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245 Cards in this Set
- Front
- Back
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identify three main sources of law dealing with the administration of a trust
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1) The Trust Instrument the words or document used to create the Trust
2)Trust Legislation the various Trustee acts 3)General Law of Trust the common law to the extend it as not been amend by Legislation |
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articulate the usual effect of the general trust law rules and statutory provisions concerning the administration of trusts.
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These are general provision that fill space in which the Trust Instrument does not apply
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the general rule with respect to trustees instructions of the settlor, beneficiaries or other persons.
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The general is that the Trustee should not take insruction from the settlor or risk breach of Trust however can be changed with trust deed some power may remain with the settlor
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What is a letter of wish
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Separate document form the Trust Deed that lays out what the Settlor wishes the Trustee to do/.
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Reason for a letter of Wishes
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Allows for flexibility if things change well giving clear guidance to the Trustee and protect against the breach of Trust from settlor instructions
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Legal effect of a letter of Wishes
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A letter of Wishes has no legal effect and the Trustee must first look to the Best intrests of the beneficiaries
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What is a “protector” (or “trust guardian” or “trust management committee”)?
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A protector is a person who oversees the the Trust ofen oversee trust and can have wide power regarding how money is allocated, the appointment and removal of trustee or even varing the trust if the deed allow this
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the general rule with respect to trustees instructions of beneficiaries
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The general is that the Trustee should not take instruction from the beneficaries or risk breach of Trust however may be allowed under to trust deed
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the general rule with respect to trustees instructions of persons not the beneficiaries or settler
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The general is that the Trustee should not take instruction from persons not the beneficiaries or settler or risk breach of Trust however may be allowed under to trust deed
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Why use a protector ?
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The settlor is worried about the possible conduct of the trustees therefore the Protector is appointed to ensure the interest of the beneficiary and settlor are protected
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How are Trustee appointed
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The Trust instrument generally states who the intended Trustee is.
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Acceptance of Trust Obligations
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The persons MUST accept however this can be via word or action thus if task are carried out on behalf of the Trust the person can be determine to have accepted. A person can only disclaim until aspectace after which they must seek a discharge
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Appointment of Additional Trustees
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The power to appoint additional Trustee is conferred by the Trust Instrument
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What a Trustee declines
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IF the Trust declines in an intros virous Trust the gift return to the settalor who can appoint a new trustee . I a testamentary Trust the court will appoint
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Non-Judaical Discharge requirements under the Trustee Act
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Requires
1) 2 or more Trustee 2) One declares their discharge by Deed 3) The other turstee or person empower to appoint Trustee accepts the discharge and vesting the property in the co-trustee |
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Discharge of a Trustee
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Under the Trustee act, by Judicial order or under the Trust Instrument
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Non-judicial Removal of a Trustee
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The Trust instrument will often confer the power to remove on a person likely the protector
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Judicial Removal of a Trustee
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Courts have the inherent power to remove Trustee also some Trustee act have a more limited power that courts can use to remove a trustee
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Statutory Removal of a Trustee
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The statutory only applies if the court has appointed the Trustee and applicant is made by a non disabled beneficiary who represent the majority of beneficaries
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What a Trustee duty?
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A duty is a obligation
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What is a Trustee Power?
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A power give authority to do something
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Overlap between Power and Duties?
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Because the Trustee holds the power as a fiduciary they must consider using it when its for the benefit of the Trust
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Underlying duties?
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This duties that unly the Trust may require the use of Trustee powers
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Why is it difficult to define a Trust
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Trust have been presented tin various context for Hundreds of year give the very different situation they are to cover it as become a broad idea to simply defined most lack the breath or focus on a single type of Trust
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Two flaws typical in attempting to define a trust
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1) Defined to board
2) Focuses on one type of Trust |
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Define Settlor
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The Person who creates an express Trust
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Define Trustee
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The Person who hold the title to the Trust property on behalf of the beneficiaries. Maybe be the Settlor or a beneficiary
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Define Beneficiary
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The person or Persons on whos behalf the Trust property is held
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Define Person with relation to Trust law
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A Person means a legal person and includes corporations but does not include Trust, partnerships or unincorporated associations
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Define Trust property
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Trust Property is the property which the Trustee has legal or equatable title to on behalf of the Beneficiary
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Define Trust Instrument
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The Document that creates the Trust. Any one of a number of Types will do ie a will, a deed or contact. Note that a Trust can be create by Action or word as well
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Bare Tust
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Also call a naked or simple Trust, a trust in which the sole duty of the trustee is to look after the Trust property
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Define Discretionary trust
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A trust in which the Trustee as the power to determine if and how much the Beneficiaries will get/
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Define Fixed Trust
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A Fixed Trust is a Trust in whcih the Beneficiaral interest is determine the Trustee is unable to appoint Beneficiaries or change the amount they get
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Define Testamentary Trust
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A trust created by a will that comes into effect at the Testor's( the person who created the will) death
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Define Inter vivos Trust
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Is a Trust created during the life time of the Settlor
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Chapter 1 3 issues with the administration of Trust
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some answer would be :
If a person had accepted the role of trustee, could the person retire from that role? Could a trustee be removed? If so, then on what basis could a trustee be removed? How would new trustees be appointed? As we shall see, the trustee must have title (legal or equitable) to the property to be held in trust before the trust will be considered to have come into existence. If new trustees are appointed, how do they obtain title to the property? If there is more than one trustee, then what is the nature of the title they hold? If there is more than one trustee, then how are decisions concerning the trust to be made? Are they to be made by majority or are they to be made unanimously? What are the obligations, or “duties”, of trustees? What are the consequences of a trustee not complying with those duties? To what extent, if any, can the settlor exculpate the trustee from a breach of one or more of the duties? What kinds of things are the trustees to be permitted to do with the property, or, as this commonly expressed, what “powers” (or “authority”) do the trustees have? Are there some powers the trustees should be presumed to have unless the settlor indicates otherwise? Are there some powers the trustees are presumed not to have unless the settlor has expressly given them such powers? |
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Difference Between a power and a duty
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A power is something the Trustee is empowered to do and a duty is something they are required to do
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Identify three duties of trustees and briefly describe the duties you identify.
