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30 Cards in this Set
- Front
- Back
Key Terms |
Settlor -the person who puts assets into a trust.
Trustee -the person who manages the trust. Beneficiary(object) - the person who benefits from the trust. Volunteer -someone who receives a benefit without consideration. Testatoror testatrix - a person who has written and executed alast will and testament that is in effect at the time of his/her death. Subjectmatter - property that is part ofthe trust. Fixedtrust - the trustees are given very specific instructionsas to how and to whom the subject matter of the trust is to be distributed. Discretionarytrust - the trustees are given discretion,either to decide the shares into which the trust fund will be divided, or todecide who will benefit under the terms of the trust, or sometimes both. Purposetrust - are set up by the settlor to carry out anabstract purpose, rather than to benefit a specific person. Charitabletrust - public trusts which are set up forcharitable purposes as opposed to purely private purposes. Charitable trustsare the biggest exception to the ‘no purpose trusts’ rule. Expresstrust - the settlor has specifically and purposefullytaken steps to create, either by way of a verbal declaration that they wish toform a trust or, as is the case in most instances, by some form of writing. Resultingtrust - Where the settlor has tried to create a trustbut has, for one reason or another, failed to transfer the beneficial interestin the property effectively. This is an ‘automatic resulting trust’ or; wherecontributions are made to the purchase price of property by more than oneperson but the legal title is held by one of the parties only, in which casethe intention of the settlor is presumed to have been that they intended tocreate a trust. This is a ‘presumed resulting trust. Constructivetrust - will be imposed by the court in anysituation where the conduct of one party is so unconscionable, or morallyreprehensible, that to allow any other outcome would be unjust, or inequitable. Statutorytrust - created or implied under the provisionsof a statute. Lifetimetrust - created to benefit one person during thatperson’s lifetime, and another person or persons after their death. Fiduciarypower - owes limited fiduciary duties to the potentialobjects of the powers. He must periodically consider whether to exercise thepower, although it remains entirely discretionary and he is under noenforceable obligation to make appointments. If he does decide to exercise thepower, he must first survey the range of potential objects before makingparticular appointments. Personal power - underno duty to exercise it, and need not even consider whether he should exercisethe power. |
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“Three certainties” - Knight v Knight |
Intention Subject Matter Objects |
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Rationale of 3 certainties |
It must be possible for a court to determine whether atrust is being properly administrated. Unless the subject matter or objects of a trust can be ascertained, thecourt cannot identify maladministration or direct proper administration of thetrust. If one of the three certainties is missing, avalid express private trust will not be created |
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Consequences of lack of certainties |
(a) If it is impossible to identify the specificproperty which forms the subject matter of the trust, the transaction will haveno effect (i.e. no property will be subject to trust obligations). (b) If the property is specified, but there isuncertainty as to the intention to create a trust, then the person holding theproperty will generally hold it free of any trust obligations (e.g. Hancock v Watson [1902] AC 14). (c) If the intention to create a trust is clearand the property is specified, but it is uncertain who is to benefit from thetrust, a valid trust will be created, but it will not be the one intended bythe settlor. The recipient will hold theproperty as a trustee on resulting trust either for the settlor himself, or, inthe case of an attempt to establish a trust by will, for the residuary legateesof the testator’s estate. |
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Certainty ofIntention – to create a trust |
Wright v Atkyns - “the words must be imperative” – though the Courts will consider the surrounding circumstances Megarry J - As for the requisite certainty of words, it is well settled that a trust can be created without using the words ‘trust’ or ‘confidence’ or the like: the question is whether in substance a trust has been manifested”. |
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Declaration of trust |
- a trust created by will (Wills Act 1837, s.9); - a trust of land or any interest in land (Law of Property Act 1925, s.53(1)(b)); and - a disposition of existing an equitable interest under a trust (Law of Property Act 1925, s.53(1)(c)). Formality at that level is not generally required for trusts over other types of property (e.g. personal property) |
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FailedGifts - “equity will notperfect an imperfect gift” |
It may be tempting totry to save the situation by arguing that the donor intended to declare him- orherself as trustee of the property for the benefit of the would-be donee. However, the courts have consistentlyrejected such arguments - Jones v Lock |
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Transfer of legal title - land |
s52 LPA 1925 All conveyances of land or of any interest arevoid for the purpose of conveying or creating a legal estate unless made bydeed. |
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Assignment of equitable title |
Where the assignment amounts to a disposition of an equitable interest, must comply with s53(1)(c) - In writing. |
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Grey v IRC |
Equitable unit on its own, moving and remaining so - Disposition |
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Vandervell |
Merger - Equitable interest moving then becoming single interest joined with legal. |
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Oughtred v IRC |
Oral agreement that son would exchange his interest for other property - Not in writing. |
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Principle of constitution |
Principle that the settlor must do all that is within her power to transfer the property to the intended trustee |
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Strict application |
Milroy v Lord Re Rose Trustee must do EVERYTHING in their power. |
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Flexibility to this principle introduced in Choithram v Pagarani |
Slightly less than EVERYTHING, but shows equity will not strive to break a trust |
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Unconscionability? |
Pennington v Waine. Hadn't done everything, would be unconscionable for her to have changed her mind. |
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Incompletely constituted trusts (ICT) |
Incomplete trust until vested in the intended trust |
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Why no rights for an ICT |
Equity will not perfect an imperfect gift. |
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Enforcing ICTs - Beneficiaries |
In Equity an intended beneficiary CAN get rights under an ICT if they give consideration. Pullan v Koe |
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Also if party to a contract |
Cannon v Hartley Or falls within s1 (rtp) 1999 |
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Enforcing ICTs - Beneficiaries |
Equity - an intended trustee can enforce if they have given consideration - Beswick v Beswick |
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Re Pryce |
Do trustees have ability to sue? Yes. But they ought not to. |
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Trust of a promise |
Holding right to sue on contract, the property isn't the actual property, the subject matter is the contract. |
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Constituted trust in the promise - Contract |
Subject matter is actually the covenant Rights are held by T for B |
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Requirements Re Schebsman |
Clear intention to create trust of a promise |
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Re Ellenborough |
Inheritance - vague subject matter Trust must concern existing property. |
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Exceptions |
Equity will perfect some imperfect gifts |
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Strong v Bird |
ICT becomes admin Intention must carry on until orignal testators death Donee must be appointed Subject of gift must survive death of donor |
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Donation Mortis Causa |
Conditional gift upon death, must have shown clear intent with contemplation of death in gift. |
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Estoppel |
Beneficiary acts to their detriment in faith of settlor's promise, estoppel will ensure trust is carried out. |