Questions and Answers
Which of the following is true about a discretionary trust?
The beneficiaries have individual rights and are in competition with each other
What happens to a life interest if bankruptcy is the first determining event to happen?
The life interest will vest indefeasibly in the trustee in bankruptcy
What is the nature of the interest of a discretionary beneficiary?
They have individual rights and are in competition with each other
Where does the equitable interest lie in the case of discretionary trusts?
Signup and view all the answers
According to the text, which Act allows for the registration of certain equitable interests under the Land Charges Act 1972?
Signup and view all the answers
In which case was the question one of the construction of Art 16(1) of the Brussels Convention?
Signup and view all the answers
According to the text, what type of action does an action for a declaration that a person holds immovable property as trustee and for an order requiring that person to execute such documents as should be required to vest the legal ownership in the plaintiff constitute?
Signup and view all the answers
What is the dividing line, according to the Advocate-General, between actions concerning a breach of fiduciary duty and actions over ownership?
Signup and view all the answers
According to the text, what is the difference between a 'determinable interest' and a 'grant upon a condition subsequent'?
Signup and view all the answers
According to the text, what conditions have been held void for premature determination of the interest granted?
Signup and view all the answers
According to the text, what is an important restriction on the validity of a determinable limitation?
Signup and view all the answers
According to English law, the interest of a cestui que trust is best classified as:
Signup and view all the answers
What is the main reason why the interest of a cestui que trust is considered a right in personam?
Signup and view all the answers
What is the 'realist' view of the nature of a cestui que trust's interest?
Signup and view all the answers
What is the compromise solution proposed by some modern writers regarding the classification of equitable interests?
Signup and view all the answers
According to the text, what happens if trustees do not exercise a merely permissive power within a reasonable time?
Signup and view all the answers
According to the text, what happens if an object of a discretionary trust assigns his interest or becomes bankrupt?
Signup and view all the answers
According to the text, what happens if the trustees exercise their discretion in favor of a discretionary beneficiary by paying or delivering money or goods to him?
Signup and view all the answers
According to the text, what happens if the trustees fail to execute a discretionary trust?
Signup and view all the answers
Under Section 33(1), income directed to be held on protective trusts is to be held on the following trusts, except:
Signup and view all the answers
What determines the interest of the principal beneficiary under Section 33?
Signup and view all the answers
Which of the following events have been held to determine the interest of the principal beneficiary under Section 33?
Signup and view all the answers
Can there be multiple protective trusts in favor of the same beneficiary under Section 33?
Signup and view all the answers
Study Notes
Legal Distinctions in Determinable Interests and Discretionary Trusts
- There is a legal distinction between a "determinable interest" and a "grant upon a condition subsequent" in property law.
- A determinable interest automatically ends when a specified event occurs, while a grant upon a condition subsequent allows for the interest to be terminated if a condition is fulfilled.
- Conditions intended to secure premature determination of a granted interest, such as alienation or bankruptcy, have been held to be void.
- However, a determinable limitation, such as a grant of a life interest until alienation or bankruptcy, is valid.
- A person cannot settle their own property on themselves until bankruptcy to defeat the claims of a trustee in bankruptcy.
- Discretionary trusts can be exhaustive, where trustees have a discretion in distributing the income, or non-exhaustive, where trustees have a discretion in whether and to what extent income is distributed.
- Under a discretionary trust, beneficiaries do not have concurrent interests or a group interest. They have individual rights and are in competition with each other.
- The term "non-exhaustive discretionary trust" conceals two alternatives: a power of distribution coupled with a trust to dispose of the undistributed surplus, or a trust for distribution coupled with a power to withhold and accumulate a portion.
- The nature of a discretionary beneficiary's interest is unquantifiable and limited. They have a right to be considered as a potential beneficiary and to have their interest protected by a court of equity.
- The equitable interest in discretionary trusts is in suspense until the trustees exercise their discretion.
- Objects of a discretionary trust may renounce their potential beneficiary rights, and if they assign their interest or become bankrupt, the assignee or trustee in bankruptcy cannot demand payment.
- Trustees can expend the trust fund for the maintenance of a discretionary beneficiary, but if they pay the beneficiary after notice of an assignment or bankruptcy, they can be held liable to the assignee or trustee in bankruptcy.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
