Introduction to Equity & Trusts Flashcards Preview

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Flashcards in Introduction to Equity & Trusts Deck (26)
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1
Q

Settlor

A
  • Person setting up the Trust
  • Once trust is set up, has no role to play unless a trustee
2
Q

Trustee

A
  • Legal title holderduty and obligations in relation to the property
  • Power to how assets are used and invested and to whom they are transferred
  • Active duties regarding what is done with assets
3
Q

Beneficiary

A
  • equitable title holder who the legal title will be passed to when of age
  • right to enjoy and benefit from the property
  • ultimate control of the trust assets
  • proprietary rights
4
Q

Saunders v Vautier [1841]

A
  • The beneficiary is entitled to the property of the trust if:
    • they are absolutely entitled to the property,
    • an adult and
    • of full mental capacity.
5
Q

What is a Trust?

A

Method of dividing ownership rights in property

  • Legal ownership – trustees - entails responsibilities but no beneficial enjoyment
  • Equitable ownership – beneficiaries
6
Q

Choses in Possession

A

tangible assets, e.g. furniture, cars, books, jewellery, pets

7
Q

Choses in Action

A

intangible assets, e.g. shares, cheques, debts, insurance policies and intellectual property

8
Q

Real Property / Realty

A

Freehold land

9
Q

Personal Property / Personalty

A

All property other than freehold land. For historical reasons, leasehold land is technically personalty.

10
Q

Pure Personalty / Chattels Personal

A

All personal property other than leaseholds and divided into choses in possession and choses in action

11
Q

Implied Trusts

A

A trust set up without the knowledge or consent of the settlor or trustee e.g. resulting or constructive trusts

Where no valid express trust exists, but it would be inequitable for the defendant to deny that claimant has some particular beneficial interest in property

12
Q

Express Trusts

A

Trust expressly created by a settlor

Trustee must agree to act in his capacity before they are bound by comprehensive trustee duties

13
Q

Resulting Trusts

A

When the property returns to the settlor, e.g. trusts for life or where property is vested to another for a period of time

14
Q

Constructive trusts

A

Imposed by operation of law, e.g. to remedy some fault or inequitable situation or to facilitate a transaction.

15
Q

Re Smith (1928)

A
  • Extends rule in Saunders v Vautier to trusts with multiple beneficiaries.
  • In discretionary trusts, if there is a closed beneficiary group, and all the discretionary beneficiaries are absolutely beneficially entitled to the whole equitable interest, then they can do as the please with the equitable interest.
16
Q

Gartside v IRC (1968)

A

Where potential beneficiaries in a discretionary trust have no proprietary interest in the trust property, they merely have a hope that they will be selected to receive some trust property.

17
Q

Fixed Trusts

A
  • Where settlor has already determined in the trust deed the beneficial interests which each beneficiary is to take.
  • The beneficiaries and their individual entitlements are fixed and certain.
18
Q

Life Interest

A

The right to the income generated by the trust property

19
Q

Interest in Remainder

A

Capital interest in a trust where the beneficiary’s possession and enjoyment of the trust assets is postponed by a prior interest in the same assets.

20
Q

Vested interest

A

Unconditional interest, i.e. a beneficiary does not have to satisfy any requirements

21
Q

Contingent interest

A

Interest subject to a condition

e.g. to T1 and T2 on trust for A for life, remainder to B if he survives A’

22
Q

Discretionary Trust

A
  • Trustees will be given some kind of discretion. This is usually to decide:
    • Whether to pay the income out
    • To whom and when
    • To decide to whom to pay out the capital on termination of the trust
  • Discretionary power must be exercised by trustee.
23
Q

Power of Appointment

A
  • Authority to deal with somebody else’s property
  • Power at holder’s discretion / optional
24
Q

General Power

A

The donee of the power may exercise it in favour of anybody in the world

25
Q

Special Power

A

Class of potential beneficiaries donee may exercise in favour of is limited by the terms of the power.

26
Q

Hybrid Power

A

Where the class is general but has an exclusion