SQE 1 FLK 2 > Trusts > Flashcards

Trusts Flashcards

(53 cards)

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1
Q

When does a resulting trust arise (3)

A
  • An interest under an express trust fails
  • An express trust fails to exhaust the beneficial interest or
  • A person makes a voluntary transfer or purchase in the name of another
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2
Q

What is a constructive trust?

A

An equitable remedy imposed by a court to prevent an unjust enrichment of one person at the expense of another as a result of wrongful conduct

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3
Q

When must intention for a valid express private trust have manifested and what must it be?

A

While the settlor still owned the subject matter

The intention must be that the trust take effect immediately

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4
Q

The subject matter must..

A

Be sufficiently certain

Presently exist but need not be currently possessory, and must not be a mere expectancy

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5
Q

Is “20 books in my book collection” sufficiently certain?

A

No because it doesn’t specify which 20 books

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6
Q

Is a trust for “50% of my shares in Baddie ltd” sufficiently certain?

A

Yes

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7
Q

Is a trust for property to inherited valid?

A

No because it’s not sufficiently certain

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8
Q

Certainty of objects test in a fixed trust

A

Complete list

of beneficiaries

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9
Q

Certainty of objects test in a discretionary trust

A

Postulant test

Need not be sufficient to track down every member but will fail if class is too wide

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10
Q

Transfer of land

A
  • Transfer legal title by deed
  • Signed written evidence of declaration

Plus:
- Must be registered at HMLR

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11
Q

Transfer of shares

A
  • Signed stock transfer form
  • Share certificate handed over
  • Delivery

Plus:
- Registered with the company

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12
Q

Transfer of chattels

A
  • Intention to transfer (declaration can be oral)
  • Transferred by:
    i) deed or
    ii) delivery + intention
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13
Q

Transfer of legal title to bank account

A
  • Signed written notice of transfer
  • Sent to the bank
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14
Q

When will equity enforce a trust from an intending settlor that failed to make the necessary transfer?

A
  • Every effort test: completed transfer to trustee but not registered
  • Rule in Strong v Bird
  • Trustee can prove that they reasonably relied to their detriment on an assurance from the settlor that the gift would be made
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15
Q

Requirements for a gift mortis causa

A
  • Donor delivers property to a donee while in contemplation of imminent or impending death
  • It is conditional on death (to be returned if Donee survives)
  • Donor dies
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16
Q

When does the legatee of a full-secret trust take the gift outright?

A
  • They refused the trust
    or
  • Did not know about it until after the settlor’s death
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17
Q

Limited interest

A

The beneficiary’s interest does not give them the right to the capital fund

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18
Q

Absolute interest

A

The beneficiary’s interest gives them the right to the capital of the fund

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19
Q

The rule in Saunders v Vautier

A

Beneficiaries may terminate a trust if:

  • Of age & sound mind
  • All agree
  • All are between them absolutely entitled to the entire equitable interest
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20
Q

What must the person claiming to be a beneficiary of a resulting trust prove?

A

By clear and convincing evidence that they supplied the money

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21
Q

How may the legal owner rebut the presumption of a resulting trust?

A

Submitting evidence that no trust was intended and it was instead:

  • A gift
  • A loan or
  • a debt owed
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22
Q

When does not presumption of a trust arise?

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A
  • The donor is the father
  • The donor is the husband or fiance
  • Loco parentis (taken on parental duties)
23
Q

The terms of a declaration of trust are…

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A

Conclusive as to their interest in the absence of proof of fraud or mistake

24
Q

When can a declaration of trust be made?

