Question 1

A child can be deliberately appointed as a trustee.

Accepted Answer

False

Question 2

What are the four requirements that a settlor must comply with when they set up an express trust?

Accepted Answer

To set up an express trust, a settlor must comply with four key requirements, often referred to as the "three certainties" plus the requirement of formality. These are essential to ensure that the trust is valid, enforceable, and reflects the settlor's intentions. The four requirements are:

1. **Certainty of Intention**: This means that the settlor must clearly indicate an intention to create a trust. This intention must be explicit; it cannot be based on vague or ambiguous statements. The settlor must demonstrate a clear desire to impose enforceable obligations on the trustee to deal with the property for the benefit of the beneficiaries.

2. **Certainty of Subject Matter**: The trust property, also known as the trust corpus or trust res, must be clearly identified. There must be a clear indication of what assets are part of the trust and the extent of the property to be included. This ensures that there is no confusion over what the trustees are to manage. Additionally, the rights or interests in the property that are being held in trust must be clearly defined.

3. **Certainty of Objects**: The beneficiaries of the trust, or the objects, must be clearly identified or at least be identifiable. This means that the trustee must be able to determine who the beneficiaries are or will be. If the beneficiaries cannot be determined, the trust may fail for lack of certainty of objects.

4. **Requirement of Formality**: Depending on the type of trust and the jurisdiction, there may be formal requirements that must be met for the trust to be valid. For example, in the case of a will trust, the will must comply with the formalities required for a valid will. For a trust of land or an interest in land, there may be a requirement that the trust be evidenced in writing, signed by the settlor.

If any of these requirements are not met, the trust may be declared void for uncertainty, and the property would revert to the settlor or their estate. It is crucial for anyone looking to set up an express trust to seek legal advice to ensure that all these requirements are properly addressed and that the trust is set up correctly.

Question 3

What are the 'three certainties'?

Accepted Answer

The 'three certainties' refer to a principle in the law of trusts, particularly within English law, which must be present for a trust to be valid. These certainties are intended to ensure that a trust is created with clear intentions and that the trustees and beneficiaries understand their rights and obligations. The three certainties are:

1. Certainty of Intention: This means that the settlor (the person who creates the trust) must have intended to create a trust. This intention must be clear and unequivocal. The settlor must demonstrate an intention to impose enforceable obligations on the trustee. This is not necessarily about the formalities of the trust's creation but rather the settlor's intention to create a trust relationship.

2. Certainty of Subject Matter: This refers to the assets or property that are to be held in trust. The trust property must be clearly identified. There must be certainty about what assets are part of the trust and the extent of the beneficiaries' interest in those assets. If the trust property cannot be identified, or if it is not clear what portion of the property is to be held in trust, the trust may fail for uncertainty.

3. Certainty of Objects: This pertains to the beneficiaries of the trust. The beneficiaries must be clearly identifiable or at least be ascertainable. The trustee must know who they are to hold the property for, and there must be criteria in place to determine who falls within the class of beneficiaries if it is a discretionary trust. If it is not clear who the beneficiaries are, or if it is not possible to determine who could be a beneficiary, the trust may be deemed void for lack of certainty.

These three certainties are essential for the creation of a valid trust. If any one of these is missing or unclear, the trust may fail, and the property may revert to the settlor or their estate. The 'three certainties' are a fundamental test for the existence of a trust and are applied strictly by the courts to ensure that the trust arrangement is executed as intended by the settlor and that the rights of the beneficiaries are protected.

Question 4

What is the beneficiary principle?

Accepted Answer

The answer of What is the beneficiary principle?...

Question 5

Why is it thought to be a bad thing to allow a trust to last forever?

Accepted Answer

The answer of Why is it thought to be a...

Question 6

Can anyone declare a trust?

Accepted Answer

The answer of Can anyone declare a trust?...

Question 7

It is possible for a child to settle personalty on trust?

Accepted Answer

The answer of It is possible for a child to...

Question 8

What did the High Court Re Beaney (1978) 1 WLR 770 decide would be taken into consideration when deciding whether a person suffering from mental capacity has the ability to declare a trust?

Accepted Answer

The answer of What did the High Court Re Beaney...

Question 9

What is the doctrine of laches?

Accepted Answer

The answer of What is the doctrine of laches?...

Question 10

How many requirements does a settlor have to adhere to when they declare an express trust?

Accepted Answer

The answer of How many requirements does a settlor have...

Question 11

Which two of the following stages are necessary in order to set up an express trust?
A)declaring the express trust
B)stating the express trust
C)constituting the express trust
D)ratifying the express trust

Accepted Answer

Declaring the express trust involves explicitly stating the intention to create a trust, while constituting the express trust involves transferring the property into the trust, both of which are essential steps in setting up an express trust.

Question 12

The rules against perpetuity exist to ensure that a trust will start and come to an end at some point in the future?

Accepted Answer

The rules against perpetuity are designed to prevent a trust from lasting indefinitely, and ensure that it will come to an end at some point in the future. The rules limit the period of time during which property can be held in trust, typically to a maximum of 21 years after the death of a measuring life. This helps to prevent the tying up of assets for generations, and ensures that beneficiaries have access to their inheritance within a reasonable timeframe.

Question 13

The trust is set up provided that the settlor meets formality requirements, the three certainties, the beneficiary principle and the rules against perpetuity.

Accepted Answer

This statement outlines some of the basic requirements for setting up a valid trust. The settlor must follow formalities, such as creating a written document, and ensure that the trust meets the three certainties (intention, subject matter, and objects), the beneficiary principle (which requires that the trust must benefit identifiable individuals or a clearly defined class of beneficiaries), and the rule against perpetuity (which limits the duration of a trust). If these requirements are met, then the trust can be established.

Question 14

Constitution of a trust means that the property of the trust must be properly transferred to the trustee. It is necessary in order that the ownership of the trust property can be placed with the trustee.

Accepted Answer

The constitution of a trust involves the transfer of trust property to the trustee so that they can hold and manage it for the benefit of the beneficiaries. Without proper transfer of ownership, the trustee cannot act on behalf of the trust.

Question 15

Once the trust is set up, the trustee holds the legal ownership in the property for the beneficiary?

Accepted Answer

The answer of Once the trust is set up, the...

Question 16

An express trust can be declared of virtually any property in which the settlor holds a legal (or equitable) interest?

Accepted Answer

An express trust can indeed be declared of virtually any property in which the settlor holds a legal (or equitable) interest. This includes real estate, personal property, tangible assets, and even intangible assets like intellectual property or contractual rights. However, certain types of property may be subject to specific legal restrictions or requirements for setting up a trust, so it's important to consult with legal and financial professionals before creating an express trust.

Question 17

Personalty consists only of freehold land?

Accepted Answer

Personality refers to an individual's characteristic patterns of thoughts, feelings, and behaviors, and is not related to land ownership.

Question 18

Generally, anyone can be a trustee provided they are 18 years old and of sound mind.

Accepted Answer

This is generally true for most jurisdictions, but some may have additional requirements or restrictions.

Question 19

What is the maximum number of trustees of land?
A)2
B)3
C)4
D)5
E)6

Accepted Answer

The maximum number of trustees of land is 4, as per the Trustee Act 1925.

Question 20

In which case was it considered that a trust involving land could be created orally?

Accepted Answer

The answer of In which case was it considered that...

Quiz 4: Trust Formation: Capacity and Formalities