Here you will find summarised trust law notes for the entire Monash University topic.
The summary notes are an excellent exam help, with steps to work through all topics. They contain relevant precedent and case citations for that HD answer, along with brief summaries of every case. They are short enough for use in an exam, but detailed enough that you will never miss a point....
The following is a more accessible plain text extract of the PDF sample above, taken from our Trusts Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Certainty of object
Certainty of object is necessary so that it is clear who has standing to seek performance of a trust, and the trustee knows who to account to
Trust structure
Fixed interest trust
This is a trust in which the beneficiaries and their shares in the trust property are specified at the time of creation of the trust
E.g Paul v Constance – C held for himself and Mrs Paul in equal shares. Hunter v Moss – Moss held 5% for Hunter
Trustee must exhaust trust property
No discretion as to beneficiary
Where shares are not specified, presume the beneficiaries are entitled to equal shares
Power of appointment
The discretion in a discretionary trust is called a power of appointment
Mechanism that allows us to create a discretionary trust. The donee of the power has power to ‘appoint’ the property
This power can be given to a trustee, or someone else
Exhaustive discretionary trust (trust power) - imperative
Trustee must exhaust trust property
The holder is under an obligation to appoint the property, but has a power to select who to appoint it to among the beneficiaries
Example
S transfers to T on trust to appoint it within 5 years to such of S's children as T sees fit
Compare to bare PoA:
S gives T land on trust to hold for such of T's children as T sees fit, and in default of appointment for the Red Cross
T has a PoA to such children/child as T sees fit
T is under no obligation to appoint to one of T's children so the power is bare power
Non-exhaustive discretionary trust (bare power) - permissive
The trustee has the power to appoint, but is still under no obligation to exercise the power. The power is permissive, not mandatory
Nevertheless the trustees responsibilities concerning the power are somewhat greater than the responsibilities faced by a non-trustee.
Where there is a taker in default specified, this renders the first part of the clause a mere power
The mere power (if invalid) can be struck out so long as it does not affect the taker in default provision
Use of modern trusts
Unit trusts for investment
Superannuation trusts
Discretionary trusts for income splitting/tax minimisation
Choosing whether it is a trust power or bare power
It is a question of construction, is there an obligation to exhaust the fund?
Gift over in default of appointment indicates a bare power
The fact that the donor of the power expressly allowed for its non-use shows that no obligation to exercise the power was imposed
“The rest in residue” (residuary clause) is NOT a gift over in default of appointment
Does not automatically convert the mere power into a trust power
But absence of gift doesn't automatically indicate trust power
Language used
Find in the words a sense that an obligation is being imposed for requiring the power to be exercised
Best way to do this – stronger the language used, more likely it is a trust
Weaker the language – more likely mere power
Nevertheless it is not determinative
It is permissible to contrast language used in other provisions of the trust deed or will to construe the meaning
NB the word “shall” is ambiguous, unsure if it denotes a mere or trust power. Discussion required.
Time limit
If it has to be done within 2 years, it has to be done
That is not conclusive
Not conclusive if followed by a gift over in default of appointment (which IS conclusive)
Exhaustive/Non-exhaustive: Classifying powers of appointment Examples
We can classify PoA according to the class of object described
General: discretion to choose anyone in the world
Trust power: invalid, fails for administrative workability Re Hays per Megarry J and also because self-appointment would be in breach of the profits and conflicts rule
Bare power: valid, unless capricious
Special: discretion to choose amongst a specific class of objects
Trust power: valid if the class meets criterion certainty McPhail
Bare power: valid, unless capricious
Hybrid: discretion to choose anyone in the world, except a specific class
Trust power: invalid, fails for administrative workability Re Hays per Megarry J
Bare power: valid, unless capricious Re Manisty’s
UK approach: hybrid mere powers always valid Re Hays
Some states: hybrid mere powers only valid if intervivos
You apply the certainty test to the excluded group
Degree of certainty required – Trust power (exhaustive discretionary trust): criterion certainty (are they inside or outside of the trust?) McPhail v Doulton; Re Gulbenkian’s Settlements
Can you say of any given person that s/he is, or is not, a member of the class of objects (criterion certainty)? If not, consider whether this is due to semantic or evidential certainty
Semantic certainty: if not, trust is void and property reverts to estate
The class must be described whereby the meaning of the words is clear (understandable in English)
Certain
“Organisations working for the elimination of war” Re Blyth
“Relatives” Re Baden – can attempt to give it meaning (Justice Sacks thought the term meant blood relative)
“Dependents” (used often in trust deeds – Sachs LJ, often used in statute without definition – Re Baden)
“Employers” (Re Gulbenkian)
Uncertain
Semantic uncertainty can arise when the words an inherently subjective in nature e.g. “My old friends” unless there is evidence of the special meaning for the settlor which would enable the trustees to identify members of the class Re Gulbenkian
Friends (difficult to attribute a certain meaning – Re Baden)
Reside (Lempens v Reid)
Organisations formed for the purpose of raising the standard of living throughout the world (Re Blyth)
Two semi-uncertain terms create uncertainty (“my friends who resided with me overseas” Lempens v Reid
Evidential certainty – provisions not invalidated by this alone, not void, court will need to give directions
Need to be able to say whether or not someone falls within the class Re Baden per Sachs LJ
The fact that we can’t be...
Buy the full version of these notes or essay plans and more in our Trusts Notes.
Here you will find summarised trust law notes for the entire Monash University topic.
The summary notes are an excellent exam help, with steps to work through all topics. They contain relevant precedent and case citations for that HD answer, along with brief summaries of every case. They are short enough for use in an exam, but detailed enough that you will never miss a point....
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