Another trust fund, comprising the proceeds of sale of a property intended by the settlors for D 2023 Legalease Ltd. All rights reserved, Registered company in England & Wales No. Trustees must not act for reasons which are irrational, perverse or contrary to any sensible expectation of the settler (see Re Manistys Settlement [1974] Ch 17 at 26), and there is no reason why the views of the settle should not be obtained and considered, but a trustee must exercise his independent judgment as to what is in the best interests of the trust and the beneficiaries as a whole even if this means going against the settlors wishes. The rule is applicable to trusts of all kinds including trusts of land, trusts of personalty, settled land, charitable trusts and pension funds. Sachs LJ took the approach that the burden of proof was on the claimants to prove they were beneficiaries, not on the trustees to prove the trust was valid. This is part of the "orthodox" or "strict" rule, along with Re Goldcorp. [42] The final device is to give the trustees the power to give trust property to "anyone in the world" or to "anyone whom the trustees consider appropriate". Take a look at some weird laws from around the world! In Year 2, the trustees may distribute the income and a portion of the capital to B and in Year 3 the income may be distributed equally to A, B and C and the entire capital distributed to C. The instrument setting out the terms of an express trust. Indeed, there is general agreement in case law on the invalidity of trusts that are constituted in order to achieve an abstract purpose and which may therefore confer no benefit on identifiable human beneficiaries; whereas trusts that identify specific individuals as beneficiaries will be deemed valid. Disclaimer: This essay has been written by a law student and not by our expert law writers. D did not identify which 5% were to be held on trust (no segregation done) and no It was held that a trust was created in favour of the testators nieces and nephews and their children. If you are the original writer of this essay and no longer wish to have your work published on LawTeacher.net then please: Our academic writing and marking services can help you! Facts: Mrs Baker transferred property into the joint names of herself and her daughter-in-law's son by the daughter-in-law's second marriage.There was a close relationship between Mrs Baker and her daughter-in-law, which was not diminished when the daughter-in-law remarried. years after the death of the last surviving niece or nephew, Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Public law (Mark Elliot and Robert Thomas), Introductory Econometrics for Finance (Chris Brooks), Principles of Anatomy and Physiology (Gerard J. Tortora; Bryan H. Derrickson), Commercial Law (Eric Baskind; Greg Osborne; Lee Roach), Criminal Law (Robert Wilson; Peter Wolstenholme Young), Marketing Metrics (Phillip E. Pfeifer; David J. Reibstein; Paul W. Farris; Neil T. Bendle), Rang & Dale's Pharmacology (Humphrey P. Rang; James M. Ritter; Rod J. For example, S may transfer property by will to his widow, W, for life with remainder to such of his children A, B and C, as W may appoint by will. There were children but the husband died intestate without having exercised the power. This duty of the trustees towards their beneficiaries is paramount. [27] This states that the trustees must be able to say with certainty, when a potential beneficiary comes before them, that he either is or is not a beneficiary.[28]. Indeed a trust under which the settler retained control would be a charade. the trustees under the settlement. However, in Re Hay's Settlement Trust, Megarry V-C held that, exercised properly, this sort of agreement could be administratively workable, and would not be immediately void. Re Hay's Settlement Trusts [1982] 1 WLR 202 - Case Summary - lawprof.co By tradition, it can be said that the duty is to hold balance between different beneficiaries or classes or beneficiaries. THE MODERN TRUST | The Lawyers & Jurists segregation between the shares did not invalidate the trust. Therefore, Lord Wilberforces criteria represents an important practical qualification of the courts zeal to implement a trust if at all possible, vitiating such an arrangement where a class of persons is so hopelessly wide or capricious that a trustee or a judge would have little hope of fulfilling their obligations without running down the trust fund significantly. and not "What did the parties mean to say? Facts: A trust fund was created to provide for two deaf and dumb elderly sisters who lacked the means to support themselves. Provided that the class is conceptually certain, it will not prejudice the trust if the geographical location or continued existence of a beneficiary is not known to the court and/or the trustees. void for uncertainty, Because an hybrid power of appointment (given to a trustee to appoint to anyone in the Discretionary trusts are distinct from the administrative discretions that accompany all trusts. Lord Wilberforces workability criteria has been refined in the ensuing decades after McPhail v Dalton in order to produce a more coherent set of guidelines for courts of equity. A non-exhaustive discretionary trust is one where the trustees are given a discretion as to whether or not to distribute the property (either income or capital). Conversely, a fiduciary power is created where the appointor acquires the property in his capacity as a fiduciary or trustee. 0000002037 00000 n
Restricting to the terms of trust, their fiduciary duties and, where appropriate, the statutory duty of care, trustees can run the trusts as they deem fit. Disclaimer: This essay has been written by a law student and not by our expert law writers. This is a question of fact. 0000001627 00000 n
