
• trust is void if interest is not certain to vest within period

Question 9

What effect will failure of each of the 3 certainties have?

Answer 9

Void for uncertainty of intention
- Property passes as gift to person who would have been trustee

Void for uncertainty of subject matter
- Property reverts to settlor

Void for uncertainty of objects
- Resulting trust in favour of settlor or settlors successors presumed

Question 10

What are the requirements for self declaration of trust vs transfer on trust?

Answer 10

Self Declaration
- Must demonstrate by word or conduct that they intend to be legally bound
- Once declaration is made they are bound and cannot retract
(- if trust of land must evidence declaration in writing and sign)

Transfer on Trust
- Settlor must transfer trust property to trustee in appropriate fashion (constitution); and
- Settlor must make declaration of trust (ie demonstrate by word or conduct the they intent trustee to be legally bound)
(- if trust of land must evidence declaration in writing and sign)

Question 11

How should different trust property be constituted? (land, shares, chattels, bank account)

Answer 11

Land
- Transfer deed
- Registration at HMLR (normally by transferee)

Shares
- Donor to sign stock transfer form
- Registered with company (by either)

Chattels
- Owner must have intention to transfer chattels and must deliver them to recipients
- Alternatively can be done by deed

Bank Account
- Must provide signed, written notice of transfer to bank

Question 12

Requirement for trust in a will

Answer 12

1. 3 certainties
2. In valid will
3. No need for constitution

Question 13

If trust is not validly constituted can it still be valid

Answer 13

1. Every Effort
   - Testator has done everything in their power and it is now in hands of person able to effect transfer
   - not if person is testators agent or if some approval is needed
2. Rule in Strong v Bird (fortuitous vesting)
   - intention to make an immediate gift and remains unchanged until death
   - intended donee becomes PR
3. Donatio Mortis Cause
   - gift made in contemplation of death and there is a reason to believe death is imminent
   - on condition of death (and they die)
   - must have been transferred (can be constructive)
4. Proprietary Estoppel
   - assurance is made
   - donee relies on assurance and acts to their detriment

Question 14

When is secret trust enforceable

Answer 14

Is when trust is not mentioned in will

Beneficiary must give evidence:
1. Trust existed
2. Terms communicated to trustee before death
- trustee did not refuse

If it fails
- then gift to trustee

Question 15

When is half secret trust enforceable?

Answer 15

Is when it is mentioned in will but beneficiary is not disclosed

Enforceable only if:
- identify of beneficiary was communicated to trustee before or when will was executed
- language of will is consistent with this

If fails
- trustee hold it on resulting trust for estate

Question 16

What enforcement action can beneficiaries take in 1. fixed trust 2. discretionary trust?

Answer 16

Fixed trust
- for breach of trust
- restrain improper exercise of trustees obligation

Discretionary trust
- breach of trust
- make trustee exercise discretion

Question 17

What are the different interests in trusts?

Answer 17

Vested
- no condition attached

Contingent
- condition attached

Limited
- does not give capital
- normally limited in time

Question 18

What happens if beneficiary has vested interest but is under 18? What if they die?

Answer 18

Held on trust till 18th birthday as minor cannot give good receipt

If they die it passes with beneficiaries estate

Question 19

When does a minor have right to income from capital?

Answer 19

Must have a vested or contingent interest with no prior limited life interest

Cannot collect income as minor so added to capital

Question 20

When can sole beneficiary exercise Saunders v Vautier rights?

Answer 20

One Beneficiary
- Sole adult beneficiary of sound mind,
- with vested interest in the trust property
- is entitled to direct the trustee to transfer legal title to them

Multiple with Distinct Interest
- if can be severed without effecting other beneficiaries

May need consent of prio life interest beneficiary

Question 21

When can multiple beneficiaries exercise Saunders v Vautier Rights?

Answer 21

• all adults of sound mind
• share absolute beneficial entitlement
• can do in such shares as they choose

Consent
- discretionary trust: all beneficiaries
- contingent: of beneficiary of gift over
- successive: remainder man agrees (not if hypothetical)