1
Q
Tangible items in a trust
A
Must be segregated to be sufficient subject matter
2
Q
Intangible items
A
Do not need to be segregated e.g shares/money
However if different shares may be different values and therefore not identifiable
3
Q
Trusts in land need what?
A
X3 certainties
S53 LPA In writing
Signed by the settlor
4
Q
Does the Trustee have to give access to all account and records to a B
A
No they have a right to inspect them
5
Q
Is residue sufficiently certain?
Is bulk sufficiently certain?
Is most of what’s left sufficiently certain?
A
Yes
No
No
6
Q
Can an oral declaration of express trust be valid
A
Yes but a trust for land needs to be in writing to be enforceable.
It will remain valid
7
Q
What is it called when a beneficial interest is being transferred on its own without the legal interest being transferred
A
Disposition of a subsisting equitable interest and is bound by formalities under s53(1)(c)
8
Q
Disposition of a subsisting equitable interest and is bound by formalities under s53(1)(c) what are the requirements
A
In writing and signed by the person disposing of the interest or by an agent authorised to do so
9
Q
Donatio Mortis Causa
A
Gift mad on contemplation of death
Conditional on death
Actual/constructive delivery
10
Q
What are the 3 duties of PRs regarding investing
A
- Power to invest as absolute owner
- Review investments
- Proper advice before investing
11
Q
Charitable Trusts (4) distinctions
A
Not subject to the perpetuity rule
Exempt from taxes
Must be for a charitable purpose
For the public benefit
12
Q
What is the doctrine of cypres
A
The wishes of the donor can carry on even if the gift fails as long as the property can be given to a similar purpose/general charity
13
Q
If Donatio Morris Causa gifts occurs and that gift was in the Will what happens
A
A valid DMC GIFT will not be included in the estate because a gift has been made and will be classed as adeemed
14
Q
3 criteria for DMC
A
Made in contemplation of death
On condition of death
Delivered or in control of donee
15
Q
When a solicitor acts as principal where must they pay the money for the invoice from even if there is enough money in the client accounts
A
The business account because solicitor is liable for the VAT and then invoice the client so money can be withdrawn
16
Q
Can Bs remove Trustees
A
Yea provided they are 18/sui his and absolutely entitled. They must all agree and inform the T in writing.
17
Q
What is a quitclose trust
A
Where money has been lent for a particular purpose. Until that purpose has been achieved the borrower holds the money on trust for the lender
18
Q
What happens if a private purpose trust is created to last longer than 21 years
A
It will render the trust void
19
Q
A discretionary trust what two certainties are needed
A
Conceptual certainty - Clear class of Bs
Evidential certainty - way of proving they are in the class
20
Q
What is required for a valid Charitable trust
A
Must be for a charitable purpose
Public benefit
21
Q
What ways can an express trust be made
A
Written/words/conduct
22
Q
All non charitable trusts are what..
A
Private trusts
23
Q
What are the 3 certainties
A
Intention
Subject matter
Objects
24
Q
What does the maxim ‘equity looks to the substance rather than form’ mean
A
Court looks beyond the words to their conduct and consider factors deem to be relevant
25
What is a gift over in default of appointment
Donor apts a donee to do something with a clause that if they fail to do that thing they have a backup plan. It ensures that the property always has a designated recipient, even if the donee doesn't make a decision. This prevents potential legal disputes or the property falling into intestacy While giving discretion to the donee, the donor still has a say in the ultimate destination by setting the "default" beneficiaries.
Without a "gift over in default of appointment," if the power isn't exercised, the property might result back to the donor's estate, which could be an unintended outcome.
26
Shams and trusts
If a trust made to avoid creditors and deemed a sham will be voidable
27
Is the word bulk sufficient for subject matter
No - no valid trust
28
On trust for A for life remainder to B absolutely
On trust for A B C in equal shares
Are examples of what kind of trusts
Fixed trusts
29
Fixed trust test for certainty of objects
Ascertainabilty test or
Complete list test
A complete list of Bs must be ID'd
Conceptual certainty needed to identify the Objects and evidential certainty needed to prove who the Objects are
30
Discretionary trust certainty of objects test
Individual ascertainabilty test
Conceptual certainty only to determine who falls with the class
Evidential no as it's not necessary to find everyone within the class
31
What is conceptual and evidential certainty
C - precise language to define the class
E - ability to prove someone falls within the class
32
33
Administrative un workability does what to a trust
Makes it VOID
34
£50 to be paid by my Ts to any family or friend who has supported my business over the years is this valid
Yes every person who meets the description is to be given £50
In this scenario conceptual certainty is not required as long as one person meets the criteria
35
Inter vivos trusts what formalities are needed for personality v realty
P - none
R - s53(1)(b) needed
36
S53 (1) Inter vivos trust of land needs what
In writing
Signed by the settlor
37
Can a S declare a trust of land and then later on put it in writing and signed by S
Yes
38
Inter vivos trusts of Iand what are the main points
S53 formalities signed/in writing i.e a Declaration of Trust
It can be expressed orally first and then formalities later - relevant date will be the oral date
No formalities does not render VOID just unenforceable in the courts
Reverts back to the s on a RT
39
Disposition of an equitable interest points
S53(1)(c) in writing/signed by S or
By agent (authorised by S in writing)
Before the disposition can take place the legal and equitable interest must have split
If not complied with VOID - EI stays with person disposing of it
40
What is a Bare trust
Assets held with T but the adult B has an absolute right to the assets.