Thus, each beneficiary is entitled to sell, exchange or gift away his interest, subject to provisions to the contrary as detailed in the trust instrument. However section 3(3) of the 1985 Act provided that, subject to any condition or restriction in the instrument, an attorney under an enduring power, whether general or limited, might execute or exercise all or any of the trust powers or discretions vested in the donor as trustee and might give a valid receipt for capital or other money paid. Elsewhere, the courts have refused to enforce trusts that are practically, or administratively, unworkable such as those trusts purporting to nominate a class of individuals that is simply too wide. That is why without the express authority of the trust deed, the consent of the beneficiaries or an order of the court, even a professional trustee could not charge. All Rights Reserved by KnowledgeBase. The rule is applicable to trusts of all kinds including trusts of land, trusts of personalty, settled land, charitable trusts and pension funds. A more complex test is found with mere powers. This Act came into force on 6 April 2010. The second device was condemned as ineffective by Jenkins J in Re Coxen, when he wrote: If the testator had sufficiently defined the state of affairs in which the trustees were to form their opinion he would not have saved the condition from invalidity on the ground of uncertainty merely by making their opinion the criterion. In McPhail v Dalton, Lord Wilberforce gave the example of the residents of Greater London. This page was last edited on 2 August 2022, at 13:01. 0000000979 00000 n
D1, D2 and D3 were between them the other trustees of the trusts. You should not treat any information in this essay as being authoritative. It was held that a mere power of appointment was given to the husband and not a trust power. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. They are not beneficiaries but, like the objects of a discretionary trust, are potential beneficiaries or have a spes of enjoying a benefit prior to the exercise of the power in their favour. It is the duty of trustees to take control of the trust assets and subsequently take proper steps to safeguard them. Equity & Trusts Basics Flashcards by Laura Henrique | Brainscape This is obviously crucial, since the function of a trust arrangement is to confer a benefit on defined individuals. In short, a non-exhaustive discretionary trust of the income is a trust for distribution of the income coupled with a power to accumulate or otherwise dispose of the undistributed income. Duties and powers of a trustee are listed according to the proper law by which the trust is governed. Free resources to assist you with your legal studies! When enduring powers of attorney were introduced by the Enduring Powers of Attorney Act 1985, s 2(8) it was expressly provided that a power of attorney granted under section 25 could not be an enduring power of attorney. In other words, under a discretionary trust, the members of the class of objects, prior to the exercise of the trustees discretion, do not enjoy an interest in the trust property but are treated as potential beneficiaries and are incapable of disposing of their potential interests by way of a trust. The Court will look at the whole of the document to ascertain the testator's intention, rather than dismissing the trust because of individual clauses. Essays, case summaries, problem questions and dissertations here are relevant to law students from the United Kingdom and Great Britain, as well as students wishing to learn more about the UK legal system from overseas. I I The terminology was adopted by Emery (1982) 98 LQR 55 1 . A general power of appointment is one which entitles the donee of the power to appoint in favour of anyone, including himself. A discretionary trust exists where the trustees are given a discretion to pay or apply property (the income or capital or both) to or for the benefit of all or anyone selected from a group or class of objects on such terms and conditions as the trustees may see fit. There was, therefore, an irrational irregularity between the limited power in the Trustee Act 1925 and the broad power in the Enduring Powers of Attorney Act 1985. Trust disputes the trustees perspective in Private Client Business (1998) 3, 127-140, Wilson, S. Textbook on Trusts (10th ed, OUP, 2011), Sarah Wilson, Textbook on Trusts (10th ed, OUP, 2011) 66, Alastair Hudson, Equity and Trusts (7th ed, Routledge, 2013) 199, Leahy v Attorney-General of NSW [1959] AC 457, A. J. Oakley, The Modern Law of Trusts (9th ed, Sweet & Maxwell, 2008) 43, Jill Martin, Modern Equity (18th ed, Sweet & Maxwell, 2009) 107, Alastair Hudson, Understanding Equity and Trusts (4th ed, Routledge, 2013) 44, This is derived from the decision in Re Benjamin [1902] 1 Ch 723, Watt, G. Cases and Materials on Equity & Trusts (8th ed, OUP, 2011) 255, I. M. Hardcastle, Administrative unworkability a reassessment of an abiding problem in Conveyancer and Property Lawyer (1990) Jan/Feb, 24, John Wood, Trust disputes the trustees perspective in Private Client Business (1998) 3, 127. If they substitute other trustees and are aware that their predecessors have not performed their duty well to get in and protect rust assets, they must take reasonable steps to remedy the situation, if that cannot be done, to consider proceedings against the previous trustees who were at fault, in order to make good any lose to the trust fund. Within this argument, there has been a good deal of debate, as typified by the approach in Leahy v Attorney-General of NSW on the one hand and Re Denly on the other. There are four categories of uncertainty that can affect the validity of a trust: conceptual uncertainty, evidential uncertainty, ascertainability and administrative unworkability. In Re Hay's Settlement Trust, the court held that it would be prepared to hold that an intermediate trust (one excluding certain specified individuals, and including everyone else) would be administratively unworkable because the a trustee's obligations in relation to a discretionary trust are more stringent than for a power of appointment: as
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