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A

On the date of conveyance or after

25
When will a common intention trust be imposed?
If C can establish that: - Parties had a common intention, express or inferred, that C should have an equitable interest in the property and - C relied to their detriment - There were actual discussions which led to this belief
26
From what conduct may the court infer common intention?
- Direct contribution to the price - Payment of household expenses to enable legal owner to make mortgage payments - Quantification of C's share will be suggested by course of dealing between the parties
27
For a charitable trust to be valid, it must appear that what?
That the trust will bestow - An identifiable benefit - To the public or a section of the public
28
The initial gift to a charity must vest within the perpetuity period, except for what gift?
A gift from one charity to another It can take effect at any distance in time
29
When do beneficiary’s have power to select trustees?
- No person is nominated to appoint new trustees - Of full age and capacity and together they are absolutely entitled to the trust property And - act unanimously
30
When may a trustee be removed from office without their consent?
- They became bankrupt or incapacitated - By the beneficiary’s (under similar conditions as in the rule in Saunders v Vautier) - By court order
31
What happens if a trustee makes a personal profit from their role as a trustee?
They hold the profit or gain on constructive trust for the beneficiaries
32
When can a trustee be paid for servicing as a trustee?
- Trust instrument provides so - Professional trustee may charge a reasonable remuneration, with written consent of other trustee(s) - they are not the sole trustee - trust corporation may charge even if acting as sole trustee.
33
When may a trustee pruchase a beneficiary’s interest?
- Pays a fair price - Made full disclosure of all material facts - In no way abused their position
34
Where a beneficiary brings a claim against a trustee for buying their interest, who is the burden on?
On the trustee To prove the conditions applicable when buying a beneficiary’s interest
35
Trustees statutory duty of care
Trustees must exercise such care and skill as is reasonable in the circumstances Taking into account any special knowledge the trustee has, or holds themself out as having
36
Power of attorney
Trustee may delete all of their functions to another individual or trust corporation By executing a power of attorney For a fixed term not exceeding 12 months
37
Trustees general standard of care
To act with the prudence of an ordinary man of business
38
What are the exceptions to the duty to act personally?
- administrative functions - investment decisions in certain circumstances - all functions by power of attorney.
39
When do trustees have the discretionary power to advance trust capital?
When a beneficiary has an interest in the capital (vested or contingent) It must be u to the amount of the beneficiary’s presumptive entitlement
40
When is advancement of trust capital limited? And to how much?
When the trust was created before October 2014 Advance is limited to 1/2 of their share
41
Liability of trustees in breach
Joint and several Note: their duty is though is to jointly and unanimously
42
When may beneficiaries make a proprietary claim? And when is it most useful?
If trust or it’s proceeds can be identified in the hands of a trustee - trustee is insolvent - value has increased, can claim the increase - trusts property was substituted by trustee, can claim charge over the asset - combined trust funds with trustee’s funds
43
What is the lowest intermediate balance?
The limit of the beneficiary’s claim The balance after the last payment out but before the next payment in
44
Mixed funds in a current account
First in first out But court could divide money proportionaately if it’s what’s best
45
Mixed funds in a savings account
Court will usually divide the money proportionately
46
What is a personal claim?
A claim against the trustee’s personal wealth for monetary compensation Mixed when trust property is gone or untraceable and the goal is to recover financial loss
47
For a trustee to apply their power to retire, what consent do they need?
Consent of the other trustees in deed
48
What is the inalienability rule, when must it be complied with?
The capital of the fund must not be tied up for longer than the perpetuity period Private trust must comply with this but not charitable trust
49
Can a trust be divided between charitable and noncharitable objects?
Yes if the trust directed trustees to divide assets as such
50
When will courts disapply the first in first out rule in relation to mixed funds from separate trusts?
1) it would be contrary to the express or implied intention of the claimants 2) it is impractical to apply the rule Or 3) applying the rule would cause injustice to the parties
51
What is the standard investment criteria that PRs must have regard to?
- suitability and diversity of investments
52
What does a void delegation of the trustees’ asset management functions, including investment decisions to an agent require?
- a written agreement and - a written policy statement giving guidance and - a terms in the agreement requiring the agree to comply with that policy statement
53
What are the elements that must be satisfied for a lifetime gift of a chattel?
1) intention to make an immediate, unconditional gift And 2) delivery or transfer of possession to the donee
SQE 1 FLK 2
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