T has no say in the distribution and B can instruct T on what to do with assets
41
Vandervell v IRC
Not valid due to both legal Interest and equitable interest transferred
42
If a person does not want their equitable interest and wants to disclaim what do they need to do
Just disclaim orally
43
Steps to a valid trust
3 certainties
If realty must comply with s53(1)(b)
Completely constituted
44
Who is a volunteer
A person who has provided no consideration
45
What is important about a volunteer in the context of an incomplete constituted trust
If constituted binding on S even tho the B is a volunteer
If not constituted correctly volunteer cannot enforce due to the maxim
'Equity will not assist a volunteer to perfect an imperfect gift'
46
If a B provides consideration and a gift is imperfect what can happen
They can rely on the maxim
'Equity deems as done that which ought to be done'
Means the B can enforce the obligation via a Court Order of SP
47
What is a covenant to settle and is it enforceable
What is the exception
A promise to transfer the title at a later until the transfer takes place the trust is incompletely constituted
Marriage consideration both spouse and children can enforce as not volunteers
48
Difference between self dealing v fair dealing
SD - T purchases trust property
(Can set aside nothing to consider)
FD - T purchases Bs beneficial interest (can only set aside on 3 conditions)
49
What are the four exceptions to the maxim that equity will not assist a volunteer
The rule in re Rose
Strong v bird
Donatio morris causa
Estoppel
50
Can proprietary estoppel be used as a cause in action and a defence
Yes
51
Re Rose criteria
The party must have done all in their power to transfer the title to the property
52
Strong v bird criteria
Where the gift was intended but fails and that party becomes an executor or administrator the gift is perfected PROVIDED the donor had a continuing intention to make the gift up until their death
53
Donatio Mortis Causa
Gift on contemplation of death (end of natural life not good enough)
Conditional on the death
Subject matter must have been delivered
54
Proprietary Estoppel criteria
Donor made an imperfect gift or promise
Donee relied on the promise of the gift
Dinner suffered a detriment
The gift will be perfected
55
P holds property on trust for life, remainder to Q absolutely
Can P claim the capital
No
P is entitled to to income/live in
Q is entitled to the capital on death
56
Property held on trust for P for life remainder to Q absolutely. Q dies before P. Who benefits from the trust when P dies?
Qs estate
57
Vested in possession can be two types what are they and what does it mean
Vested in possession
Present right to present enjoyment
Vested in interest
Present right to a future enjoyment
58
What is a contingent interest
An interest that will only occur upon the condition being fulfilled if B dies before the meeting the condition the interest is lost
59
Perpetuity periods for most trusts
Any longer trust is VOID
All truss expire after 125 years from 2010
60
Does a B have a proprietary right in a discretionary trust
No because the T have the right to distribute to who and how much
B only have right to be considered
B cannot compel a T to decide in their favour
61
Bare trust
B has full control over the actions of the Ts in relation to trust property
62
Saunders v vautier
Bs are all adults
BS have no disability
Bs all in agreement
Bs absolutely entitled
Can compel Ts to distributed the assets and terminate the trust
63
What is the beneficiary principle
Private trusts without Bs are void
64
Purpose Trust and Charitable trusts are the exception to what principle
The beneficiary principle
65
What are charitable trusts usually enforced by
Attorney General
66
How long can private purpose last
21 years plus lives in being
67
How long can charitable trusts last
Indefinitely
68
What are the endacott categories for a private purpose trust
Maintenance for tombs/monuments
Saying of masses
Maintenance of pets
69
What are the three conditions for a private purpose trust
Must be an endacott category
Limited in perpetuity
Someone willing to carry out the purpose
70
If the purpose is to erect a tomb no need to include a perpetuity period why?
But to maintain a tomb need to be in perpetuity why?
The court assumes the action will be carried out in the 21 years
Maintain the courts believe will not be carried out in 21 years so need an express PP
71
Trusts for pets do they need to be expressly limited in perpetuity and exception
Yes
Unless a judicial notice is made by court which can save the trust when it can be shown that the animal will not live longer than 21 years
72
What is a judicial notice
A rule of law of evidence which allows a fact to be introduced without proof of the truth of that fact is so well known it cannot be doubted
73
Charitable trusts must be...
For the public
A charitable purpose
74
What act deals with the law on charitable trusts
Charities Act 2011
75
What are the three advantages to charitable trusts
Exempt from B principle
Not subject to perpetuity
Exempt from some taxes
76
What is the cy-pres doctrine
Where a charitable trust fails or a surplus can use the trust for another charitable purpose or as near as possible as donor intended
77
What are the two types of resulting trusts
Presumed RT
Automatic RT
They arise from circumstances as opposed to being intentional
78
What is a Presumed Resulting Trust
The transferor transfers property to the Transferee for no consideration
So the presumption is that the party transferring does not intend to lose thier beneficial interest so its held on a RT can be rebutted
79
A transfers property to B for no consideration what trust is B holding for A
Presumed RT
Can be rebutted by evidence if intended to be an outright gift
80
A pays for the property but it's held in Bs name what kind of trust is this
B holds the property on a presumed RT
81
A contributed to the purchase price but it's in Bs name what kind of trust is this
B holds on a presumed RT in proportionate to their contribution
82
Can a presumed resulting trust be rebutted
Yes Can be rebutted by evidence if intended to be an outright
&
Presumption of advancement
Gifts from mum/dad to child
(Does not work from child to parents)
83
Automatic RTs arises when .... (4)
Failure of Bs
Trust partially expressed
Trust is void
Surplus of assets
84
Common intention constructive trusts
Usually cohabitates as courts have statutory powers for spouses
Common intention
An agreement/excuse/payment towards purchase price
Detrimental reliance
Acts of detrimental reliance
Usually financial payments that must be significant
85
Resulting trusts can arise for sitting tenants what does this mean
A T in possession of a LH and may be entitled to a discount when buying the FH from the LL
86
How to tell the difference between a common intention constructive trust and proprietary estoppel
Owner made a promise anytime (estoppel)
Verbal disscussion to share usually around time of purchase (CICT)
87
What is a constructive trustee
Someone who receives property knowing it to be in breach of a trust
The absence of such knowledge = innocent volunteer
88
Why are the three way a stranger could end up as a constructive trustee
Knowing receipt
Dishonest assistance
Intermeddling
89
Despite being a conflict in interest where a trustee sells and buys a property which is against their duties what could happen to verify this
Bs could approve the transaction
90
What three remedies are available to take against constructive trustees
Recovering property
Tracing
Personal claim
91
Self dealing rule
Ts should not purchase trust property regardless if a fair price it is VOIDABLE at the request of a B
Exception:
Trust allows
OR
All Bs agree and are Sui juris
Or
Purchase was before trust arose
92
Fair dealing rule
A T can purchase a Bs beneficial interest provided:-
No advantage of position taken
