W7 | Creating and Performing the Trust

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Questions and Answers

Which beneficiary classification is least likely to be upheld in a private trust?

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Charitable organizations

Individuals from specific races (correct)

Family members

What is a potential consequence of a violation of the rule against perpetuities in trust law?

The trust will automatically dissolve

The trust becomes irrevocable

The beneficiaries lose their rights

The trust assets may revert to the settlor (correct)

How does freedom of disposition in private trusts relate to discrimination laws?

Private trusts enjoy complete immunity from discrimination laws (correct)

Discrimination laws only apply to public trusts

Freedom of disposition overrides discrimination concerns

All trusts must comply with anti-discrimination legislation

In relation to resulting trusts, which scenario is most indicative of an intention to create such a trust?

Transfer of property without consideration Signup and view all the answers

Which statement best reflects how discrimination may influence private trusts?

Discrimination has no bearing on the establishment of private trusts Signup and view all the answers

What does an express trust require regarding the classification of beneficiaries?

Beneficiaries must be specifically named or clearly defined. Signup and view all the answers

In the context of trusts, what is a resulting trust most likely to arise from?

A voluntary transfer of property for illegal purposes. Signup and view all the answers

What does the rule against perpetuities generally seek to prevent?

The indefinite control of property by deceased individuals. Signup and view all the answers

How does statutory public policy typically address dispositions intended to defeat creditors?

By empowering courts to set aside such dispositions. Signup and view all the answers

What is the main purpose of s37A as discussed in the case of Marcolongo v Chen?

To suppress fraud through liberal construction. Signup and view all the answers

What happens if a purported trust is incomplete and the settlor is still alive?

The settlor continues to hold the property on their own behalf. Signup and view all the answers

What occurs when property is transferred to a would-be trustee but the trust is not completely constituted?

The trustee holds the property on a resulting trust for the settlor. Signup and view all the answers

If a declaration of trust is made after the transfer of property, what will be its effect?

The declaration will be ineffective. Signup and view all the answers

What can cure an incomplete trust if the intended beneficiary has provided consideration?

An agreement to trust is established. Signup and view all the answers

Which scenario would cause a trust to fail according to societal norms?

Setting up a trust that undermines the institution of marriage. Signup and view all the answers

What must occur for a trust to be effectively constituted?

Simultaneous declaration and transfer of property. Signup and view all the answers

What is the consequence if a settlor dies before an express trust is fully constituted?

The court may recognize a resulting trust for the settlor's estate. Signup and view all the answers

What effect does giving valuable consideration have on an incomplete trust agreement?

It may cure the incompleteness of the trust. Signup and view all the answers

Study Notes

Statutory Public Policy and Trusts

The term "defraud" in s37A of the Statute of Elizabeth 1571 should be interpreted in the same way as the Elizabethan statute.
The court should give a liberal construction to s37A to ensure the purpose of suppressing fraud.
Anti-avoidance provisions give courts the power to set aside dispositions, including trusts created to defeat a court order.
A voluntary transfer of property for illegal purposes could mean a resulting trust for the transferor.

Express Trusts and Discrimination

Express trusts can define beneficiaries based on factors like gender, religion, and sexual orientation.
Express trusts are upheld because the law favors freedom of disposition.
Modern equal opportunity and anti-discrimination laws do not apply to private trusts.

Marcolongo v Chen

Marcolongo sued a company (Lyn) for building works that damaged her property.
Lyn, owned by Yang, transferred its only substantial asset to Chen.
The transfer was designed to protect the assets from potential action by the Chinese government.
The court set aside the transfer under s37A because it was intended to defeat Marcolongo's claim.

Incomplete Trusts

If a trust is not fully constituted, the settlor continues to hold the property if the trust fails by declaration.
If the property is successfully transferred to the intended trustee, the trustee holds the property on resulting trust for the settlor and must re-transfer it.
If the settlor is no longer alive, the court may recognise the existence of the trust even if not fully constituted.

Non-Simultaneous Declaration and Vesting

A declaration of trust made after the transfer of property is ineffective.
A declaration of trust made before the transfer is effective if the transfer takes place subsequently.
An agreement to trust may cure the process, especially if valuable consideration is provided by the intended beneficiary.

Trusts and Public Policy

Trusts that are contrary to public policy may fail, such as trusts designed to prejudice the administration of justice, commit a legal wrong, or undermine the institution of marriage.

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Description

Explore key concepts related to statutory public policy and express trusts. This quiz covers important legal interpretations, anti-avoidance provisions, and the impact of discrimination laws on trusts. Test your knowledge of landmark cases like Marcolongo v Chen and their implications in trust law.