Trusts and Their Formalities

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Questions and Answers

What was the key legal issue in Rochefoucauld v Boustead?

The validity of an express trust required by written form

The ability of oral agreements to form binding contracts

The transfer of property without registered title

The enforcement of an oral agreement against a fraudulent trustee (correct)

Which section of the law pertains to the formal requirements of private trusts?

s.53(3) LPA 1925

s.53(1)(a) LPA 1925

s.53(2) LPA 1925

s.53(1)(b) LPA 1925 (correct)

In Hodgson v Marks, what type of trust automatically arose despite the failure of the express trust?

Charitable trust

Express trust

Constructive trust

Resulting trust (correct)

What principle did the court apply to ensure that fraudulent acts could not benefit the wrongdoer in Rochefoucauld v Boustead?

Equity will not allow a statute to be used as an instrument of fraud Signup and view all the answers

What was the reason Mr. Marks could not rely on the formalities of s.53(1) in Hodgson v Marks?

There was no element of fraud on his part Signup and view all the answers

Why might oral agreements be upheld in cases of trust despite formal requirements not being met?

To prevent unjust enrichment and fraud Signup and view all the answers

Which statement reflects the purpose of s.53(2) concerning trusts?

It restricts the enforcement of express trusts to written agreements Signup and view all the answers

In both Rochefoucauld v Boustead and Hodgson v Marks, what common theme regarding trusts emerges?

Both cases highlight how equity can intervene in matters of trust to prevent fraud Signup and view all the answers

What is the main purpose of the formalities in property law regulations such as Section 52 (1) LPA 1925?

To create predictability and provide extra protection against fraud Signup and view all the answers

According to Section 27 LRA 2002, when does a disposition of a registered estate operate at law?

When the relevant registration requirements are met Signup and view all the answers

What does Section 53 LPA 1925 require for a declaration of trust regarding land or interests therein?

It should be documented and signed by the disposing party Signup and view all the answers

In what scenario does a constructive trust arise according to the information provided?

To prevent fraud when there is an express private trust Signup and view all the answers

What condition does Section 1 Law of Property (Miscellaneous Provisions) Act 1989 impose on a deed?

It must comply with specified formal requirements Signup and view all the answers

Which of the following statements is true about the implications of transferring legal ownership from settlor to trustee regarding tax?

It affects the tax obligations that may arise Signup and view all the answers

What does Section 53 LPA 1925 not affect?

The creation of resulting or implied trusts Signup and view all the answers

Why are complications introduced by case law in terms of formalities related to trust creation?

They introduce exceptions based on fairness, leading to unpredictability Signup and view all the answers

What was the main outcome of the case Grey v IRC concerning trust dispositions?

The court ruled the oral instruction had no legal effect. Signup and view all the answers

In Vandervell v IRC, why did the disposition not require written documentation?

The equitable interest was not disposed of, thus no formal requirement. Signup and view all the answers

What two conditions must be met for beneficiaries of a fixed trust to instruct the trustee to give them their share?

Beneficiaries must be of full age and of sound mind. Signup and view all the answers

What is the significance of Section 53 (1)(c) LPA 1925 in relation to trust dispositions?

It directs trustees to transfer legal title to a new owner without formality. Signup and view all the answers

In the context of discretionary trusts, what is required for beneficiaries to instruct the trustee to terminate the trust?

All beneficiaries must come to a unanimous agreement. Signup and view all the answers

What differentiates the outcome of Grey v IRC from that of Vandervell v IRC?

Grey involved oral instructions, whereas Vandervell involved a direct legal title transfer. Signup and view all the answers

What underlying principle guides the decisions made in trust law as exemplified by Grey and Vandervell?

Formalities significantly impact the legality of trust instructions. Signup and view all the answers

Which case is considered a textbook example for Section 53 (1)(c) of the LPA 1925?

Grey v IRC Signup and view all the answers

What is a testamentary trust and when does it come into force?

A trust made by a will that comes into force after the settlor's death. Signup and view all the answers

Which of the following is NOT a requirement of a valid testamentary trust according to Section 9 of the Wills Act 1837?

The witnesses must be beneficiaries. Signup and view all the answers

What is required for a trust of land to be valid under s. 53 LPA 1925?

