Equity LG/WS 7 - Validity of express trust (2)

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  • Created by: Emma13
  • Created on: 22-06-18 09:08
What did Thellusson v Woodford establish?
Accumulated income could offend the rules against perpetuity
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What are Prepetuities Rules Rules against remoteness of vesting?
The rule against remoteness of vesting applies to trust which create contingent interest. The trust is void unless the interests vest within the perpetuity period (125 years for trust created and wills executed on or after 6th April 2010
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Which Act establish the rules against remoteness of vesting?
Perpetuities and Accumulations Act 2009
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When will the rule against remoteness of vesting apply?
If the trust creates a contingent interest-B's interest is conditional/B is not yet born or ascertained/The trust is a discretionary trust or include a power of appointment
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When will the beneficiary's interest vest?
When condition is satisfied When all beneficiaries are born/ ascertained (in a discretionary trust/ power of appointment) when objects are selected
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Will Vesting occur within the perpetuity period?
For trusts created on or after 6th April 2010 - 125 years (From the start of the trust. If created on death it’s date of death)
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What about trusts created before 6th April 2010?
including wills executed before that date - different periods apply
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What are purpose trusts?
A trust to carry out a purpose or advance a cause as opposed to dividing the trust fund between beneficiaires.
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What does a trust mean?
Equitable duty imposed on a trustee To deal with property For benefit of beneficiaires who can enforce the obligation
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What is the general rule about purpose trusts?
trusts for a purpose are void Generally, trust are valid only if they have beneficiaries who can, if necessary go to court to enforce them.
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What did Sir William Grant Morice v Bishop of Durham say regarding purpose trusts?
There can be no trust, over which this Court will not assume control..Every trust must have a definite object. There must be somebody in whose favour the Court can decree performance
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What did Re Astor’s Settlement Trusts 1952 establish?
“on trust for 1. The maintenance of good understanding, sympathy and cooperation between nations and 2. The preservation of the independence and integrity of newspaper” = void as no ascertainable beneficiaries also too vague a purpose.
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What did Re Shaw 1957 establish?
Residue was given on trust to be applied towards establishing a 40 letter alphabet in place of the present 26 letter alphabet = void
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What are Exceptions to the beneficiary principle?
Charitable trust and “Trusts of imperfect obligations”
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What is “Trusts of imperfect obligations” ?
anomalous exceptions permitted as a concession to human weakness and sentiment
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What did Re Dean establish?
trust to provide income for the upkeep of the testator's eight horses and hounds
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What did Pettingall establish?
trusts to provide money for the upkeep of the testator's favourite black mare
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What did Re Hooper establish?
testator left money to his executors on trust to use the income for the upkeep of various family graves for as long as they legally could do so
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What did Re Endacott establish?
these exceptions are “concessions to human weakness” which concerned a trust “to provide some useful memorial to myself” = void as uncertain
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What did Musset v Bingle establish?
trust to erect and maintain a monument to “my wife’s first husband in sympathy”
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What did Re Denley’s Trust Deed 1969 establish?
“Where..the trust, though expressed as a purpose, is directly for the benefit of an individual or individuals..it is in general outside the mischief of the beneficiary principle” Goff J
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What is the rule against inalienability of capital?
A non-charitable purpose trust is void if it renders capital inalienable for a period longer than the perpetuity period in this case usually 21 years.
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Non-charitable purpose trusts are void for offending the rule against inalienability unless either?
RAIC-The trust states that it is to last for no more than 21 years; or The trustee may spend all the trust capital on the purpose and thereby end the trust at any time
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The trust is void from the start unless?
RAIC- Trust capital is capable of being all used up on the stated purpose OR The purpose trust must end within period permitted by law
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What did Brown v Burdett establish?
Capricious purposes - the testatrix left her house on trust to block up the windows and doors for 21 years = void
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What are the 2 methods to create a full constituted trust?
Owner of property termed settlor can create a trust over it by; declaring himself trustee or transferring it to 3rd P who is intended to hold it on trust for specified Bs and not enjoy benefit himself
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What is the meaning of a fully constituted trust?
The trust is in existence, because the legal and equitable title to the property has been properly vested in the trustees and beneficial title in the proposed beneficiaires
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What is an incompletely construed trust?
If settlor has failed to effectively declare himself trustee of the intended trust property/ property never transferred by the settlor to the intended trustee, trust hasn't come into being
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What happens if a trust has been completely construed?
Beneficiaries have an equitable interest in the property, may enforce trust obligations
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What did Re Cozens establish?
Neville J indiciated '‘In each case where a declaration of trust is relied on the Court must be satisfied that a present irrevocable declaration of trust has been made’ (settlor declared himself t'ee)
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What did Richards v Delbridge establish?
Jessel MR made clear that the settlor does not need to use particular words or technical expression to create a trust by declaration
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What did Paul v Constance establish?
Scarman LJ accepted as a statement of principle that ‘there must be clear evidence from what is said or done of an intention to create a trust’/ repetition of similar words over time may be sufficient to create trust
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What did Jones v Lock establish?
words spoken in what was merely ‘loose conversation’ will not amount to an effective declaration of trust because the necessary intention to create a trust is lacking