Full disclosure to B
Transaction fair and honest
93
Can trustees make a profit under a trust
No not even remuneration but can be compensated expenses
94
If a T obtains a profit as a result of trusteeship what do they need to do
Give this to the B
This rule is strict
A T cannot profit from their knowledge even if no competition with trust
Four exceptions
95
Four exceptions to the no profit rule
1. Court authorises
2. Bs agree must be fully informed
3. Solicitors
4. Where instrument allows a charging clause
96
Can a trustee be a minor
Yes for personal property
No for land
97
Can a trustee disclaim
Yes ideally by deed before they begin to act with consent of other Ts as long as 2 Ts left or a trust corporation
98
Do Ts needed to exercise thier powers jointly and unanimously
Yes
99
Can a settlor change its trustees
Only if the trust instrument allows
100
Can statutory powers be removed with a clause in a trust
Yes
101
When can Bs appoint new trustees
No one is nominated
All Bs agree
All absolutely entitled
Sui juris
102
What duties do trustees owe
DOC
provide info to Bs
To invest
Distribution
Act impartially
103
Can Bs inspect the trust property
Yes but not entitled to reasons of Ts decisions
104
Can Ts invest in land outside the UK
No
105
When should careful consideration by a T take place in the duty to be fair and balance Bs interests
Where there is a life T and a remainder man
106
Statute grants three powers when looking at the financial decisions
Power of investment
Power of maintenance
Power of advancement
107
Power of maintenance covers what and are Ts obliged to pay
Education and maintenance
No they are not
108
Power of maintenance does the T have to pay and what does it cover
No
Maintenance covers setting up someone for life and it's deducted from their share
109
No conflict rule of trustees
Do not put themselves in a position of conflict between duty and their own interest
I.e no self dealing or no fair dealing
110
Can a T evade the self dealing rule by retiring or nominating someone else to make a purchase
No
111
When would it be beneficial for the B to make a claim against a stranger rather than a Trustee for a breach of trust
When T does not have any money
112
What is a constructive trusts
A trust imposed by equity when no other trust is appropriate an equitable remedy to obtain restitution (ie unjust enrichment)
113
What three ways can a stranger be liable for breach of trust
Recipient or knowing liability
Accessory liability (assisting T)
Intermeddling
114
3 ways to become a Stranger under a trust and remedies
Knowing receipt - Personal claim/Tracing/recovery of property
Accessory - personal claim on as stranger did not have the property
Intermeddling - personal claim/recovery of property/tracing
115
What is an innocent volunteer and outcome
Where a person receives trust assets innocently but as no consideration given must still return the property
116
What ways should a T not make a profit via their role
Unauthorised profits
Retaining Ds fees (3 exceptions)
Remuneration as a T
Purchase of T property
Competition
117
What are the three exceptions to the Ts taking a fee for being a D
Directorship predates trusteeship
Appointed D independently
Trust instrument authorises
118
Remuneration for Ts
Professional have a statutory right to be paid
Lay trustees do not unless
Trust Instrument authorised
Courts authorise
Bs authorise
119
What does s31 of the TA 2000 stipulate about fees
Ts are entitled to be reimbursed for out of pocket expenses but not remuneration
120
What are the 3 conditions where won't set aside a purchase from a B - fair dealing
T did not take advantage
T made full disclosure to B
Transaction fair and honest
121
A T has a fiduciary duty not to profit true or false
True
122
Does a T have an overriding duty to ensure their personal interests do not conflict with their duty to client
Yes
123
Only the settlor has the right to appoint new or replacement Ts True or false
False the S usually appoints the first Ts but according to statute in order
Those nominated in trust can
Surviving Ts can
Court can appoint
124
What does s1 TA say about the standard of care expected of Ts
Lay Ts must exercise such care and skill as is reasonable in the circumstances
Skilled Ts the standard imposed is higher
125
What powers do Ts have to invest
Ts powers could be expressed In the trust or they can rely on the statutory power and incest as if they were absolutely entitled
126
Power of maintenance and power of advancement is it mandatory or discretionary
Discretionary unless trust instrument says otherwise
127
When will a T be unfit to act as a T
Someone bankrupt
Convicted of dishonesty
Lacks capacity
128
129
Will equity allow a trust to fail for no trustee
No
130
When can a replacement trustee be appointed
Under s36(1) T is
Dead
Outside uk for 12 months
Wants to be discharged
Refused to act
No more than 4 must be in writing
131
Bs can appoint/replace Ts what needs to be met
Must be adults
Mentally capable
Absolutely entitled
In agreement
132
Appointment by B to trust of land
S19 Used Where no one is nominated for the purpose of appointing Ts to MUST given written direction to T to retire and written direction to apt new T
S20 used to apt a substitute who lacks capacity when no one nominated by given a written direction to T
133
A T who has been given a written direction to retire must ensure what before they retire or be appointed
To retire must ensure a trust corporation or two Ts remain & must be in a deed and consent
To be appointed/Ts left they must consent to the retirement by deed
134
If there is no one willing to act as a T what can the court do
Appoints a public trustee or a judicial trustee
135
What is a public trustee
A trust corporation - the office of public trustee administers trusts when no trustee can be found
136
What is a judicial trustee
A trustee appointed by the HIGH COURT when Ts have failed in their administration of the trust
137
How can a trusteeship terminate
Disclaim - cannot disclaim if have accepted. Deed/oral/conduct
Death - automatic termination
Retirement (deed/consent/2 Ts left)
Removal
138
On apt a T must -
Check terms of trust
Examine all documents
Locate the trust property
139
What are the Trustees ongoing duties
Exercise powers unanimously
Keep account and records
Act impartial
Personal does not conflict with duty to trust
140
Duty of the T to invest what should be considered
Ts must treat all Bs fairly
The modern portfolio theory
Can invest as if absolutely entitled
141
What is the modern portfolio theory
Considers the entire portfolio rather than the risk attached to each investment in isolation
142
Can the power of maintenance be used from the trust fund even if there is another fund available for that purpose
Yes
143
When does the power of maintenance apply to minors for which interests
Vested interests
&
Contingent interests
144
What is the power of maintenance applicable to
Eduction, maintenance or benefit of B
145
Power of advancement what needs to be considered
Ts can pay or apply at their discretion any trust capital for the advancement of a B
Must not exceed Bs share
Must be deducted
If a prior life interest the other must consent
146
What does power of advancement include
Any money which will improve the material situation of the B
147
Power of maintenance v power of advancement
POM - pays income for eduction etc
POA - pays capital for benefit of B
148
What standard of care are Ts actions measured on
A reasonable standard of care
149
Does a breach of trust always lead to liability
No the B has to prove that the breach led to the trust fund suffering a loss
Some connection between breach and loss
150
Can the T use a defence that a B instigated and consented to a breach
Yes
151
Does a breach of trust require mens rea
No the intention of the T is not relevant to their liability of BREACH OF TRUST
152
Trustee liability key points ..
