Core Principles of Trust Law
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What is the key characteristic of certainty of intention in the creation of an express trust?

  • It requires the use of explicit language indicating trust.
  • It is solely dependent on the type of assets involved.
  • It must be determined based on the settlor's specific instructions.
  • It considers a person's words and conduct in context to ascertain intent. (correct)

    • Which requirement relates to identifying the actual property held in trust?

  • Certainty of Objects
  • Certainty of Intention
  • Certainty of Disposition
  • Certainty of Subject Matter (correct)

    • In a discretionary trust, beneficiaries have which of the following rights?

  • A right to have the discretion exercised in their favor. (correct)
  • An equitable interest in the trust property automatically.
  • The right to compel trustees to distribute trust assets to them.
  • A guaranteed specific share of the trust assets.

    • What distinguishes fixed interest trusts from discretionary trusts?

    <p>The settlor sets fixed entitlements upon trust creation.</p> Signup and view all the answers

    Which test is required for certainty of objects in fixed trusts?

    <p>Complete list test</p> Signup and view all the answers

    For non-fungible assets in a trust, what must be identified?

    <p>A specific asset within the class</p> Signup and view all the answers

    What is a primary requirement for a trust to be enforced in court?

    <p>The objects of the trust must be sufficiently certain.</p> Signup and view all the answers

    What formality is required for transferring legal title of registered land in the creation of an express inter vivos trust?

    <p>A deed transfer and registration at HMLR</p> Signup and view all the answers

    In terms of the certainty of objects test for discretionary trusts, what is the primary requirement that can accommodate some evidential uncertainty?

    <p>Conceptual certainty</p> Signup and view all the answers

    Which of the following accurately describes the burden of positive covenants at common law?

    <p>The burden remains personal to the original covenantor.</p> Signup and view all the answers

    Under which circumstance may the benefit of a covenant pass by implied assignment?

    <p>If the requirement that the covenant touch and concern the land is met.</p> Signup and view all the answers

    What is the basis for determining the priority of legal mortgages?

    <p>The date of registration of the mortgage.</p> Signup and view all the answers

    What legal right does a borrower maintain in regards to a mortgage?

    <p>The right to equity of redemption.</p> Signup and view all the answers

    Which of the following is true regarding lender's duties when selling a property due to default?

    <p>Lenders must account for any sale proceeds that exceed the outstanding debt.</p> Signup and view all the answers

    When is a lender’s power of sale exercised correctly?

    <p>When the statutory rules regarding power of sale are followed.</p> Signup and view all the answers

    What is the consequence if an equitable mortgage is not protected by entry of a notice at HMLR?

    <p>It will rank in priority to any subsequent equitable mortgage.</p> Signup and view all the answers

    Which statement accurately reflects the lender's limitations in benefiting from a mortgage agreement?

    <p>Lenders can only benefit from the security and interest specified.</p> Signup and view all the answers

    What is a requirement for the doctrine of mutual benefit and burden to apply?

    <p>Burden and benefit must be in the same transaction.</p> Signup and view all the answers

    Study Notes

    Core Principles of Trust Law

    • Creation and requirements of express trusts: The three certainties of intention, subject matter and objects.
      • Requisite intention is an intention to impose/assume the duty.
    • Certainty of intention:
      • Intention is ascertained from a person's words and conduct.
      • Use of the word "trust" is neither necessary nor conclusive.
      • Question of whether there is sufficient intention to create a trust is fact-specific, words and conduct must be considered in context.
    • Certainty of subject matter:
      • Must be possible to identify the trust property (trust property requirement).
      • Must be possible to ascertain the beneficiary's interest in the trust property (beneficial entitlement)
    • Trust property requirement applies differently to tangibles and fungible intangibles:
      • Tangible assets: physical assets (e.g., diamonds).
        • Must be identified specifically.
      • Intangible assets: do not exist in physical form (e.g. shares in a company).
        • Class must be identified specifically.
        • Fungible assets: identical and readily exchangeable (e.g., same class of company shares).
        • Non-fungible asset: may be similar but are not distinguishable and are not interchangeable (e.g., specific asset within class needs to be identified because not interchangeable).
    • Certainty of objects:
      • Objects of a trust must be sufficiently certain so that the court is able to regulate and enforce the trust.
      • Test of certainty for fixed trusts is complete certainty.
      • Requires conceptual and evidential certainty.
      • Test of certainty for discretionary trusts and fiduciary powers is the is/is not test.
      • A discretionary trust can fail for administrative unworkability but a fiduciary power cannot.
    • Fixed interest trusts:
      • Trust in which the entitlement of beneficiaries is fixed by the settlor.
      • Trustees have no discretion in relation to distribution of trust property.
      • Settlor cannot tell trustees what to do once trust has come into effect unless they have reserved power to do so.
      • Can have one or more beneficiaries with different entitlements to trust property.
    • Discretionary trusts:
      • Trustees have a distributive discretion.
      • Settlor determines potential beneficiaries of the trust and trustees determine who from within that class of beneficiaries to make provision for different beneficiaries according to future needs.
      • Flexible, enables settlor to make what sum.
      • Objects have no equitable interest in trust property until discretion is exercised in their favour.
      • Have a right to ensure trustees exercise their powers appropriately.
    • Formalities to create express inter vivos trusts:
      • Legal title must be transferred using the correct method. | Trust property | Formalities to transfer legal title | |---|---| | Registered land | Transferred by deed and registered at HM Land Registry | | Share in private company | Transferor signs stock transfer form and sends to company, legal title transferred |

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    Description

    This quiz covers the essential elements of trust law, focusing on the creation and requirements of express trusts. Explore concepts such as certainty of intention, subject matter, and the distinction between tangible and intangible trust properties. Test your understanding of how these principles apply in legal contexts.

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