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1) Duty of Care Must invest the fund in a prundent manner
2)Duty of Loyalty Must avoid conflicts of interest 3)Duty of impartiality Must not favour one beneficiary or class of Beneficiary over another |
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difference between administrative powers and dispositive powers
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An Administrative power retains the property and dispostitive power get ride of the the property
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define administrative powers
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The Powers that allow a Trustee to manage Trust property inculding invest, sell, buy or insure
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define dispositive powers
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Allow for the trustee to dispose of the Trust property including distribution to the Beneficiary
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Define Personal Power
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Is a power given to a person in their particular capacity as a person with no additional impacts
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Define Fiduciary Power
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Is a Trust power given to a person who is a a fiduciary relationship with the settalor
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Define Trust Power
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Is power that the Trustee must use however they have some choice as to how its used
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When can income eared on a trust be attributed to the Settalor of the Trust
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When the settalor retains the power to determine who get the money or to end the trust
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Explain how the taxation of trusts works to allow the trust to be used as a “conduit” for income on the property of the trust
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Income paid to the Beneficiaries is not tax at the level of the trust , thus unlike a corperation income is only taxed once
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Tax Rate for a intro Viarous Trust
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Taxes are paid at the highest rate for individual taxpayers
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Capital gains during Transfers
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When interest are transfer to a contingent interest capital gains are paid at the Trusts tax rate
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Capital Gains during Settlement
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During Settlement Capital Gains are paid by the settlaor
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When is a Trust determined to be disposted of fo tax law
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1) Transfer of Interest
2) Every 21 year under income tax act |
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Treatment of Chatites in Trust law
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Charitable status in Trust law focus on presone rather then operations
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Tax for Testamentary Trusts
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Is the same a person thus it rises with the income fo the trust seperate tax rate
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Four(five?) meanings of equity
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1) Fairness -not imporant
2)Net Worth 3) Equality as the correction of law Civil 4) mere Equility Balance between the two people 5)Maitland’s Definition of Equity(key) |
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Equlity as net worth
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The amount that a person has less liabilities
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Equality as the correction of law
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Civil law was a code strict Equality could correct that however over time the equality became more strict to the point it was no longer corrective
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Mere Equalities
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Special defenses in a Court of Equality
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Maitland’s Definition of Equity
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“Equity is now that body of rules administered by our… courts of justice which, were it not for the operation of the Judicature Acts, would be administered only by those courts which would be known as Courts of Equity.” these ruled allowed for fleixability within the set rules
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the administrative beginnings of equity and Trust law
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Courts of Equity began with petition to the King for the corrections of
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Development of equity as Corrective to the Injustices of the Common Law
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original the court of equity was the chancellor on be behalf of the king the Chancellor would issue writs these began to be rejected by common law court thus Equality became separate from the common law the chancellor could determine the fair allocation of property if there was a dispute
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Equity follows the law
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Equity never say the common law was wrong it simply acted in response it, the common law rules remained
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Equity acts in Personam
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Equity applied to the petitioner in there personal capacity not to the property
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Who were the early Chancellors
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The Early Chancellors were Churchman this meant that the early course of Equity was tied to Cannon law
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Creation of the Court of Equity
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In the latter part of XV-century equaity became to busy to be handled by the king alone or even the Curia Regis(kinda like the Privy Council) thus the cCourt of Chancery was created along with other such as star chamber,the court of Request, the High Court of Admirality and High Court of Chivalry( the Earl Marshal's court)
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Uses” – Franciscan Friars, Crusades and the Form of the “Use”
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The Early forulation of Use allowed one to hold property for the use of another this allowed Franciscan to keep their vow of poverty
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Four other ways use was empolyed
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1)To Avoid the Feudal Burdens of Wardship and Marriage
2)To Avoid the Feudal Requirement of Forfeiture for Treason or Escheat for Felony 3)To Avoid Creditors 4)To Effect Testamentary Dispositions of Land |
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Employing use to Avoid the Feudal Burdens of Wardship and Marriage
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When a person came into land before the age of Majority (21 if male 16 if female) the rents and incomes would be forfeit to that persons lord, to help with the wardship of the minors but if it was held by a friend there the friend got the income but owner could still enjoy until death and children could after death
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Employing use to Avoid the Feudal Requirement of Forfeiture for Treason or Escheat for Felony
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When a felony was committed the land was forfeit to that persons lord, if however the property was in the hands of another for the first person use their was no property to forfeit and they could still enjoy the property
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Employing use to Avoid Creditors
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The Creditors would have nothing to seize equitable title was not recognized either
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Employing use to Effect Testamentary Dispositions of Land
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Early law stated no gifts of land after death there for a life gift was made, the life being the giver then to another after the gives death
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Advantage of the non recognition of Use
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by not recognizing use the Court allowed the the use of Trusts to protect the property from the creditors or from feudal obligations
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Briefly discuss the recognition of the use providing a simple example.