T is liable for own breach not those of their co trustees but they are jointly and severally liability so B can sue any of them.
Courts can determine the contribution the T must pay determined on what they think is fair just and reasonable
153
Remedies for breach of a fiduciary duty v breach of trust
FD - restitution eg account for profit
BOT - compensation personally/tracing
154
Can the court award interest on damages awarded to a B for a BOD by a T
Yes at their discretion usually just simple interest but can use compound interest is T has been fraudulent
155
Can a T rely on an exemption clause in a trust limiting their liability for fraud
No
156
Can the court relieve the T of liability and why
Yes they have the discreción to if they believe they acted honestly and reasonably
157
What is acquiescence by a B
A defence available for a T if they can show that the B discovered the breach and excused it. Basically waving their right to sue
158
What is the limitation period for breach of trust
6 years from the right to take action
Countdown begins on Bs interest
No limitation on fraud until B discovers the same
159
What is the Doctrine of Laches
A defence by a T against an equitable claim on the basis the C delayed taking action to the extent it has become inequitable to pursue
160
If a B is claiming an injunction or specific performance for a BOT doss the limitation period apply
No court can refuse a claim even if within the time limit
161
If a breach of trust occurs and the T is bankrupt or cannot be found what does the B have the right to
Trace the property in equity
162
When a B is tracing property and for eg the T purchases and item which doubles in value what remedies do the B have
They can take a personal claim against the T for breach of trust and the T must compensate B
Or
B could trace and claim the object as it would be a more profitable option
163
Does tracing have a limitation period
No it is an equitable remedy and not subject to the limitation period
It is instead subject to the doctrine of laches
164
What are 3 tort ways tracing could be used against a Trustee
Fraud
Misappropriation
Mistake
165
Who can tracing claims be against
Trustee
Constructive trustee
Innocent volunteer
166
When would tracing be an option for a B to pursue (4)
T is bankrupt (priority over creditors)
T cannot be found
D is an innocent volunteer
Tracing is more profitable than a personal claim
167
168
When is the right to trace lost
Where the trust property no longer exists
169
For a successful tracing claim what needs to be met
Must be a fiduciary relationship T&B
C must have an equitable interest
Property must be traceable
Must not be inequitable
No unreasonable delay
170
171
Can tracing take place even if the initial item has been substituted or mixed
Yes to both
But if mixed fund with an innocent volunteers money would be inequitable so tracing would not be allowed
172
173
Tracing and Unmixed funds, mixed funds
Unmixed - I.e separate - claim asset, claim proceeds, claim property
Mixed
Assets - T must prove which money belonged to them if can prove asset divided/claim over property
Banks - T presumed to have spent their own money first
From various trusts in a bank - first in first out rule applies
174
Equitable remedies general points
Discretionary
Maxims of equity apply
Only available when damages not appropriate
175
What is the principle that applies to injunction of the C must give an undertaking to damages
C will promise to compensate the D if it transpires that an injunction should not have bebe granted
176
If a person contributes towards the purchase of land but is not the legal owner what does the law recognise
An implied trust in their favour and so would be entitled to benefit from their contribution on the sale
177
Individuals might want to transfer property to a non-charitable unincorporated association, for example, a club or society. An unincorporated association exists where there are two or more persons, bound together for a non-business purpose, subject to rules, including who has control of the association’s funds and which can be joined and left at will
As non-charitable organisations, a trust for the purposes of an unincorporated association would be considered a private purpose trust
Transfers to an unincorporated association could take effect as outright gifts, This would make it difficult for the donor to ensure that the money is used for the particular purpose they intended and that members are prevented from taking their share of the money with them when they leave the society
In most cases, the property would instead be transferred to the unincorporated association as an outright gift, but the members would take the property subject to the contractual rules between them
178
Does DMC trump a Will
Yes
179
ART V PRT
Resulting trusts are a type of implied trust that arise by operation of law, usually where there is a transfer of property but the beneficial ownership is not fully disposed of. They are divided into two main categories, traditionally referred to as "automatic" and "presumed" resulting trusts, although the underlying rationale for their existence is debated.
Here's a breakdown of the differences:
Automatic Resulting Trusts (ARTs)
* Nature: These trusts arise automatically, regardless of the transferor's intention, whenever there is a "gap" in the beneficial ownership of property. They reflect the equitable maxim that "equity abhors a vacuum" – property cannot be without an owner. The beneficial interest "results back" to the original transferor (settlor).