A written declaration signed by the settlor. Signup and view all the answers

Which of the following statements is true regarding inter vivos trusts?

Formalities are unnecessary if the trust involves personal property. Signup and view all the answers

If the formalities for a trust are not followed, what is the legal status of the trust?

The trust is unenforceable but not void. Signup and view all the answers

What is the rationale for treating land differently from other types of property in trust law?

Land has intrinsic value and requires protection against fraud. Signup and view all the answers

Which of the following describes the main characteristics of a resulting trust?

Imposed by the courts to prevent unjust enrichment. Signup and view all the answers

In the context of trusts, who has the authority to declare a trust for land according to s. 53 LPA 1925?

Only the person who owns the land can declare the trust. Signup and view all the answers

Study Notes

Formalities & Constitution of Trusts

Formalities for a valid trust
- Testamentary trusts
- Inter vivos trusts
- Trusts of land and interests therein
- Transfers of beneficial interests under existing trusts

Requirements for a Valid Trust

The Three Certainties
Statutory Formalities
Constitution

Formalities: Testamentary Trust

Testamentary trust (made by a will)
- Only comes into force after death of settlor
- Section 9 of the Wills Act 1837:
  - Must be made in writing
  - Signed by the testator
  - Signed by two witnesses in the testator's presence
Formality requirements satisfy any need for evidence of transfer of equitable/interest creation
Few exceptions: Can be created orally (very rare, e.g., soldiers close to death)

Formalities: Inter Vivos Trust

Inter vivos trust (during the lifetime of the settlor)
- No formalities required if subject matter is personalty
- Can be created in writing, but not essential
- Trusts of land must comply with s.53 LPA 1925

Formalities: Trusts of Land and Interests Therein

Subject to provisions for creation of interests in land by parol
Declaration of trust respecting land must be manifested and proved by writing signed by declarant (or will)
Disposition of equitable interest must be done by writing signed by the person disposing
This section doesn't affect resulting, implied or constructive trusts
Reason for different treatment: land is tangible, valuable, so needs better protection against fraud.

Formalities: Trusts of Land and Interests Therein (continued)

Trust is unenforceable (NOT VOID) if formality not followed
- If trustee doesn't use land for benefit of others and doesn't perform trust requirements, beneficiaries can't act against them
- However, if formality is performed it becomes enforceable
Rochefoucauld v Boustead [1837]: Equity will not allow a statute to be used as an instrument of fraud.
Hodgson v Marks: Mrs Hodgson transferred property, oral agreement. Whether trust had arisen? Yes, Mr Marks made contribution to purchase and held equitable interest. Resulting trust (implied trust) automatically arises.
Bannister v Bannister: Constructive trust will arise to prevent fraud. Oral agreement upheld because of fraud.

Formalities: Transfer of Beneficial Interests under an Existing Trust

s.53 LPA 1925
- Subject to provision(s) for creation of interests in land by parol
- Declaration of trust respecting any land or interest therein
- Disposition of an equitable interest (trust exist in transfer)
  - must be in writing and signed by the disposer, authorized agent, or in the testator's will.
This section doesn't affect the resulting, implied, or constructive trusts (if they exist)
Transfer is void if there's failure to meet formalities
Grey v IRC: Initially one person holds significant shares. On 1st February, trust created between that person as trustee and some other party. On 18th February, oral instructions for transfer of trust benefit. Formal written documents on 25th March. Court decision based on where disposition occurred legally.
Vandervell v IRC: A wealthy individual wanted to give a gift to a college and followed through by transferring ownership and assets to the trustee. Advisor's suggestion to maintain some shares until they reached their target and advisors will take back from the college at that point. Court ruled that trust was not executed, but the individual had done a gift.

When can a trust be terminated?

Saunders v Vautier: Fixed trust: Beneficiaries can instruct trustee to give them shares if the beneficiaries are of full age and sound mind.
Discretionary trust: All beneficiaries must agree and instruct trustee to terminate trust if beneficiaries are of full age and sound mind.

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Description

Explore the essential formalities and constitutional requirements for valid trusts in law, including testamentary and inter vivos trusts. Understand the three certainties and statutory formalities necessary for the formation of trusts. This quiz covers critical legal concepts to ensure your comprehension of trust law.