Trust Validity And Advice

Summary

Careens trust must meet the three certainties: intention, subject matter, and objects. The intention seems clear, but the subject matters description as best paintings may be subjective, creating potential uncertainty. The objects, young people under 25 on Cardigan Rd, Leeds, are identifiable, which may satisfy this requirement. The trusts non-charitable status is acceptable if these certainties are met. Trustees should seek legal advice for assurance. Trusts campaigning for legal change generally dont qualify for charitable status due to public benefit requirements. For Marys trust, legal titles are held by the aunt and uncle. Amelia, as a minor, cannot create a trust of land. A companys trust for creditors lacks certainty of beneficiaries. Tracing into Rockys flat is available, benefiting the trust. Purpose trusts without identifiable beneficiaries are void. Resulting trusts may apply to unclear beneficial interests. Properly signed stock transfer forms are needed for share trusts. Trusts must have certainty of objects. Maria and Selma likely hold equitable title as

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A gift to trustees in a will specifies that they must establish a charitable trust to campaign to change the law on freedom of speech so that internet service providers have a new legal duty to remove harmful content. What would you advise the trustees? Select the single best answer: There is no element of public benefit in the gift and so any application for charitable status will fail. An application for charitable status is likely to succeed because the purpose is to advance human rights. Trusts which are set up to campaign for legal change will never get charitable status because the court has no means of deciding whether or not the legal change sought is in the public benefit. This is a purpose which falls within the heads of charity set out in the Charities Act *.
For the scenario where trustees are tasked with establishing a charitable trust to campaign for legal change, the best answer is:
Trusts which are set up to campaign for legal change will never get charitable status because the court has no means of deciding whether or not the legal change sought is in the public benefit.
Campaigning to change the law generally does not qualify for charitable status as it may not directly meet the public benefit requirement under charity law.
Mary owns some gold jewellery and a new electric bicycle. She delivers the gold jewellery and the electric bicycle to her aunt and uncle at their house and tells them to hold them on trust for some named family members. Select the single best answer: The aunt and uncle own the bicycle and jewellery outright. Mary still owns the bicycle and jewellery because legal title to them has not been effectively transferred to the aunt and uncle. The legal titles to the bicycle and jewellery are now held by the aunt and uncle on the terms of the trust. The bicycle and jewellery are not held by the aunt and uncle on trust because there has been no signed writing achieving this.
The best answer for Mary's situation is:
The legal titles to the bicycle and jewellery are now held by the aunt and uncle on the terms of the trust.
This answer is based on the intention to create a trust and the transfer of possession, assuming that the necessary formalities for transferring legal title have been met.
Amelia is aged * and wishes to buy a house in Leeds and then hold it on trust for her two younger step sisters. Select the single best answer: She cannot do this because she is a minor and she cannot create a trust of land. She cannot do this because her step sisters are too young to be beneficiaries under a trust. She cannot do this unless she can establish that she has the mental capacity necessary to make a valid disposition of property. She can do this because the purpose of the trust is to assist her two younger step sisters.
Case Rating: *
Amelia cannot buy a house and create a trust of land because she is a minor. Under English law, minors cannot hold legal title to land or create trusts involving land.
A company writes to its bank directing it to hold most of the money in its bank accounts on trust for its creditors. Is this a valid declaration of trust? Select the single best answer: No because there is insufficient certainty of intention. No because there is insufficient certainty of subject matter. No because there is insufficient certainty of beneficiaries. No because a bank is unable to be a trustee.
Case Rating: *
For the scenario where a company directs its bank to hold money on trust for creditors, the best answer is:
- No because there is insufficient certainty of beneficiaries.
A valid trust requires certainty of intention, subject matter, and beneficiaries. Without clearly identifiable beneficiaries, the trust may not be valid.
Miles and Rocky are the sole trustees of a trust. In breach of trust, Rocky paid £*,* of trust money into his own personal bank account which had a credit balance of £*,*. Rocky used the £*,* in the bank account to purchase a flat in his own name which has now increased in value Advise the beneficiaries on proprietary remedies. Select the single best answer: Tracing into the flat is available and the trust will benefit proportionately from the increase in value of the flat. If Rocky declares himself bankrupt the beneficiaries will be left without an effective remedy. Tracing into the flat is unavailable because it was purchased with mixed funds. Tracing into the flat is available but it would be preferable for the beneficiaries to pursue a personal claim against Rocky .