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Use was recognized by provided an action against a Trustee who retained what belong to the beneficiary in a personal capacity Thus if A conved Blackarce to B for the use of C and kept the profits then C would have a action against B
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Discuss the reasons for the Statute of Uses and its effect
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prior to the statute of use the beneficiary was gaining the profits from the land without feudal dues this reduced the amount of money which was coming in to the lords most notable the king. The statue of Uses ensured that the Beneficiary was recognized as the legal owner of the property
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Set out two word formulas that were used in an attempt to avoid the Statute of Uses that were eventually recognized by the Court of Chancery.
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1)“A to B for the use of C in trust for D”
2)“A unto and to the use of B in trust for C”. In the first case C was the legal owner and the second B this was reconzied in Sambach v. Dalston (1634) to allow the funds to go the D and C respectively without being the legal owners |
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Explain the reason for the enactment of the Statute of Wills.
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The statue of Uses end the ability to make Testamentary distribution
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Conflict between law and equity
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The Court of Chancery began to re-examine the decision of those of the law court this came to ahead over common injunctions which lead to the removal of Lord Coke
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Courts of Equity Survive the Civil War and Removal of the Monarchy
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The Court of Chancery was abolition by Parliament during the commonweath but no agreement on incorporating into the the Common Law courts was reach therefore it was left alone
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Equity as a Body of Substantive Law
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Courts of Equity became more a court of rules over the the XVII- Century, thus Equity became much more of a set of rules then it had been in the past even borrowing from the
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Equity between in XVIII and XIX Centuries
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Equity became much more a developed area of law with set rules.During this time the remedies that were available in equity were favourable for a number of newly emerging uses that were highly complex made it slow and ineffective therefore under Judicature Act of 1873 meraged the Court with the common law courts which follow a trend of expanding the court that had begun early in the XIX century
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history of the exercise of equitable jurisdiction in the Atlantic
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1) Nova Soctia the governor had equable jurisdiction from 1764 was by masters meraged in 1855
2) New Buniweck: siminlar to Nova Soctia Masters appointed in early XIX century and merged in 1854 3) PEI: Masters from the early XIX century and but did not merge until 1974 4) Newfoundland: Always with the Supreme Court confided in 1825 |
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history of the exercise of equitable jurisdiction in the Ontario and Quebec
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1) Quebec has generally maintained civil law only had a Court of equity from 1763-1774
2) Ontario Govanors did not use Equity early but began sometime in early XIX century with the Court of Chancery created in 1837 because of creditor worries became part of the High court in 1881 |
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History of the exercise of equitable jurisdiction inThe West and North
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When the courts were created in the North and West the merger of Law and Equity was already well under way therefore a single court was created. There were divisions in BC and Manitoba but these have been abolished
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procedural concepts of fusion.
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Means that a single court administers both law and equity but as different path thus they can not be crossed over
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substantive concept of fusion.
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The Court administer a single body of law that covers the old ideas of law and equity in a single body of law and can and should draw from both
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example of the potential practical effect of the distinction between substantive and procedural fusion
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In Canson Enterprises Ltd. v. Boughton a claim for both an accounting of profit and damages, it could not be made if they was only procedural but if there was a substantive fusion it could
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Current Status of the Debate on fusion of law and equity
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In Canson Enterprises Ltd. v. Boughton the supreme court ruled that the result would be the same under either body of law . McLachlin J (as she then was) felt the result could have been reach under equitable princables. Neither judgement have clear guidance. McLachlin J state however
“we may take wisdom from where we find it, and accept such insights offered by the law of tort, in particular deceit, as may prove useful.” which potenial indicates a substantive fusion , however lawyer should know and be alive to this debate |
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requirements for the creation of an express trust.
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1)Capacity (does the person have capacity to create a trust)
2) The Three Certainties, intention, subject matter, Objects 3)Constitution (has the Trust be constituted) 4) formality (have the formal requirments been met) 5)Public policy (the Trust is not for reason that are not ok from a legal or public policy stand point) |
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Who must have legal capacity to create a Trust
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1) the settalor ( the settalor must be able to transfer the propery)
2) The Trustee ( The Trustee mus be able to take the Property) |
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Identify who else should have legal capacity
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beneficiaries while not require the have capasity it is useful to enforce the trust
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types of legal incapacity.
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1) Minors
2) Mental Incapacity 3) Not recognized in Law as person ie partnership Trust unincorporated organizations 4)Bankrupts Their property is held by the trustee in bankruptcy |
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When might Minor incapacity arise
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A minor is a person below the age of majority in the jurisdiction and as they are not able to enter into contract do not have the capacity to be involved in Trusts, it is problematic to allow trust creation because minors can void contracts.
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When might mental incapacity arise
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The person creating a Trust must understand the legal effect of the trust
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When can minors create a Trust
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A minor who is married or on active duty with the Canadian forces can make a will and therefore create a testamentary trust
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List the three certainties
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1) Certain of intention
2) Certain of Objects 3) Certain of Subject matter |
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Basic rules for Certain of intention
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Via an oral or written agreement the settelor must show intention to create a Trust unless its a testmenty Trust or the Statue of Fraud applies there are not formal requirements nor formal working although some works(trust Trustee) may indicate and other may such as (wish hope desire) may indicate against the overall intention is what matters.
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Basic rules for Certain of subject matter
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two branch
1) Certain of property subject to the Trust Look to see if its a specific amount or specific fund that is in question, also look if the amount can be calculated terms such as bulk or amount not disnating account or if the propety is unclear. However if there can be a determination it will most often be met. 2) Certain of Beneficiary entitlement this can be met by a clear amount, clear calulation or full discretion of the trustee |
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Basic rules for Certain of objects
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The court must know who benefits from the trust in a clear matter if they are to be able to enforce the trust if needed or at minimum how the Trustee can determine who befits, this does not apply if its for a charitable purposes. If its fixed the courts must be able to determine if a given person is a member of the class and determine all member of the class if its dicestionary the Turstee must be able to determine if a person is a member of the class. Fianlly no need for evidentary certain
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What is require to constitute a trust?