* Circumstances:
* Failure of an Express Trust: If an express trust is declared but fails for some reason (e.g., uncertainty of objects, illegality, failure to meet formalities for a particular type of trust, or the trust purposes cannot be fulfilled), the beneficial interest automatically reverts to the settlor. For example, if a settlor transfers property to trustees "on trust for X" but X has already died, the trust for X fails, and the property is held on resulting trust for the settlor.
* Surplus Property: If an express trust has been carried out and there is surplus property left over after all the purposes of the trust have been fulfilled, that surplus will be held on automatic resulting trust for the settlor. This often occurs with trusts set up for specific purposes, like a fund for a charity event that raises more money than needed.
* Quistclose Trusts: While sometimes treated separately, a Quistclose trust is often seen as a type of automatic resulting trust. This arises when money is paid to a recipient for a specific purpose (e.g., to pay dividends or to buy a particular asset), and if that purpose fails, the money is held on resulting trust for the payer.
* Basis: The underlying rationale is often said to be the retention of beneficial interest by the transferor because they never effectively parted with it in the first place, or that the law simply provides a default mechanism to ensure ownership when a declared beneficial interest fails.
Presumed Resulting Trusts (PRTs)
* Nature: These trusts arise based on a presumption that the transferor did not intend to make a gift of the beneficial interest. The presumption is that if a person transfers property to another without receiving anything in return (consideration), or contributes to the purchase price of property put into another's name, they did not intend to make an outright gift, and therefore the beneficial interest "results back" to them. This presumption can be rebutted by evidence of a contrary intention.
* Circumstances:
* Voluntary Conveyance of Property: If A voluntarily transfers property (other than land, due to section 60(3) of the Law of Property Act 1925, which states that a resulting trust is not presumed merely because the property is not expressed to be conveyed for the use or benefit of the grantee) to B without receiving any consideration, there is a presumption that B holds the property on resulting trust for A. However, this is less common for land due to the LPA 1925 and the rise of constructive trusts in domestic contexts.
* Purchase Money Resulting Trusts: This is the most common scenario. If A provides the purchase money for property that is put into the name of B (or A and B jointly), there is a presumption that B holds the property on resulting trust for A (or for A and B in shares proportionate to their contributions).
* Basis: The key is the presumed intention of the transferor. The law presumes that people do not typically make outright gifts of valuable property unless there's a good reason to think otherwise.
* Rebuttal: The presumption of a resulting trust can be rebutted by:
* Evidence of Actual Intention: Direct evidence that the transferor did intend to make a gift.
* Presumption of Advancement: This is a counter-presumption that arises in certain relationships (historically, from a father to a child, or a husband to a wife). In these specific relationships, the law presumes that an outright gift was intended, thus rebutting the presumption of a resulting trust. However, the presumption of advancement has been criticised as outdated and discriminatory, and while section 199 of the Equality Act 2010 aimed to abolish it, that section has not yet been brought into force. Its practical application is therefore limited and often given less weight today, especially in relation to family homes where common intention constructive trusts are preferred.
Key Differences Summarised
| Feature | Automatic Resulting Trust | Presumed Resulting Trust |
|---|---|---|
| Origin | Arises automatically by operation of law. | Arises from a presumption of the transferor's intention. |
| Intention | Independent of the transferor's actual (or presumed) intention; it fills a gap. | Dependent on a presumed intention, which can be rebutted. |
| Common Scenarios | Failed express trusts, surplus trust property, Quistclose trusts. | Voluntary conveyance (less common for land), unequal contributions to purchase price. |
| Rebuttal | Generally not rebuttable as it's an automatic consequence. | Rebuttable by evidence of contrary intention (e.g., a gift, loan, or presumption of advancement). |
In modern English law, particularly in the context of family homes, the role of resulting trusts has diminished in favour of common intention constructive trusts, which focus on the parties' actual or inferred shared intentions regarding beneficial ownership, taking into account a wider range of factors beyond just financial contributions. However, resulting trusts remain important in other contexts, especially where there is no close familial relationship or where the transaction is purely commercial.
180
What's the key difference between a resulting trust and constructive trust
Direct contribution to the purchase price makes it a resulting trust
181
What are the requirements for Bs of a trust to direct a T to retire
Bs must be Sui juris
Absolutely entitled
No one nominated in trust
All Bs agree
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Procedure for a T to retire
Consent of other Ts
Retire by deed
Other Ts and retire signs deed
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Do Ts have to give Bs access to accounts and records
No
B can inspect accounts and records
BUT NOT
deliberations by Ts of their decisions to exercise their powers
184
Do Ts have the power to sell chattels belonging to the Trust
If the trust allows if not must apply to the court for this power
185
Does the doctrine of ademption apply to general legacies
No only specific legacies
186
When do the Bs have the power to complete a T to retire
All Bs must agree and must appoint a new T if only one will remain.
The Bs must have SvV rights if they do have the power to compel under s19 TOLATA
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5 Defences to Trustees for breach of a trust
* an exemption clause in the trust deed
* limitation
* laches (delay)
* consent of the beneficiaries, and
* statutory relief under the Trustee Act 1925 (TA 1925). s61 & s62
188
What is the limitation period for a breach of trust
6 years from the date of breach or if contingent once their interest has vested
189
What elements are needed for the defence of consent by the B to a breach of trust
* have provided informed consent
* given this consent freely and not been under any undue influence in providing consent, and
* be sui juris.
190
Statutory Relief under TA 1925 for defences against a breach of trust
s61 - T acted honestly, reasonable and ought fairly to be excused (BOP lies with T)
s62 - B requests in writing that the T commit a breach of trust
191
For tracing to succeed there must be ....
evidence of a fiduciary relationship and
a beneficial interest in the trust property
192
3 Defences to Tracing as to why tracing will not be available
o being equity’s darling
o dissipation, and
o inequitable
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Re Diplock and tracing
In Re Diplock [1948] Ch 465, as the hospital had innocently applied the charitable trust funds it had received in breach of trust to renovate existing hospital property, the court found that it would be inequitable and disproportionate to allow the claimants to force a sale of the hospital’s entire asset to restore the trust property. Note that the defence of inequitability has been criticised and is likely only to apply in cases where the facts are very similar to those in Re Diplock itself.
