Equity & Trusts: Overview

[Flash Card 1 of 2]

Legal and equitable interest

• split ownership of trust property: trustee (T) legal title / beneficiary (B) equitable interest
• B proprietary interest / trust property / if T wrongly transfers legal title to X / B enforce trust against X (if not bona fide purchaser without notice of trust) / if T dies personal representatives bound / if T bankrupt creditors no claim trust property

Fixed trusts

• trust terms define each B's share trust property / may be conditional
• successive trust: A (life tenant) for life remainder to B (remainderman) / A trust income during lifetime / on A's death Ts transfer property B (trust ends)
• bare trust: T hold for sole adult B / full mental capacity / B dictate handling of trust property

Discretionary trusts

• amounts B receives at Ts' discretion / no equitable interests until Ts exercise discretion in B's favour / flexible & allow for future changes settlor (S) cannot predict

Purpose trusts

• benefit purpose rather individuals / most void offend beneficiary principle / exception: charitable Charities Act 2011

Nature of interests

• vested: B exists / no conditions before entitled to trust property
• contingent: conditional upon future event / or B not in existence / once satisfied vested / if fails: S can make provision substitutional gift / or resulting trust implied
• B absolutely entitled: B's interest: vested / in possession / not limited / B can end trust (Saunders v Vautier)

bits of law

Equity & Trusts: Overview

[Flash Card 2 of 2]

Collective ownership

• occupational pensions / collective investment trusts: must recognise contractual nature contributory schemes (Air Jamaica v Charlton)
• Pensions Act 1995: restraints on who Ts (sufficient representation of employees) / Ts must obtain [professional advice / employers restricted right to surplus / public enforcement: Pensions Ombudsman & Pensions Regulator / Pension Protection Fund compensates B due insolvency or fraud
• unit trusts: collective investment schemes / investors diversify investments / management company acts Ts / investor allocated units to represent their share of equitable interest
• members' clubs (Ts) often hold property on behalf of members (Bs)

Insolvency

• trusts can provide protection against insolvency / B equitable interest in trust property can bring proprietary claim / above creditors (Re Kayford)

Express trusts: Lifetime trusts & Wills

• S declares self T: declaration define terms (Bs / nature of benefits / trust property & T powers) / can be oral (except land)
• S transfers property T: valid declaration of trust & correct transfer procedure (depending on asset type)
• if valid trust: S only recover property if reserved power of revocation
• S (testator or testatrix) / create testamentary trust in will / trust terms must be declared & comply with validity rules

Implied trusts

• resulting trust: gap occurs in beneficial interest / conditional trust not fulfilled then resulting trust for S implied
• constructive trust: if unconscionable / legal owner property / deny an equitable interest

bits of law