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The tranfer in a irrevocable matter of the trust property to the trustee
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Why must a Trust be constituted and explain the two reason ?
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1) Trustee can care out duties over property they don't control without title insurance and transfer can not happen
2)Equity Will Not Perfect an Imperfect Gift The settalor must show that their a serious in their attempt to transfer the property |
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Three way a trust can be constituted
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the settlor can transfer the intended trust property to another person to hold as trustee
the settlor can declare herself to be a trustee with respect to property she owns The settlor can have a 3rd party transfer property to the trustee to hold on trust |
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Explain the settlor can transfer the intended trust property to another person to hold as trustee
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Property is transfer with a trustee to hold for another person
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Explain the settlor can transfer the intended trust property to another person to hold as trustee;
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The settalor promises to hold property in a set way for the Beneficiary
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explain The settlor can have a 3rd party transfer property to the trustee to hold on trust
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IF the settalor is entitled to have something they can instead have it transfer to a Trustee to hold for the Beneficiaries
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Transfer of the legal interest in land
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Depends on the system generally a deed or transfer via land title
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Transfer of the legal interest in chattels
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Generally done via possession however can also be done via a bill of landing or via a deed,but a deed require specific performance and thus consideration
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Transfer of the legal interest in Choses in Action
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must be in writing and give notice to the person whom the choice of Action is against
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Transfer of the equitable interest in Choses in Action
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Does not require any particular form unless indicated in the act however requires the right be current unless a contract is undertaken
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Transfer of legal interest in Negotiable Instruments
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Requires there negotiation so that they are in the name of the bearer
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transfer of legals interest in Securities
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Must be recorded on the files of the corporation issuing the security
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Transfer of equitable interest
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1)an assignment of the equitable interest to a trustee on trust for the proposed donee
2)a declaration by that person that he or she is a trustee of the equitable interest for the proposed donee; 3)an instruction to existing trustees to hold the equitable interest in favour of the new intended beneficiary. |
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Cite case authority concerning how a trust can be effectively constituted by the transfer of property to a trustee
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Milroy v. Lord required at Settlor must do everything he can do to effect the transfer by wither a direct gift, transfer to another person to hold on trust or delcaring themselves the trustee and the court would not change one for another
so long as the giver has done all they can the trust will be good Re Rose |
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Cite case authority concerning how a trust can be effectively constituted by a settlor declaring herself or himself to be a trustee.
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Paul v. Constance no technical words are need however clear intention is required
Watt v. Watt estate a icomplete gift may be found to be a good delcation of self-trust if the evidence show that |
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approach of courts to the enforcement of gratuitous promises to settle property on trust;
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The Court will not enforce such a promise as it would be view as completing an imperfect gift neither the Trustee nor the Beneficiary can sue
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approach of courts to the enforcement of a promise to settle property on trust where consideration was given in exchange for the promise
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If the beneficiary is a party to the contract they would have the ability to sue specific performance would require the transfer of the property to the trustee the property would then be settled on the trust if the trustee was the party they would be generally entitled to damages
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approach of courts to the enforcement of to settle future property on trust
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It is enforce if done for consideration but the persons involved should consider the possibility of it not coming to pass
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whats the difference between mere power and trust powers ?
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A mere power is something the trustee can do and trust power is a power the trustee as a duty to do
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how do Trustee duties overlap with power
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A trustee must use their powers in a manner that reflect there underlying duties thus the power to invest must be consider with the duty of loyalty
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Define Administrative Powers
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The power that the Trustee have to take care of the property including repair upgrade or otherwise retain the property on behalf of the Beneficiary
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three situations in which some written evidence may be required under statute of frauds legislation.
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1) Contract with respect to land
2)Trust with respect to land 3)Assignment of Equitable Interest in the Trust |
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Descripti written evidence may be required under statute of frauds legislation withe respect to Contract with respect to land (s. 4 of the English Statute of Frauds)
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Does nor have to be the contract itself however to enforce the provision of the contract inducing the distribution of income on Trust requires some evidence that in writing and signed
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Descripti written evidence may be required under statute of frauds legislation withe respect to Trust with respect to land s. 7 of the English Statute of Frauds
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Does not require a trust instrument however the settalor or a person acting on behalf of the settalor must provide signed evidence of the intention to have the transfer be on trust
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Descripti written evidence may be required under statute of frauds legislation withe respect to Trust with respect to land Assignments of Equitable Interests in Trusts (s. 9 of the English Statute of Frauds)
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This applies when a person transfers a possiable remainer interest to an third party, it is unclear if it apply with regard to a disclaimer of the interest this one is diffenent in which the grant itself must be in writing
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Identify and describe the problems that were created by statute of frauds legislation
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The major problem with the Statue of frauds was that that promises to act were unenforceable this often lead to unjust enrichment. the promise would be carried out but to the other side
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Decrepit the doctrine of Past performance
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This was the idea that if an action was taken to fullfill an oral contract the court could hold that as evidence of the contract
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DecrepitThe Doctrine of Fraud
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If land is convened to a trustee and the trustee know that land is on trust there is a fraud however one does not need to prove fraudulent intention
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How has BC changed the Statue of Fraud via section 59 of the British Columbia Law and Equity Act?