194
Having a proprietary claim over property to a B of a trust means what
They have priority over other creditors in the event of bankruptcy and allows them to assert a claim to any increase in the value of the property
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What at the three proprietory claims
Equitable ownership (part or full) can force a sale
Equitable charge over the property
Subrogation to the interests of a third party creditor – where trust funds are used to pay off a secured debt (for example, a mortgage), the claimant can assume the position of the repaid secured creditor and revive the debt.
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Re halletts estate
This case is a cornerstone of the law of tracing in equity. It deals with the rights of beneficiaries to recover their trust property when a trustee (or other fiduciary) has misappropriated trust funds and mixed them with their own money.
* Fiduciary Relationship and Tracing: The court confirmed that beneficiaries have an equitable right to trace misappropriated trust funds into their proceeds or substitutes, provided the trust funds remain identifiable. This right arises where there is a fiduciary relationship (like that between a trustee and beneficiary).
* Mixing of Funds: The core issue in Re Hallett's Estate was what happens when a trustee mixes trust money with their own money in a single bank account and then makes withdrawals.
* "Presumption of Honesty" / "Trustee's Own Money First" Rule: The most famous principle from the case is the presumption that a trustee is acting honestly. When a trustee mixes trust funds with their own in an account and then makes withdrawals, it is presumed that they withdraw their own money first, before touching the trust money. This is a crucial rule designed to protect the beneficiaries' interests.
* Example: If a trustee has £1,000 of trust money and £1,000 of their own money in an account, and then withdraws £500, it is presumed that the £500 came from their own money, leaving the full £1,000 of trust money in the account.
* Beneficiary's Option (Proprietary Claim or Lien): The case also clarified that where trust funds have been mixed and used to acquire new property, the beneficiaries have an option:
* They can claim beneficial ownership of a proportionate share of the new asset (if the asset has appreciated in value, this might be more advantageous).
* They can assert an equitable lien or charge over the new asset to secure repayment of the misappropriated trust funds (if the asset has depreciated, or they simply want their money back, this might be preferred).
Why is it important?
Re Hallett's Estate significantly strengthened the position of beneficiaries by making it easier to trace and recover misappropriated trust funds, even when they had been mixed with the trustee's personal assets.
It's often contrasted with the "first in, first out" rule (from cases like Clayton's Case), which applies in certain circumstances (e.g., when tracing between innocent beneficiaries, or where the trustee's own money is exhausted). However, for a trustee mixing their own money with trust money, Re Hallett's Estate's "presumption of honesty" is the default.
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Protection/defences of trustees
Exemption clause in trust
Limitation
Laches
Consent
Acted honest/reasonably and ought to be excused (s61)
B requests in writing to the breach (s62)
198
Does a proprietary claim offer priority to a B over creditors
Yes in the event if bankruptcy
199
What does a trust of property have a priority over
Other creditors in the event of bankruptcy
200
For a tracing claim two elements are needed
A fiduciary relationship
And
A proprietary interest
201
What 3 situations can a tracing claim arise
A T who received property in breach of trust
An innocent volunteer (I.e received with no consideration)
3rd party knowing receipt
202
Who can a tracing claim not be against
A bone fida purchaser for value with no notice
203
Can a B choose to trace a Claim when a party has substituted the original trust property
Yes
204
If there is a deficit to a tracing claim what can B do
Make a personal claim against T
205
Are PRs obliged to Renew insurance policies
No they do not have a duty but Must take reasonable steps to preserve the dec'd estate so would be prudent to do so
206
Two parts for the public benefit test for a charitable trust what are they?
Is the public benefit sufficient a large enough
&
Does the benefit outweigh any detriment
207
Quantification of beneficial interest what does the court deem (3) as considered
Direct contributions- always considered
Indirect contributions- usually considered
Non financial contributions- rarely considered
208
Can a fee paying school be charitable
Yes if it can show it is accessible to those in poverty I.e scholarships
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Section 36 of the Trustee Act 1925 – Power to Appoint New or Additional Trustees (6)
Dies
Is absent from the UK for more than 12 months
Desires to be discharged
Refuses to act
Is unfit or incapable of acting
Is an infant
210
Who can appoint a new Trustee under s36 TA
The person nominated in the trust instrument
If no such person exists or is unwilling/unable to act, then:
The surviving or continuing trustees
The personal representatives of the last surviving trustee
211
Does the trust instrument override the statutory power to appoint a new trustee
yes
212
What three ways can a T be remunerated from a trust
Trust Corporations
Trustee is professional
Charging Clause inc in trust instrument
213
Do the trustees have the power to sell chattels belonging to the trust?
Yes, if such power is conferred on them by the trust instrument. If the power does not exist in the trust instrument, an application might be made to the court for this power to be conferred on trustees
214
Can the power to invest be modified by the trust deed
Yes
215
Can a T invest in land outside of the UK
No unless trust deed overrides this
216
What should T consider when investing
Suitability of investments
Interest of Bs
Modern portfolio approach
217
What two things MUST a T do before and after they have made investments
Regularly review
Take expert advice
Unless unreasonable in the circumstances
218
Should moral and ethical be considered when investing
NO but if two investments would bring the same return it can be
219
What are the three main statutory powers of Trustees
1. Power to Invest
2. Power of Maintenance
3. Power of Advancement
220
Is the powers of advancement and maintenance mandatory or discretionary powers
discretionary
221
Power of maintenance v power of advancement
POM - can use income for minors
(Education or if it benefits)
POA - can use capital to advance a Bs position In life
222
Can an E renounce the right to a GOP
Yes as long as the E has not accepted office or intermeddled
223
Does renunciation require the consent of the Bs or co - executors
NO
224
What must an E do to renounce (5)
In writing
Signed by E
Witnessed
Statement of truth
File with the probate registry
225
Once an E renounces can they go back on their decision
No
226
When are the two resulting trusts
Automatic & Presumed RT
227
When do ART & PRT arise
ART - where no one held the equitable title and reverts back automatically
PRT - where there has been a voluntary transfer and presumed not intended to the a gift
228
When does the presumption of advancement arise (equitable principle where the relationship means the gift is outright and no trust)
Father to child
Man to wife
229
What does the presumption of advancement mean
An equitable principle where the relationship means the gift is outright and no trust)
230
How many Beneficiaries and Trustees can you have?
