Notes created using ULaw materials for the purpose of assisting existing ULaw GDL students in ULaw GDL exams only. They are
intended to be used as a supplemental tool to aid revision in conjunction with ULaw materials, not as a replacement for them.
INTRO
Absolute owner = legal and equitable ownership
Trust = Underhill and Hayton:
Binding obligation placed on a person – trustee
To look after property for the benefit of another – beneficiary – or for a purpose permitted by law
Requires:
Transfer of property to the trustee
Declaration of trust by settlor/testator
CREATION OF A TRUST
Settlor = creates the trusts → they decide who will be involved in the trust and what its terms should be
• Can declare themselves a trustee
• Can transfer property to trustees on trust
Trustee = holds the property for the benefit of the other → they have legal ownership of the property
Beneficiary = person for whom the property is being held for → they have an equitable interest in the property
Reasons for a trust instead of an outright gift = B is a minor, not old enough in the situation, or lacks capacity
ie disabled → therefore put in a trust until they are considered responsible
Fiduciary duties: Equity imposes trustee-like duties on certain people who occupy positions of trust →
imposes standards of honesty in certain business rel
TYPES OF TRUSTS
EXPRESS = any trust which the settlor expressly/intentionally wants to create
Fixed Settlor fixes from the outset who Bs are and what share they will get
Discretionary Settlor states who can be considered to benefit, but leaves in discretion of trustees who of
the options will benefit and the actual allocation of who gets what
• Allows them to react to circumstances which arise after the trust comes into effect =
• Those benefitting are called objects not beneficiaries
• Trustees and Bs cannot be the same people in a discretionary trust
Objects therefore only have a hope to benefit, there is no guarantee
IMPLIED = no express intention, but one arises due to surrounding circumstances – law assumes a trust was
intended/should be imposed
Resulting Trust arises to reflect the supposed intention of the settlor
, Constructive Imposed to achieve a fair result between parties involved, generally where it would not be
fair to allow the legal owner to fully enjoy the property they hold
BENEFICIAL INTERESTS
VESTED OR CONTINGENT INTERESTS → is my interest unconditional?
Vested Unconditional interest → B exists and does not have to meet any conditions imposed by
the trust terms before becoming entitled to trust property
Contingent Conditional interest → B not yet in existence or depends on some future event that may
or may not happen
• If the condition is met, B’s interest becomes vested
• If it isn’t met the B never becomes entitled to property → remaining property =
resulting trust then and passes on intestacy
• Death Is NOT a contingency as that is always going to happen → delay not condition
• Need specific wording for it to be conditional
INTERESTS IN POSSESSION VS IN REMAINDER → when will I benefit?
In possession Now ie can enjoy interest immediately
In remainder Later ie cannot enjoy interest immediately and has to wait until some other B’s interest
expires (eg they die) = postponed
ABSOLUTE VS LIMITED INTERESTS → what do I get?
Absolute Capital → vested, in remainder, not limited in duration
Limited Income generated by underlying capital only → vested and in possession
Ie dividends from shares but not the shares themselves
Absolutely B’s interest is vested and in possession and not limited in enjoyment
entitled
NB Bs have the right to be paid income from the age of 18
Bare trust = think: ‘barely a trust’
= Sole adult B who is absolutely entitled can bring the trust by an end by requesting the trustees to hand the
whole trust fund over to him or other trustees
→ used for convenience ie when someone is entitled to the property, but being held on trust for an
administrative convenience
intended to be used as a supplemental tool to aid revision in conjunction with ULaw materials, not as a replacement for them.
INTRO
Absolute owner = legal and equitable ownership
Trust = Underhill and Hayton:
Binding obligation placed on a person – trustee
To look after property for the benefit of another – beneficiary – or for a purpose permitted by law
Requires:
Transfer of property to the trustee
Declaration of trust by settlor/testator
CREATION OF A TRUST
Settlor = creates the trusts → they decide who will be involved in the trust and what its terms should be
• Can declare themselves a trustee
• Can transfer property to trustees on trust
Trustee = holds the property for the benefit of the other → they have legal ownership of the property
Beneficiary = person for whom the property is being held for → they have an equitable interest in the property
Reasons for a trust instead of an outright gift = B is a minor, not old enough in the situation, or lacks capacity
ie disabled → therefore put in a trust until they are considered responsible
Fiduciary duties: Equity imposes trustee-like duties on certain people who occupy positions of trust →
imposes standards of honesty in certain business rel
TYPES OF TRUSTS
EXPRESS = any trust which the settlor expressly/intentionally wants to create
Fixed Settlor fixes from the outset who Bs are and what share they will get
Discretionary Settlor states who can be considered to benefit, but leaves in discretion of trustees who of
the options will benefit and the actual allocation of who gets what
• Allows them to react to circumstances which arise after the trust comes into effect =
• Those benefitting are called objects not beneficiaries
• Trustees and Bs cannot be the same people in a discretionary trust
Objects therefore only have a hope to benefit, there is no guarantee
IMPLIED = no express intention, but one arises due to surrounding circumstances – law assumes a trust was
intended/should be imposed
Resulting Trust arises to reflect the supposed intention of the settlor
, Constructive Imposed to achieve a fair result between parties involved, generally where it would not be
fair to allow the legal owner to fully enjoy the property they hold
BENEFICIAL INTERESTS
VESTED OR CONTINGENT INTERESTS → is my interest unconditional?
Vested Unconditional interest → B exists and does not have to meet any conditions imposed by
the trust terms before becoming entitled to trust property
Contingent Conditional interest → B not yet in existence or depends on some future event that may
or may not happen
• If the condition is met, B’s interest becomes vested
• If it isn’t met the B never becomes entitled to property → remaining property =
resulting trust then and passes on intestacy
• Death Is NOT a contingency as that is always going to happen → delay not condition
• Need specific wording for it to be conditional
INTERESTS IN POSSESSION VS IN REMAINDER → when will I benefit?
In possession Now ie can enjoy interest immediately
In remainder Later ie cannot enjoy interest immediately and has to wait until some other B’s interest
expires (eg they die) = postponed
ABSOLUTE VS LIMITED INTERESTS → what do I get?
Absolute Capital → vested, in remainder, not limited in duration
Limited Income generated by underlying capital only → vested and in possession
Ie dividends from shares but not the shares themselves
Absolutely B’s interest is vested and in possession and not limited in enjoyment
entitled
NB Bs have the right to be paid income from the age of 18
Bare trust = think: ‘barely a trust’
= Sole adult B who is absolutely entitled can bring the trust by an end by requesting the trustees to hand the
whole trust fund over to him or other trustees
→ used for convenience ie when someone is entitled to the property, but being held on trust for an
administrative convenience