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1) New approaches respecting land under the new leg look to all circumstances to show the promise also consider unjust enrichment by promisee or reliance by the promisor
2)Does not apply to Dispositions of Land by Way of Trust 3) Does not apply to the assignment of Equitable interest in Trusts |
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Define secret trust
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A secret trust is one of two types of testamentary Trust in which property bequethed with no indication in the will that it will be held on trust
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Define fully secret trust
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fully Secret Trust is a type of testamentary Trust which is not clearly evidence on the face of the will that the property is intend to be held on trust
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Define semi-secret (or half-secret) trust.
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A form of testamentary Trust in which the will indicates that property will be held on trust but does not give indication of the nature of the obligation
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Requirements for a fully secret trust
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1) must be communication (must be irrevocable an nu-mailed sealed letter will not do it)
2) Must be acceptance 3) Must be before the Death of the testator |
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Requirements for a semi-secret trust
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1) must be communication
2) Must be acceptance 3) Must be at or before making the will an the document must be referred to and identifiable able from the will |
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example of a trust likely to be found unenforceable on the basis that it is for an illegal purpose.
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A Trust is illegal if it encourage people to violate the criminal code o some other statue or for a non criminal fraudulent purpose such as keeping money out of the hands or creditor not charitable purpose have been called illegal in the past.
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Potential consequences of a finding that the trust is for an illegal purpose
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1) unenforcability and return of Trust property
2)Forfeiture of Trust Property under a)Proceeds of Crime Legislation b) Proceeds of Crime (Money Laundering) and Terrorist Financing Act |
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Discuss unenforcability and return of Trust property
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The Property is forfeit if the trust is for a illigent reason however there are two heads in which the property may be return as long as there is no actual fraud however there is some evidence that this is not the case.
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Discuss Proceeds of Crime Legislation
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all amount that area the results of processes of criminal activity are forfeit to the crown
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Discuss Proceeds of Crime (Money Laundering) and Terrorist Financing Act
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Requires the keeping of records by various groups also if trust money is going to a group linked to terrorist that money can be forfeit
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five situations in which courts have historically found a condition in a trust contrary to public policy
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1)Restriction on Marriage (unless it clear that its intended to support prior to marriage )
2)Interference with martial relations (Try to break up a marriage) 3)interference with parenteral duties (stopping children from live with parents) 4)Discriminatory Conditions( limiting ie to students of the white races) 5)Restraints on Alienation or Interference with Enjoyment of Property( only if an absolute gift) 6) Adherence to a particular religion |
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basic common law rule against remoteness of vesting
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A interest if its is to vest at all must vest by a date calculated based on a life in being plus 21 years.
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describeprotective and spendthrift trusts and the difference between Canada and US
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In Canada these trust are aimed at protecting the interest by preventing the disposition of the trust interest. In the US the same idea is done by not allowing the distribution to any person but the Beneficiary
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Describe a right of revocation.
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The right of revocation allows a settleor take back the trust property after full implementation of the Trust that power must be reserved.
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Indicate how a right of revocation must be reserved to be effective
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If the settlor wishes to have the right of revocation it must be reserved common law holds that once the property is transfer to the Trust in can not be revseed
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why the right of revocation used infrequently in Canada.
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If a Settlor maintains the the right of revocation the trust property is determined to be the Settlor for tax purposes
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articulate the rule in Saunders v. Vautier.
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1) One or more beneficiaries
2) Are entitled to all the beneficial interest 3) May apply to have the trust terminated even if the trust instrument calls for the final payment to be delayed |
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Explain what the probable purpose was for the enactment of variation of trust legislation (such as the British Columbia Trust and Settlement Variation Act)
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variation of trust legislation allows for the alteration of a trust instrument without using the power of revocation or the rule in Saunders v. Vautier.
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explain what variation of trust legislation (such as the British Columbia Trust and Settlement Variation Act) does?
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Section 1 Allows the court to give consent on behalf of minor or persons lacking legal capacity, Persons of a Specified Description or Specified Class, unborn persons so long as it in those person best interest and can generally give consent on behalf of those with a determinable interest. if the court is given consent on behalf of a minor, a person lacking capacity or a unborn person notice must be give to the public guardian.
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Reasons for the invalidity of purpose trust
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1)The benfrisary principle
2) Conceptual uncertainty 3) perpetual duration 4) Excessive Delegation of Testamentary Power |
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define the benfrisary principle as it relates to the Invalidity of purpose trusts
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In Morice v. The Bishop of Durham the court noted that such trust are difficult because there is no one to enforce them
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define Conceptual uncertainty as it relates to the Invalidity of purpose trusts
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A Trust must be clear as to what it will be used for often purpose trust are not clear and therefore will not be valid
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define perpetual duration as it relates to the Invalidity of purpose trusts
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A non-charitable purpose trust can be seen as have a perpetual duration this is however a minor isssue as the instrument can be drafted to comply with the Rule against preperuities
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define Excessive Delegation of Testamentary Powers it relates to the Invalidity of purpose trusts
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Claim that too much power is given to the trustees however most testamentary trust have board power therefore
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exceptions to the rule of no non-charitable purpose trust
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1) The erection of a monument at a gravesight
2)the maintenance of a gravesite 3) Care for a specific animal |
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Why where there exceptions where made to the rule of no non-charitable propose trust
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This were things that upper class English people in the XIX-Century would have view as conesitions to human weakness
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Discuss whether the implication of those exceptions to the rule of no non-chariable purpose trust, is that there is no general rule.
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The old idea was that the exceptions were merely exception however the law is moving towards a more general acceptance of non-charitable purpose trust.
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Explain the problem with gifts to unincorporated associations to be held on trust.