Case Rating: *
The best answer for Miles and Rocky's situation is:
- Tracing into the flat is available and the trust will benefit proportionately from the increase in value of the flat.
This is because the trust money can be traced into the flat, allowing the beneficiaries to claim a proportionate share of its increased value.
Question 19Purpose Trusts A settlor gives money to trustees to provide a green and healthy environment in Yorkshire. He specifically states that a charitable trust is not to be created. Is this trust valid? Select the single best answer: No because the settlor could have simply given the money to an existing charity with appropriate aims. Yes because the trust will be benefitting everyone and so there are identifiable beneficiaries. No this is a void private purpose trust because there are no identifiable beneficiaries. Yes because the trustees can use their discretion to select some specific people as beneficiaries.
Case Rating: *
For the question regarding the purpose trust in Yorkshire, the correct answer is:
- No, this is a void private purpose trust because there are no identifiable beneficiaries.
In English law, for a trust to be valid, it must have identifiable beneficiaries unless it qualifies as a charitable trust. Since the settlor explicitly stated that a charitable trust is not to be created, the lack of identifiable beneficiaries renders the trust invalid as a private purpose trust.
A company held the legal title to a large piece of machinery. It sold the legal title, and half the beneficial interest, in the machinery to its subsidiary but it is unclear on the facts who holds the remaining half share of the beneficial interest. Advise the company Select the single best answer: There is a good argument that the remaining half share of the beneficial interest is held on resulting trust for the company. Proprietary estoppel will apply so as to give the whole beneficial interest to the subsidiary. The subsidiary holds a half share of the beneficial interest on express trust for the company. Equity follows the law and therefore the subsidiary will own all the beneficial interest as well as the legal title.
Case Rating: *
For the company holding the legal title to the machinery, the best answer is:
- There is a good argument that the remaining half share of the beneficial interest is held on resulting trust for the company.
This suggests that the remaining beneficial interest may revert to the company as per the principles of resulting trust due to lack of clear allocation.
In order to put private company shares into a trust, the following steps must be taken: Select the single best answer: A share certificate must be delivered to the trustees in circumstances where it is obvious that title to the shares is intended to pass to them. A properly signed stock transfer form relating to the shares must be given to the trustees together with any share certificate. A share certificate must be delivered to the trustees. The company's registrar must be informed in writing that title to the shares has been transferred to the trustees.
Case Rating: *
For putting private company shares into a trust, the best answer is:
- A properly signed stock transfer form relating to the shares must be given to the trustees together with any share certificate.
This ensures that the legal title to the shares is effectively transferred to the trustees.
The terms of a trust give £*,* to trustees to be used 'for such talented young rugby league players living in England as my trustees shall in their absolute discretion select'. Is the trust valid? Select the single best answer: Yes because the settlor has identified the people who should benefit from the trust. No because there is insufficient certainty of intention. No because there is insufficient certainty of objects. Yes because the subject matter is clearly identified.
Case Rating: *
The correct answer is: No because there is insufficient certainty of objects.
In this scenario, the trust lacks certainty of objects because the definition of "talented young rugby league players" may be too broad and subjective for identifying specific beneficiaries under English trust law.
Maria and Selma live together as partners. They are not married or in a civil partnership. They live in a flat together and they both hold the legal title of the flat. Selma paid a *% deposit for the flat. There is no written document setting out the terms on which the beneficial ownership of the flat is held. Advise Selma on the beneficial ownership of the flat. Select the single best answer: There is a strong presumption that Maria and Selma will be joint tenants in equity. Any presumption as to equitable ownership can only be rebutted by evidence from disinterested third parties. Any presumption as to equitable ownership can only be rebutted by written evidence. There is a strong presumption that Maria and Selma will hold the equitable title as tenants in common.
Case Rating: *
For Selma's situation, the best answer is:
- There is a strong presumption that Maria and Selma will hold the equitable title as tenants in common.
In the absence of written agreements, the fact that they both hold the legal title suggests a presumption of tenants in common, especially given Selma's distinct contribution to the deposit.
Miles and Rocky are the sole trustees of a trust. In breach of trust, Rocky paid £*,* of trust money into a new personal bank account in his own name . The account was opened with a zero balance. Rocky then used all the £*,* in the bank account to buy *,* shares in Now Plc. The value of the *,* shares in Now Plc has doubled. Advise the beneficiaries on their proprietary remedies in relation to the missing £*,*. Select the single best alternative: The beneficiaries have no proprietary claim because the £*,* has been used to buy other property. The beneficiaries have a proprietary claim against the bank for the loss suffered by the trust. The beneficiaries have a proprietary claim to the *,* shares in Now plc up to a limit of £*,*. The beneficiaries have a proprietary claim to all the *,* shares in Now plc.
