Trusts vocab

Question 1

bailment

Answer 1

the transfer of possession of chattels from one person to another

Question 2

bailor

Answer 2

the transferor

Question 3

What interest does a bailor have in bailed goods?

Answer 3

a legal proprietary interest

Question 4

bailee

Answer 4

the transferee

Question 5

precatory words

Answer 5

words expressing confidence, wish, belief, desire, hope or recommendation e.g. ‘I wish’, ‘I hope’: unlikely to result in the creation of a trust

Question 6

‘the trust property requirement’

Answer 6

It must be possible to identify the trust property

Question 7

‘vest’ property in the trustees

Answer 7

transfer the legal title of the property to the trustees using the proper formalities

Question 8

realty

Answer 8

real property; land and anything attached to the land e.g. buildings

Question 9

CREST

Answer 9

the central securities depository for markets in the UK

Question 10

Secret trust

Answer 10

an unofficial/undocumented arrangement between a testator and trustee by which the trustee will receive property from the testator, but must then pass the property onto another person who benefits

Question 11

Full-secret trusts

Answer 11

Neither the existence of the trust/nor the identity of the beneficiary are disclosed in the will

Question 12

Half-secret trust

Answer 12

Formed when a testator leaves property on trust in his will, but communicates the terms of that trust to the trustee in private

Question 13

vested in possession

Answer 13

a present right to present enjoyment

Question 14

vested in interest

Answer 14

a present right to future enjoyment

Question 15

When will an interest that is vested in interest vest?

Answer 15

in possession in the future

Question 16

sui juris

Answer 16

of full age, no disability

Question 17

Rule against remoteness of vesting

Answer 17

The trust property must vest within the statutory period of 125 years. It is possible to wait and see whether it vests in that time.

Question 18

The purposes of a charitable trust must be

Answer 18

wholly and exclusively charitable

Question 19

Threshold for someone to have had “actual knowledge”

Answer 19

the stranger knew about the breach of trust

Question 20

constructive knowledge

Answer 20

the stranger to the trust has no actual knowledge of the breach but wilfully shut their eyes to the obvious, or wilfully and recklessly failed to make enquiries that an honest and reasonable person would have made.

Question 21

The Baden Scale

Answer 21

used to determine whether a person had knowledge of their involvement in breach of a trust

Question 22

Fair-dealing

Answer 22

the trustee purchases the beneficiary’s equitable interest in the property in an honest and fair transaction, having made full disclosure to the beneficiary

Question 23

personalty

Answer 23

movable assets; any property other than realty

Question 24

impound a beneficiary’s interest

Answer 24

seize/take control of a beneficiary’s entitlement under the trust; so that it can be used to indemnify the trustee

Question 25

volunteer

Answer 25

someone who has not provided consideration (eg donee)

Question 26

Formalities for testamentary trusts

Answer 26

All testamentary trusts must be in writing, signed by the testator and attested by two independent witnesses in the presence of the testator (same as a will)

Question 27

the 3 certainties

Answer 27

certainty of: (1) intention (2) subject matter (3) objects

Question 28

Rule against remoteness of vesting

Answer 28

The trust property must vest within the statutory period of 125 years

Question 29

Outcome if a trust is void for uncertainty of objects

Answer 29

resulting trust to the settlor or their estate

Question 30

Outcome if a trust is void for uncertainty of intention

Answer 30

outright gift made to the trustee

Question 31

Is it sufficient that a donor's intention remained unchanged on their death if they made an imperfect gift?

Answer 31

No, the gift must either be conditional upon death and satisfy the requirements of a DMC, or it must be intended to be immediate and satisfy the requirements of Strong v Bird.

Question 32

What is the effect of failure to comply with section 53(1)(b) LPA 1925 for a trust of land?

Answer 32

the trust of land will be unenforceable

Question 33

Requirements to transfer legal title of shares on trust

Answer 33

signing a stock transfer form is insufficient (with exception of Pennington v Waine): Generally, to transfer legal title, the settlor should send a signed stock transfer form and share certificate to the Company’s registrar under s1 Stock Transfer Act 1963. Legal title would pass on registration of the intended beneficiary as shareholder.

Question 34

A power of appointment

Answer 34

a right to choose who, from within a specified class of objects, receives property

Question 35

The donee of a power

Answer 35

the trustee (usually)

Question 36

Does a trustee have to use their power of appointment?

Answer 36

The trustee does not need to exercise it but must periodically consider whether to do so.

Question 37

A personal power

Answer 37

a power given to someone who is not a trustee - they are not even required to consider exercising it