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Unincorporated Associations are not persons thus the gift will not be held by anyone in a legal sense
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How can a gift to an unincorporated association be saved
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1)Gift to member each member is entitled to their share
2) Gift to the member for the propose of the association 3) For a charitable purpose 4) Saved by section 24 of the BC Perpetuity Act(allowed fro 21 years) |
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Discuss the modifications to the beneficiary principle with respect to charitable purpose trusts
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The crown via the Attorney General or a deligate will enforce a charitable purpose trust
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Discuss the modifications to the requirement of certainty of objects with respect to charitable purpose trusts
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The Court will clarify the the charitable purpose if there is a clear charitable intention.
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Discuss the modifications to the perpetuity rules with respect to charitable purpose trusts
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The rule against perpetuity does not apply so long as the property can not vest in a person for a non-charitable purpose
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Compare and contrast the tax basis for the definition of charitable purposes and the trust law basis for the definition of charitable purposes
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The tax based definition is far broader the the trustand in particular to activity of a Charity must be charitable not just it purposes
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Identify the three key elements of a charitable purpose.
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1) excursive dedication of Trust property
2) To a Charitable purpose 3) in a matter that provides a public benefit |
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Four head of Charitable Purpose
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1)the relief of poverty
2) Advancement of Education 3)Advancement of Religion 4)Other purposes that benefit the community |
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Where are the four head of Charitable Purpose derived from ?
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The Statute of Charitable Uses preamble provides a list of uses the four modern head were defined by Lord McNaughten in Pemsel
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Why are Charitable Purpose so constrained
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The crown is required to enforce Charitable purpose trust the Crown would not wish to expend money to enforce a trust that does benefit the public
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What is the origin of the Advancement of Religion head.
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This head arose from the repair of churches in the preamble of the Statute of Charitable Uses
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What is generally included in the head of advancement of Religion
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1) Publication or teaching of religious believes
2) The building or repair of Churches or other religious buildings 3)the work of minister of Religion Note applies widely |
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Is the worship of God required to be the advancement of religion as a Charitable purpose ?
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In Canada it appears that it does (Re South Place Ethical Society) however with the advent of the Charter such a determinate may not be constitutional. International case law(Church of the New Faith v. Commissioner of Pay-Roll Tax) indictes that belif in a supernatural being by be sufficient or a moral and ethical system
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What type of things have been included under the head of general benefit to the community
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1) Help to the old. the young or disabled
2)to care for the sick 3) the provision of hospitals 4) provide health care or advance medicine 5)disaster relief 6)Care for veterans 7) aid prisoners 8) Native broadcasting( may not be good law) 9) provision of internet service |
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Identity the general rule of exclusivity
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All the funds held on trust must be dedicated to Charitable purposes to be held to be a charitable purpose trust
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What are the reason for Exclusivity
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The Crown will have difficulty enforcing a trust which can divined it resources between charitable and non charitable purposes
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what are 5 ways around Exclusivity?
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1)Interpret the intention to do charitable and non charitable as being charitable only
2)Read the Non-Charitable purpose as Charitable based on the donee 3) Serve the non-charitable purpose 4)Find the non-charitable purpose merely ancillary to the charitable 5)apply statuary provision to sever the non-charitable purpose |
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Discus Interpret the intention to do charitable and non charitable as being charitable only in the context of exclusivity
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The worlds will be read as only as only being charitable thus word that indicate a non-charitable purpose will be read as charitable. ie needy or deserving , deserving was read as deserving with regards to need not merit
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Discus the read the Non-Charitable purpose as Charitable based on the donee as being charitable only in the context of exclusivity
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The donee of the trustee if someone who would be regarded as upholding the Charitable purpose ie a bishop, the charitable purpose will be upheld
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Discus Sever the Non-charitable Portion the read the in the context of exclusivity
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When the trust will not be substantively altered the courts can sever a non-charitable purpose generally done with Testamentary trust only or when the settlor has not indicated the propotion to each purpose.
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Discus Find Non-charitable Purpose to be Merely Ancillary to the Charitable Purposes in the context of exclusivity
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Some non-charitable purpose help to promote a charitable purpose so long as it not the main goal in can be supported ie social events to promote woman in medicine as related to education (Guaranty Trust Co. v. M.N.R)
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Discus Apply a Statutory Provision (such as s. 47 of the B.C. Law and Equity Act) in the context of exclusivity
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Allows when a charitable use severance when the gift would be void for remoteness or uncertainty
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Articulate the general rule of political purposes in Charitable trust
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Trust can not be used to promote political cause or parties even if they would otherwise be valid for charitable purposes it very broadly defined as action that would promote at change in policy of a domestic or foreign government (McGovern v. Attorney-General)
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The Reason given for the rule against olitical purposes in Charitable trust
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The Court must stand by the law as it currently is the and can not determine if a change will be of benefit
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The Reasons against for the rule against political purposes in Charitable trust
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1) Encouraging debate is in the public interest
2) religious organization recognized a Charitable seek to influence the legislate process 3)Poltical activity are incidental to the Charitable propose |
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describe the historical treatment of discriminatory conditions
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Such clauses were generally held to be valid prior to Leonard Foundation since that time viewed as invalid unless they are for marginalized group or does not articulation racist or otherwise repugnant views
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Describe the administrative scheme-making power of the court.
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The Court will create scheme which allows for the carrying of clear charitable propose so long if the way it would be carried out is unclear,
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Give examples of circumstances when the administrative scheme-making power will apply
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The settlor hs provided the money to be used for a charitable purpose but has not idicated how or what
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Give examples of circumstances when the administrative scheme-making power will not apply.