Case Rating: *
For the situation you've described, the best answer is:
- The beneficiaries have a proprietary claim to all the *,* shares in Now Plc.
This is because the trust money can be traced into the shares, allowing the beneficiaries to claim the entire value of the shares, including any increase in their value.
India and Jacob are the trustees of a large trust. In breach of their investment duties, they fail to review the trust investments for many years and the trust fund is left invested in the shares of a single company. The value of the trust falls. In relation to the personal liability of India and Jacob: Select the single best answer: No legal action for loss may brought against either trustee after four years from the date of any breach of duty. Neither may take advantage of any clause in the trust deed exempting them from liability. Liability will depend on proof that the breach of duty caused the loss in value of the trust fund. Their liability is joint and several so they must both be sued for any loss at the same time.
Case Rating: *
The best answer regarding the personal liability of India and Jacob is:
- Liability will depend on proof that the breach of duty caused the loss in value of the trust fund.
This reflects the principle that trustees are liable for losses directly attributable to their breach of duty.
The Charities Act * contains a list of specific charitable purposes in s3. Which of the following statements is accurate in relation to s3? Select the single best answer: Any application to establish a charitable trust will need to fit into one or more of these charitable purposes. The list in s3 replaces all previous case law on charities and so that case law is no longer relevant to any application for charitable status. The promotion of the efficiency of the armed forces is not listed in s3 as a charitable purpose. Every application to establish a charitable trust will need to show that it meets the charitable purpose of the prevention or relief of poverty.
Case Rating: *
The accurate statement in relation to s3 of the Charities Act * is:
- Any application to establish a charitable trust will need to fit into one or more of these charitable purposes.
This statement reflects the requirement for a charitable trust to align with the purposes listed in the Act.
Sophie gives her cousin Eileen £*,* to buy shares in a new company. The shares double in value and Sophie claims that she is the beneficial owner of the shares. Advise Eileen. Select the single best answer: Sophie is the beneficial owner of the shares under a common intention constructive trust. Eileen is the beneficial owner of the shares because she entered into the contract to buy them. Sophie is the beneficial owner of the shares under a resulting trust unless there is evidence of a contrary intention. Eileen is the legal owner of the shares and owns the beneficial title because her name is recorded as a shareholder in the register of members of the new company.
Case Rating: *
The best answer for Eileen's situation is:
- Sophie is the beneficial owner of the shares under a resulting trust unless there is evidence of a contrary intention.
This is because, under English law, if one person provides the funds for purchasing property but the property is held in another's name, a resulting trust may arise in favor of the person who provided the funds unless there is evidence showing a different intent.
Marj, David and Mohammed are trustees. Mohammed is a qualified accountant who has been in practice for 5 years. They seek your advice on the standard of care that applies to them in exercising their discretion to appoint an investment adviser. Select the single best answer: A trustee who acts honestly will never be held to be in breach of the standard of care. The standard of care applying to Mohammed will be higher because he is professionally qualified and experienced. The standard of care will be the same for all the trustees. Each trustee will be judged according to their own subjective view of what is reasonable and prudent.
Case Rating: *
The best answer for the standard of care applying to Marj, David, and Mohammed as trustees is:
- The standard of care applying to Mohammed will be higher because he is professionally qualified and experienced.
This reflects the principle that trustees with special skills or expertise are expected to apply those skills in their trustee duties.
in a valid will a man created a trust over his residuary estate for his three children in equal shares. Two trustees were appointed by the will. The will contained no express provisions on appointing or removing trustees. The man was survived by three children who are now aged *, * and *. They wish to remove the current trustees. Select the two alternatives that set out the law correctly: The children cannot direct the trustees to retire because they are not all of full age. The children can always apply to the court under s41 Trustee Act * seeking an order that the trustees be replaced. The children can direct the trustees to retire because taken together they are absolutely entitled to the trust fund. The children cannot direct the trustees to retire because only the trustees can do this. The trustees cannot be changed because they were appointed by will and the testator is dead.
Case Rating: *
For the situation where the children wish to remove the current trustees, the two alternatives that are legally correct are:
- The children cannot direct the trustees to retire because they are not all of full age.
- The children can always apply to the court under s41 Trustee Act * seeking an order that the trustees be replaced.