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What did Rowe v Prance establish?
Applied Paul v Constance
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What did Choithram establish?
In effect the S made a gift of the intended trust property to himself in his capacity as t'ee, which had the effect of constituting the trust.Words of gifts by the S to himself on trust should be regarded in substance as a declaration of self as t'ee
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What did Re Vandervell establish?
Effective declaration of trust may also be inferred from conduct, even if no words approximating to such declaration are actually used
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What did Milroy v Lord establish?
equity will not construe an ineffective transfer as a declaration of trust by the settlor
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What are the B's entitled to when a trust has been fully constituted?
B's are immediately entitled to the equitable interest in the property held on trust for them.They can seek to aid of equity to compel the T's to perform trust obligations by virtue of their interest as b's,regardless if they vol's/provided consid
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What did Paul v Paul establish?
Once the trust has been created the settlor cannot change his mind
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What is the general principle for if the beneficiary has provided consideration for the trust?
intended beneficiaries have provided valuable consideration in return of the settlors promise to create a trust in their favour, then equity will compel the settlor to constitute the trust
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What are the formalities for creation of trusts?
A valid trust may be created either by the self-declaration of the legal owner, or by the transfer of the legal title to trustees upon trust The trust may either be created inter vivos or by will
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Why are formalities of trust in relation to land required and what obligation does s53(1)(b) impose?
Formalities are required for declarations of trusts of land to prevent the disputed and inconvenience which would result if purely oral declarations were allowed In essence s53(1)(b) imposes an evidential safeguard
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Will s53(1)(b) allow the writing to be signed by an agent?
Unlike the parallel provision of s53(1)(c), s53(1)(b) will not be satisfied if the writing was signed by an agent
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Why does the law not usually allow purpose trusts?
The law insists that trusts must be for the benefit of legal persons and not merely for the object of carrying out purposes
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What happens if a purpose trust is upheld?
Where purpose trusts are upheld as valid and a mechanism to supervise and enforce them is provided by the state for reasons of public policy
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What did Bowan establish?
Lord Parker of Waddington said that ‘for a trust to be valid it must be for the benefit of individuals.’
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What did Stamp establish?
Without ben's there is no owner, a trust makes ben's into equitable owners
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Why is a purpose trust a problem for the courts?
Where a trust is created to carry out a purpose there is no person with locus standi to apply to the court to ensure that the terms of the trust are being carried out and that the trustees do not act in breach of trust
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Who is supposed to supervise the trust and what are they supposed to do?
The supervision of trust relies first and foremost on the beneficiaries, as the person most interested in the proper administration of the trust, bringing abuse to the attention of the court.
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Why is the law reluctant to allow trust property to violate the rules against perpetuity?
The law has always been reluctant to allow property to become subject to restrictions that would unduly prevent its free marketability
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What is the perpetuity period of private trusts?
must not exceed the perpetuity period, which has been defined to consist of the duration of a human life in being at the date that the trust was established plus an additional period of 21 year. trust offends this it is void ab initio
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What did Re Astors Trust establish?
Exceptions to B principle - Roxburgh J reviewed the exceptions and commented that they were ‘anomalous and exceptional reviconcessions to human weakness or sentiment’
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What happens if the trust falls within one of the exceptions?
Even where a trust falls within the ambit of one of the anomalous exceptions, it will be void if it offends the rule against perpetual trusts because it might exceed the perpetuity period
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What did Mitford v Reynolds establish?
Care of particular animals testators horses allowed
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What did Re Hetherington establish?
The saying of masses for the dead was held to be a charitable activity for the advancement of religion in Re Hetherington provided they are celebrated in public
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What did Brown v Burdett establish?
Policy limitations on PT - Even if a purpose trust falls within the anomalous exceptions, it appears that it will be invalid if it is fo capricious or useless purposes
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What did Re Denley's Trust establish?
Goff J upheld gift to establish PT because it would in fact benefit individuals because they would benefit in/directly from carrying out purpose - outside mischief of BP
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What did Re Lipinski's establish?
As the gift was made to an unincorporated association the only way it could be upheld was if it was a gift to the individual members of the association
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What is the problem with Purpose trusts?
Residuary legatees who would apply to court are the people who would benefit if trust not properly carried out. Self interest overrides the setlors intentions when there is no specific set of b's
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What have other jurisdictions adopted to avoid this problem with enforcing PT?
introduced statutory schemes that facilitate the enforcement of non-charitable purpose trusts The essence of many such schemes is the introduction of a third party ‘enforce’ who is empowered to act to ensure that the trustee carry out their duties
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What are Prepetuities Rules Rules against remoteness of vesting?

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The rule against remoteness of vesting applies to trust which create contingent interest. The trust is void unless the interests vest within the perpetuity period (125 years for trust created and wills executed on or after 6th April 2010

Card 3

Front

Which Act establish the rules against remoteness of vesting?

Back

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Card 4

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When will the rule against remoteness of vesting apply?

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Card 5

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When will the beneficiary's interest vest?

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