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IT will not be used when the Charitable purpose has become difficult or imposable to carry out
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Describe the cy près power of the court and its purpose
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the Cy pres power is the power to correct when it is imposable or impracticable to carry out the trust the purpose of this power is to that Chariable intendion are met
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Application of cy près when no one will benefit
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The Court can update a trust to met modern need rather then the historic one it had originally addressed or the original people it would have benefited
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Application of cy près when there is Surplus from a Fund Raising Campaign for a Charitable Purpose
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the Court can allow the use of the fund for another similar purpose
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Application of cy près when Surplus Remains Because Funds were Obtained from Another Source
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The court can allow the fund to be used for another purpose if they can not be returned
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Application of cy près when The Charitable Purpose Trust is Found to Violate Public Policy
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The court can change the trust so that it is no longer void for public policy
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Application of cy près when The Organization to which the Funds were to be Given has Ceased to Exist or never Existed
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This the court can direct the fund to another similar organization so long as there is a clear charitable intent
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What is impracticality?
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If the money use would be impractiable because of a change in the situation the money can be reallocated this does not mean simple better use of funds
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Discuss how the cy près power applies in cases of initial failure
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The court will look for a general intent the courts will use the money for another related charitable purpose
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Discuss how the cy près power applies in cases of Subsequent Failure
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The court will not look for a general charitable intent before changing the trust
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How is a express trust used for a life interest ?
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There are many ways in which a trust can be used for a life interest, this allows for the provision for persons subject to a remainder interest to another or the charities
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Express trust for a period other then life?
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A trust can be created until a particular date or the beneficiary reaches a particular age
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Why use Discretionary Trusts
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A Discretionary trust allows the trustee to determine the allocation of the trust funds between beneficiaries, this allows settalor to have some control over how the money is allocated
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Four way to control discretion in a discretionary trust
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1)Imposing Constraints on a Discretion in the trust instrument
2)Requiring Consultation with the Settlor income tax act danger 3)Letter of Wishes non binding 4)Use of a “Protector” a person appointed to have see the trustees |
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why use Contingent Interests in Trusts
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A settalor may wish money to vest in a beneficiary if a situation is met, such conditions can also prevent Saunders v. Vautier.
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Why use Trusts to Deal with Spendthrift Beneficiaries
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An settalor may wish a allow an allowance to the beneficiary with restriction of alienation or limitation on who the trustee can pay money to.
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Why use Trusts for Disabled Persons
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A trust can get around limitation on the assents of a disabled person if the trustee has the ability to allocate this is called a Hanson Trust care must be taken that the trust is not subject to Saunders v. Vautier.
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Why use Testamentary Trusts
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A testamentary trust can deal with the property at the time of death, It is always tax at the rate for indulaivual therefore tax can be saved by creating a number of trusts
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Why use Secret Trusts
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Are used when the settalor does not want to disclose who the money is going to.
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Why use Insurance Trusts
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two forms
1) testamentary Life insurance payment these bring down probate fees, are confidential, and protect from creditors 2) inter vivos contract for payment of the insurance policy however tax risk |
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Why Spousal (or Common-law Partner) Trusts?
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Transfer to a spousal trust is not subject to the capital Gains Tax or does the 21 year rule apply, the taxation for a testamentary trust is calculated at the same rates is individuals and is determined to be a separate tax payer however tax benfits are not so great if inter vivos
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Why use Alter Ego Trusts, Joint Spousal Trusts and Joint Common Law Partner Trusts
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allows for the avoidance of capital gains tax income tax act rules protect this against the capital gains tax such trusts also protect agist creditors and provide confidentiality
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trust Estate Freezes
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Trust for estate fezzes stop teh further growth of the capitial in the hand of a high income person and place that in the hands of a lower income person
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Using a Trust in an Estate Freeze family corporation
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Will prevent to the credit of children from taking the shares the shares are then allocated at a fixed price
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Using a Trust in an Estate Freeze other assest
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Will prevent to the credit of children from taking the control of the assent thowever in term of tax the price will be fixed at a set rate.
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why use Charitable Remainder Trusts
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By have a irrevocable charitable remainder the settlor will gain a tax write-off and the capital must not be able to be enfugeed by the life interest
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why use Education trusts
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Protects money for beneficiary for education one most be careful of Accumulations, peritutities and capital gain 21 year rule
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why use Pour-over Trust
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allows to get around the rule about not be able to vary an intor vious by adding however may not heavily alter the nature of that trust
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what is Domestic Asset Protection Trusts
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Allows for little control be the settalor and great discrasssion by the trustee to prevent the assent from being targeted by creditors
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Offshore Asset Protection Trusts
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This offshore trust can be done in jurisdiction which will not enforce a Canada court order and may allow for measures that are not allowed under Canada thus can be an effective means to protect liquird assets
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describe Mutual Fund Trusts
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Allow a investor to diversify their portfolio the pooled money is invested an the divined paid to the investor( beneficiary) geberally not subject to the 21 year rule for capital gains tax
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describe Shareholder Voting Trusts
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Used to empower corporate voting by jointly pool the share to vote because of tax implication such trust are uncommon in Canada
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describe Debenture Trusts
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Trust to hold a part of a coperation debt in exchange for payment of interest to the holders high cost of enforcing are shared
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describe a trust to Buyout Interest of Deceased Business Associate
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Offend to via insurance to cover the cost of buying out other business assoicates share in a company under an agreement after they die
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describe Business Trusts
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A Trust can be used in the place of a corperation to invest money in a business with investor as beneficiaries
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describe Liquidation Trusts
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A trust that appoints a trustee to sell a bankrupt business. A trustee in bankruptcy is a statutory various of this
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describe Pension Trusts
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Use to manage money for the benefit of employees who retire
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describe Asset Securitization Trusts
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Allows to sale of a asset that will be profitable at a future date in trust to another to allow for cash flow the person who has bought them will.
