Equity LG/WS 6 - Validity of express trust

  • Created by: Emma13
  • Created on: 21-06-18 21:54
Why is certainty needed?
Trustees must be able to carry out the trust Court must be able to enforce
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What is Certainty of intention?
Need to construe words used by settlor S must intend to make himself or T a trustee of the property. S’s words must impose a duty on himself or T to act as t'ee
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What did Shah v Shah establish?
“in interpreting a document the court should...have regard to..the intentions..as manifested by the words..used in the context of all the relevant facts” Lady Justice Arden
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What is needed for certainty of intention to create a trust?
Needs binding words, not precatory words
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What did Re Adams and Kensington Vestry establish?
Precatory words do not create a trust.
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What did Paul v Constance establish?
Precatory words do not create a trust however here there was clearly an express declaration to create a trust
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What did Palmers v Simmonds and Peck v Halsey establish?
Certainty of subject matter - The trust property must be certain
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What did Re London Wine Co (Shippers) Ltd establish?
Certainty of subject matter - Trust of part of a collection of items; Need to segregate the specific items for certainty if subject matter
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What did Hunter v Moss establish?
Certainty of subject matter - Trust of part of a collection of items -Not necessary to segregate if assets are all identical shares in a company This case only applies to shares in a company and shares need to be identical
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Is a trust of “residue” certain?
Trust of “residue” Is sufficiently certain
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What happens if the trust property is uncertain?
If no certainty of subject matter- Trust fails and settlor remains owner of property
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What did Re Golay establish?
trust involving income - Treated it as a discretionary trust Things to consider: beneficiary’s previous income,need of other beneficiaries, total income from the properties.
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What is the test for Certainty of objects for fixed trusts and authority?
Description of beneficiaries must be certain enough to enable a complete list of them to be created IRC v Broadway Cottages Trust
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What is the test for Certainty of objects test for Discretionary trusts and authority?
McPhail v Doulton - HOL adopted the ‘any given postulant test’ for discretionary trusts: the trust is valid if it can be said with certainty whether any given postulant (individual) is or is not a member of the class of objects.
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How can you satisfy the AGPT?
To satisfy the test, the objects had to be described with conceptual (linguistic) certainty.
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What was the previous test for discretionary trusts?
Before M v D - Complete list test applied to D Ts HL adopted more flexible test for certainty of objects for DTs
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What did Mcphail v Douton establish?
HL specifies that the test for certainty of objects for DTs is now the given postulant test. HL remits the case to determine whether the description of objects in Mr Baden’s trust passed this new test for certainty (Re Baden’s Deed Trust (no 2)
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What is administrative work-ability?
A discretionary trust is void if the class of objects is too large.
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What did Lord Wilberforce say in MvD in regards to administrative work-ability?
“There may be a third case where the meaning of the words used is clear but the definition of beneficiaries is so hopelessly wide as not to form ‘anything like a class’ so that the trust is administratively unworkable.”
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What did ex p West Yorks establish?
2.5 million inhabitants of West Yorkshire - In this case the trust would be administratively unworkable
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What is capriciousness ?
A discretionary trust is void if it is capricious i.e. there is no rational reason for benefiting that class of objects and the trustees have no rational basis on which to distribute the trust fund.
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What happens if the objects are uncertain or the trust fails due to administrative unworkability or capriciousness?
= resulting trust for settlor
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What is power of appointment?
A power of appointment gives a person the ability (but not a duty) to decide who should receive the property in question.
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What is Donee of a power?
The person who is given the power of appointment.
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What is Objects of a power?
The people who could be chosen to receive the property (i.e my relatives)
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What is Bare power?
A power of appointment which is given to a non-trustee.
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What is Fiduciary power?
A power of appointment given to a person who owes fiduciary duties e.g trustee
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What is Gift in default of appointment?
A gift which directs what is to happen to property which is not appointed to one or more of the objects.
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What is General power of appointment?
A power to appoint objects from anyone in the world.
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What is special power of appointment?
A power to appoint objects from a class of identified people.
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What duties are the trustee's under with a discretionary trust?
Under a discretionary trust, the trustees are under a duty to distribute the property. If the trustees do not distribute within the time laid down by the trust declaration, the court will execute the trust.
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What duties are donee under with power of appointment?
Under a power of appointment, the donee is not under a duty to distribute the property. If the donee does not distribute within the time laid down in the power, the court will not execute the power.
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What does Re Gestetner, Re Gulbenkian’s settlement trusts establish?
Certainty of objects GPT applies to POP,The objects of a POP must be certain.Reason is that the court will intervene if the d'ee appoints property to someone who is not an object.Court must be able to say who is+who is not, an object of the power
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Does administrative unwork-ability apply to POP?
This is thought not to invalidate powers - Re Hays. A general power in favour of everyone in the world is valid.
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What did Re Manisty’s Settlement establish?
Capriciousness does invalidate powers of appointment
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What was Stamp LJ views in Re Baden trust?
minority: if he can’t say claimant is “in or out” the trust fails for uncertainty of objects.
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What was Sachs J views in Re Baden?
description of objects must be conceptually clear, burden on claimant to show they are in the class, evidential uncertainty does not cause the trust to fail.
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What was Megaw LJ views in Re Baden?
if can say substantial number are in the class, doesn’t matter if can’t prove some are in and some are not.
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Why LW thought is appropriate to have the same certainty of objects test for the powers of appointment and discretionary trusts?
Powers don’t need administrative work/Capriciousness
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What are the duties of a Trustee in a discretionary trust Per Lord Wilberforce in Mcphail?
Survey, Enquire, Prioritise, Select - similar process suggested for fiduciary powers in Re Hays
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What is to survey?
‘examine the field by class and category’
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What is to enquire?
‘as to the composition and needs of particular categorised and individuals
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What is to prioritise?
decide upon certain priorities and proportions
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What is to select?
individuals according to their needs and qualifications
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Other cards in this set

Card 2

Front

What is Certainty of intention?

Back

Need to construe words used by settlor S must intend to make himself or T a trustee of the property. S’s words must impose a duty on himself or T to act as t'ee

Card 3

Front

What did Shah v Shah establish?

Back

Preview of the front of card 3

Card 4

Front

What is needed for certainty of intention to create a trust?

Back

Preview of the front of card 4

Card 5

Front

What did Re Adams and Kensington Vestry establish?

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Preview of the front of card 5
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