Unlimited for both.
However a trust of land only a max of 4 will be allowed
231
What are the two express trusts?
Private Trust
(individuals x3 certainties)
Public Trust
(For the public - does not need 3 certainties)
232
What are the three Implied Trusts?
Resulting Trust
(reverts back to settlor)
Constructive Trust
(imposed by law)
Statutory Trust
(by an Act of Parliament)
233
Life Interests Trusts what kind of interest does the :-
Life Tenant
& Remainderman have?
LT - Vested in Possession (can enjoy the income immediately)
RM - Vested in Remainder (future interest upon LT dying)
234
Can a Life Tenant and Remainderman collapse a Trust
Yes under the rule of SvV
235
Can a Bare Trust be an express or implied trust?
Yes
236
Can Bs exercise SvV rule?
Yes as long as they satisfy the condition
237
What are the 3 conditions to SvV?
Absolutely Entitled
18 years or over
Sui Juris (sound mind)
238
Can a B of a bare trust demand that the T transfers the legal title to them?
Yes as they have absolute ownership
239
Can SvV be exercised when there is a contingent interest with a gift over?
No because there is someone else who may be entitled to the property if the condition is not fulfilled (making the B not having absolute entitlement)
240
Can the settlor exclude the rule in SvV
No
241
Private Express Trust's perpetuity period is what?
the property must vest within 125 years
242
Even if the property does not vest within the perpetuity period what approach does the court take?
Wait and See Rule
243
Private purpose trusts perpetuity period?
21 years plus life in being or 21 years
244
What is a vested interest?
an unconditional interest and the person is absolutely entitled
245
What interest will stop the SvV rule taking place?
Where there is a gift over (a condition to full ownership)
246
What are the two express trusts?
Private Trusts
(individuals with x3 certainties)
Charitable Trusts
(public - no formalities)
247
Can a Discretionary Trust be collapsed via SvV?
Yes if it is small and ascertainable enough (can be decided as closed)
248
What does Vested in Possession mean?
Present right to a present interest
249
What does Vested in Remainder?
Present right to a future interest
250
What formalities do an Express Inter Vivos Trusts require?
Just the 3 certainties - can be oral/conduct/written
EXCEPTION
LAND
251
An express inter vivos Trust over land requires what formalities?
To comply with s53(1) (b) LPA 1925
In Writing & Signed
Failure to do so means its valid but unenforceablce
252
What is a transfer of an existing equitable interest under a Trust?
Where one B passes on their interest to another
253
What formalities are needed for transfer of an existing equitable interest under a trust?
to comply with s53(1)(c) LPA 1925
In writing
Signed by the B
Executed
254
If a B instructs a Trusted to transfer both legal and equitable interests under a trust what happens
This is a collapse of the trust under SvV and there is no need for any evidence in writing
255
A trust must be constituted to be ....
Valid
256
A Trust not correctly constituted is what?
There is no trust full stop - equity will not assist a volunteer
257
DMC requirements:
Contemplation of Death
Delivered to Donee
Conditional on death
258
Fixed Trusts need what test for certainty of objects
Complete List Test
Conceptual Certainty - Be able to ID the Bs
Evidential Certainty - Be backed up with evidence
259
Discretionary Trusts need what test for certainty of objects
Individual Ascertainability Test
Conceptual Certainty only
260
Is the word friend conceptually certain for FT and DT
No void for uncertainty
261
For a DT who bears the burden to prove they are within a class
The beneficiary
262
If a trust instrument originally appointed a certain number of Trustees what must happen?
The Trustee must be replaced to the original number of Trustees
263
Does the trust deed overrule any statutory powers?
Yes
264
What are the 3 appointed Trustee duties
Check trust deed terms
Find Trust Property
Take any action if any breach
265
What are the continuing duties of Trustees? (5)
Act Unanimously
Be impartial
To Invest
Keep accounts and records
Fiduciary Duties - No profit, no conflict
266
Can the Statutory Duty of Care under the TA 2000 be excluded?
i.e must exercise such reasonable care and skill is reasonable in all the circumstances have regard to specialist knowledge
Yes
267
A retiring trustee must do what
Be in deed and ensure another T is appointed
268
Can the Power of Investment be excluded by the trust deed?
yes
269
Can Trustees invest in land overseas?
No - unless the trust deed says otherwise
270
A Trustee should take advice from someone suitably qualified to provide advice. Do they have to follow this advice?
No but they must consider it
271
Trustees have to consult Bs on investments
No and are no bound by any of their comments or suggestions - Subject to the trust deed
272
Should T disregard all personal/ethical and political decisions
Yes
unless where two investments choices have equal weight
273
Power of Maintenance
Ts can use INCOME for a MINOR for EDUCATION, MAINTENANCE or BENEFITC
274
Can the power of maintenance be excluded from Trust Deed
yes
275
Can the power of maintenance be used under a discretionary trust
no
276
Is the power of maintenance a discretionary power
yes - until the B turns 10 then the income MUST be paid to the B
277
Power of Advancement
CAPITAL for Bs of any age to improve the Bs situation
Commonly used to pay off debts, school fees, buy property
278
4 Defences to a breach of trust by Trustee
B consent in any way or allows to for a number of years
Court - if they believe T acted with honesty and integrity
Trust deed exempts with a clause (e.g. negligence)
Time barred
279
Can No Conflict, No profit be excluded by the trust deed
No
280
If a fiduciary is appointed a director can they claim a fee
No only out of pocket expensesf
281
If a fiduciary makes a profit they must do what
Hand that profit back t- Strict liability
282
What is an automatic resulting trust?