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Identify the six core duties of trustees
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1) The Duty of Care
2)The Duty not to delegate 3) The Duty of impartiality 4) the Duty of loyalty 6) Duty to Care out the terms of the Trust |
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What is the difference between an absolute duties and duties to take care
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An absolute duty does not provide a defense of due care other duties such as the duty to invest require that the trustee took reasonable care
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what is the the general rule with respect to delegation by trustees
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The general rule is Trustees must not delegate
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When the trustee may delegate
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1) when the Trust deed allows for delegation
2)when its in accordance with the normal course of business 3) when allowed under a statue |
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Delegation Permitted under the B.C. Trustee Act
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s7(1) allows the appoint of a solicitor to receive and dischange money
s.7(2)appoint a banker solicitor to discharge money under an insurance policy s,7(3) Must not allow the money to stay in other hand longer then required s.7(5) over rides the express terms of the trust. |
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delegation by a Corporate trustee
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In Ontario a corporate trustee can not delegate however the BCCA say this is not law in BC
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The duties of trustees when they do delegate.
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1) must select the agent themselves,
2) the agent must be a expert in the area delegated to them 3) The Agent must be suprived with care |
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what the B.C. Trustee Act provision dealing with liability of trustees for the acts of agents or other trustees say
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The trustee is not liable the loss is a result of there willful default it a open question as to the meaning maybe more the regular negligence
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Describe the duty of loyalty
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The trustees must mange the trust in the best interest of the beneficiary and must therefore not put themselves in a conflict of interest
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Discuss the duty to inform beneficiaries of their interest in the trust.
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Trustee have a duty to inform beneficiary of 3 things
1) the existence of the trust 2)trust accounts 3)the excise of discretion |
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Discuss the duty to provide accounts.
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Trust accounts are important so that beneficiaries can determine there share of the funds and if the trust is being manage correctly, the duty only applies if the beneficiary asks
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two main approaches courts have taken with respect to the duty to disclose information relating to the exercise of discretion
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1)The Proprietary Right Approach
2)Balancing of Interests Approach |
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Describe The Proprietary Right Approachcourts have taken with respect to the duty to disclose information relating to the exercise of discretion
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Arose out of Re Londonerry’s Settlement, It hold that a beneficiary with a vested interest in a trust is entitled to documents relating to trust management as those are there property.
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Describe balancing of Interests Approach courts have taken with respect to the duty to disclose information relating to the exercise of discretion
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The courts will require safe guards as against trustee abuses yet will balance that with the general requirement to protect trust property
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How far can a trust instrument go in protecting trustee from liability?
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Trustee deed can proptect trustee from most liability however given the nature of Trustee court in Canada have been unwilling to protect in case of gross negligence (Re Poche), or even further and require fraud(Armitage v. Nurse)
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Indicate the general rule concerning remuneration of trustees
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The Default rule is that Trustee are not entitled to remuneration because they have a duty of loyalty to act in the best interest of the beneficiary therefore payment could be seen to place the Trustee in a conflict of interest
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Identify three exceptions to the general rule concerning trustee remuneration.
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1) Provision in the trust instrument Called a charging provision but must be very clear as to when payments will be made
2) The beneficiaries, if of full legal capacity and unanimously agree , can provided for payment to the trustee 3) The Court have the statutory and inherent power to grant remuneration |
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Identify factors considered by courts in assessing trustee remuneration.
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1)The magatue of the Trust(How much its worth)
2)The care and responsibility (this is linked to 1) 3)The time require to perform duties 4)The skill and ability displaed by the trustee 5)the Success of the trust |
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what are the two sources which a Trustee may claim the to be indemnified by
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1)Out of the Assets of the Trust
2)From the Beneficiaries |
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Discus trustee imdemifcation out of trustee assets
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A trustee is entitled to claim expensive in administer the trust out of its assents (Worral v. Harford) this has been incorporated into statuate law in most canadain provinces which allow the expense to be paid directly out of the Trust assesnt or by recovery
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Discus trustee imdemifcation from the Beneficiaries
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When the trust assents do not cover the liability of the trustee in administering the trust they may be indemifted by the Beneficiary (Hardoon v. Belilios) or Beneficiaries (J.W. Broomhead (Vic) Pty Ltd. v. J.W. Broomhead Pty Ltd) of legal capacity
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Describe the presumption of advancement
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Transfer in enurerated classes of people(Between marriage parners or parents to children[incudling person actiing on behalf of the child]) are presumed to be gifts and can be rebutted with eviedne
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Describe the law with respect to the presumption of advancement from a husband to a wife.
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This presumtion has been abosished by legistaion across expert Alberta, British Columbia and Manitoba does not apply when dealing with marrial breakdown in those provinces, applies to inter voris gifts when later place into the estate(Mehta Estate v. Mehta Estate) subject to evidence of different intent, change condition may stop it from applying (Rathwell v. Rathwell) and does apply to co-habbit couples
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Describe the law concerning the presumption of advancement from a parent to a child.
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Applies between a parrent an child not withstand the historic rule(Pecore v. Pecore) or a person funtioning as a parrent (Young v. Young) and apply even if the child is an adult
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Discuss whether the presumption of advancement can be rebutted with evidence that indicates a transfer was made for a fraudulent purpose
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It is clear taht evidence from a donor as to unlawful persuse will not be except to reput if harm as resulted, it not clear what the law is if there was no harm this will not apply when the presumption of resulting trust arises it is likely that because of this mainly arising in martial break down it will not arise offend because of family and then mainly in the context of parent to child.
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Explain the implications of resulting trusts for joint bank accounts
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When there is a sole depositor the Court will presume a resulting trust unless the other holder can prove that a gift was intended similarly the presumption for equal payment unless the bank document indict differently
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