Property Law free essay sample

Kinds of Trust Trusts are either: 1. Express Trusts (being examined in this lecture). 2. Charitable Trusts 3. Resulting Trusts (intention presumed) 4. Constructive Trusts (used as a remedy) Three Certainties The law of equity states that a trust must satisfy the 3 certainties. If any of the 3 certainties do not eventuate, the trust will fail: ?Certainty of Intention – it must be clear that the settlor or testator/testatrix (person creating a trust) wanted the trust to exist. ?Resulting (intention presumed) and Constructive (used as a remedy) trusts are immune from this certainty. Intention does NOT need to be expressed through the word ‘trust’. Only the elements of a trust need to be present. A deed may contain recitals, that recite a previous set of events where an agreement was made. Consequently the accuracy of the deed’s ‘memory’ can be challenged) 3)The document is ambigious – Lutheran Church of Australia v Farmers Cooperate Executive and Trustees Ltd (1970) 121 CLR 628 4)Document was created in circumstances of fraud, duress or mistake – Boranga v Flintoff (1997) 19 WAR 1 ~Post mortem Trusts ? in addition to the parole evidence rules, there is law restricting extrinsic evidence in the interpretation of a will. We will write a custom essay sample on Property Law or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page To ‘side step’ this issue we should view the holder of the fund as the setttlor and trustee, in effect removing the ‘hostile’ settlor from the equation. NB: Meagher and Gummow in Jacobs Law of Trusts (edition before last) have accepted this a probable explanation for the finding in the NSW Court of Appeal in Stephens. ?Certainty of Subject Matter – it must be clear what the property is that will be held on trust. NB: Either the property must be stated as being certain or it must be able to be determined in accordance with the maxim ‘that which is not certain is capable of being rendered certain’. Problems (that usually arise): ?Percentage Property ? problems occur when the property is part of a number of identical items. E. g. 5% of the 950 shares of Kaplan Ltd. (which shares are being held? ). ?Future Property ? as the property doesn’t exist, it cannot be put on trust. ?Certainty of Objects (The Beneficiary Principle)– the trust will fail if it is not clear who the beneficiaries are. Exceptions: -Charitable Trusts – beneficiaries do not have to be identified. -Trust for Animals – (don’t the animals have to be identified? ) Level of Certainty: The level of certainty required by the beneficiary principle changes subject to whether the trust is a fixed trust or a discretionary trust. ?Fixed Trusts: ~Refers to trusts where the entitlement of the beneficiary is known and fixed. ~‘List Certainty’ ? Certainty of Object rule requires that all the beneficiaries can be listed at the time their beneficial interests come into effect. -Inter vivos trust ? certainty of object is required from the moment the trust comes into operation. -Post mortem trust ? certainty of object is required from the moment the person dies. ~Identity ? t should be known that only the identity of the beneficiary is needed (their whereabouts, etc are NOT required). If the beneficiary can’t be located, the trustee can request for the court to direct them how to pay the missing beneficiary’s share (Whislaw v Stephens; Re Gulbenskian Settlements [1970]). West v Weston (1998) 44 NSWLR 657 (RSL 18. 2. 40) Testator died, leaving his estate on trust for any descendants of his 4 grandparents that have now reached the age of 21. -The executrix of the trust identified over 1600 people, but still couldn’t guarantee that everyone was identified. Problem: If the trust ‘falls over’ and there is no residual beneficiary, than the funds go to the crown. -Justice Young: States that the rule of list certainty will be satisfied if the court is satisfied that: a. The substantial majority of the beneficiaries have been identified. b. No reasonable enquiries could be made which would improve the situation. ?Discretionary Trusts: ~Reminder: Trust has been set up and the trustee has an obligation to exercise a power of appointment, not for themselves. ~ History: Prior to Baden the list certainty rule was applicable to discretionary trusts as well as fixed trusts. A creator created a trust that gave his trustees the discretion to use the net income of the trust for the benefit of the staff of a company, their relatives and dependants. -The executors of the creator’s estate argued that the trust was void because the beneficiaries could not be ascertained with list certainty. -The executors requested that the funds become part of the creator’s estate. -The trustees argued that the disposition was a mere power thus not subject to the requirement of list certainty. House of Lords unanimously found that the disposition was a trust power, given the mandatory language employed by the creator.