A failure of the trust and the trust reverts back to the Settlor
283
What is a Quistclose Trust?
Where a lender lends money to a borrower for a specific purpose and makes it very clear it is to be used for a specific purpose. Until that purpose has been fulfilled the borrower holds the money on trust for the lender.
If the borrower fails to use the money for that purpose the lender can enforce their trust and get their money back. Lender would be in a better position then the creditors
284
What is a presumed resulting trust?
Property transferred for no consideration and voluntarily and does not make it clear it is a gift or loan.
285
Can the presumed resulting trust be rebutted?
Yes
286
What is the general rule about Purpose Trusts and the two that are allowed?
GR - Purpose Trusts are not allowed and are VOID as no one can enforce the trust
Private Purpose Trust & Charitable Trust
287
What is a private purpose trust?
A trust set up by a person to carry out a particular function after death
288
What is a charitable trust defined as: -
Be for a charitable purpose
&
For the public benefit
289
For a private purpose trust what are the limited exceptions that they take effect? (3)
Maintaining monuments and graves
Saying of Private Masses
Maintenance of Pets
290
What kind of trust is exempt from the beneficiary principle?
Charitable trusts
291
What does remoteness of vesting mean?
What is the term?
What is excluded
that a "gift over" must vest within the perpetuity period.
Within 125 years
Does not apply to;-
Private purpose trust which is subject to the inalienability rule.
292
Is a charitable trust subject to the remoteness of vesting?
Not if it is solely for charitable purposes but will be if there is a gift over to a non charity
293
What is the rule against inalienability?
the perpetuity period for private purpose trusts and it cannot last longer than a life in being plus 21 years
Person mentioned in trust - ends on death of person plus 21 years
Person not identified - trust will only last 21 years
294
What taxes are charitable trusts exempt for?
Income Tax
Corporation Tax
CGT
SDLT
Business Rates
295
When are Common Intention Constructive Trusts usually applicable?
When the two individuals show an intention to share the ownership of the property and it would be unjust and unfair not to impose the trust. The C must have relied on a promise and suffered a detriment.
296
How to tell the difference between Common Intention Constructive Trust and Proprietary Estoppel
CICTS require a common intention between both parties with a detriment suffered by the claimant (usually cohabitees)
PE only requires a promise from one party to his detriment (usually disputes in Wills)
297
What two kinds of claims can be made against a stranger?
Proprietary Claim (i.e. trust property or profits)
Personal Claim
Knowing Receipt
Dishonest Assistance
298
When a Fiduciary makes a profit they hold it on what for the principal?
A constructive trust
299
Can a stranger be liable for dishonest assistance even if they never came into possession of the trust property?
Yes
300
Conditions to tracing?
Must be a fiduciary r'ship
B must have an Equitable Interest in property
301
If money is in overdraft is this classed as dissipated for tracing?
Yes
302
Are equitable remedies discretionary?
Yes
303
When are equitable remedies usually applicable?
Where common law remedies are not sufficient or inadequate
304
With Notice Injunctions & Without Notice Injunctions what is the test?
WN - Just and Convenient
WON - Necessary (higher bar)
305
Search Orders and Freezing Orders are they normally granted with or without notice?
without because of the urgency
306
What is a Search Order
Allows a C to attend premises and search for, inspect, copy or take documents. V high bar to clear
307
Breach of an injunction is what?
contempt of court and punishable by a fine and or imprisonment
308
Does a freezing order freeze the bank account?
No the D can still move their money around but will breach the injunction if they do
309
3 criteria for private purpose trusts
One of endacott category
Limited in perpetuity
Someone willing to carry
310
A private trust with no B is it void or voidable and the exception
Void
Private purpose trusts
311
What is a judicial notice
A rule of evidence that allows a fact to be introduced without proof of the truth as it is so well known it cannot be doubted
312
What does PUBLIC BENEFIT mean for charitable trusts
Public - for a sufficient number of the public
Benefit - means that the detriment must not outweigh the benefit
313
Cypres doctrine rules
Initial failure
Subsequent failure
IF - if it appears to be a general intent will succeed. If a specific charity will revert back to donor
SF - as charity money dedicated will usually be applied to nearest possible charity
314
How can charitable v non charitable purpose trusts act?
CT - Trustees must act by majority
NCPT- Trustees must act unanimously
315
Section 21(1) Limitation Act
This is the second, widely applied exception, which prevents a trustee from relying on the limitation period if they are still holding the trust property (or money traceable from it) for their own benefit.
• Key Idea: The section ensures that a trustee cannot use the limitation period to enrich themselves by taking trust property and converting it to their own use. It is designed to prevent a wrongdoer from keeping misappropriated assets.
💡 Contrast with the General Rule (S21(3))
It is important to contrast S21(1) with the general rule for breach of trust, found in Section 21(3):
• General Rule (S21(3)): An action by a beneficiary to recover trust property or in respect of any breach of trust (that does not fall under S21(1)) shall not be brought after the expiration of six years from the date the cause of action accrued.
In summary:
• If the breach is fraudulent or the trustee keeps the property for themselves, the claim is never time-barred (S21(1)).
• If the breach is merely negligent, technical, or innocent (e.g., a poor investment decision where the trustee didn't benefit), the beneficiary generally has six years to bring a claim (S21(3)).
This highlights the high duty of accountability placed upon trustees under English law.
Would you like to know more about the concept of diminished responsibility and how it relates to criminal liability, which we discussed earlier?
