Trusts and Trustees

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Questions and Answers

What is the purpose of a trust under the Securities (Amendment) Act 2013 in Jamaica?

To create a testamentary trust

To appoint a trustee

To benefit charitable institutions such as schools and universities (correct)

To make provision for a non-charitable purpose

Who is the creator of an inter vivos trust?

Settlor (correct)

Trustee

Cestui que trust

Beneficiary

What is a fiduciary relationship in the context of trusts?

A relationship between the trustee and the settlor

A relationship between the trustee and a third party

A relationship between the trustee and the beneficiary (correct)

A relationship between the beneficiary and the settlor

What is a requirement for a trustee to act?

To act in accordance with the terms of the trust Signup and view all the answers

In what circumstances may the Crown act as a trustee?

When it deliberately chooses to do so Signup and view all the answers

What is the result of the case of Re Vinogradoff?

The granddaughter held the property on resulting trust for the estate of the testatrix Signup and view all the answers

Who may not act as a trustee?

A mentally disturbed person Signup and view all the answers

What is the significance of the case of Boardman v Phipps?

It emphasized the scope of the fiduciary obligations of the trustee Signup and view all the answers

What is the primary obligation of a trustee in a trust?

To safeguard the trust property and deal with it in accordance with the trust instrument Signup and view all the answers

Who is primarily liable for payment on income tax from trust investments?

The beneficiaries Signup and view all the answers

What is the purpose of a 'protective trust' or 'asset protection' trust?

To protect family property from spendthrifts Signup and view all the answers

What is the role of a trustee in relation to trust income?

To act as a conduit pipe to convey the trust income to the beneficiaries Signup and view all the answers

What is the legal status of a trustee in relation to trust property?

Legal owner Signup and view all the answers

What is the purpose of a unit trust?

To facilitate investments through pooled investments schemes Signup and view all the answers

What is the meaning of a 'conduit pipe' in the context of trusts?

An agency or means of access, communication, etc. to convey the trust income to the beneficiaries Signup and view all the answers

What is the primary purpose of a trust in succession?

To rollover the destination of family property on death Signup and view all the answers

Study Notes

Introduction to Trusts

A trust is an equitable obligation that binds a person (trustee) to deal with property owned by them (trust property) for the benefit of others (beneficiaries).
Trusts are creatures of equity.

Trustee's Responsibilities

A trustee is required to safeguard the trust property and deal with it in accordance with the terms of the trust instrument.
The trustee may be required to invest the trust property or convert it to rental property to generate income.

Ownership of Trust Property

Beneficiaries are primarily liable for payment of income tax on trust investments (Baker v Archer-Shee).
Trustees are the legal owners of trust property and can impose distress for rent arrears (Schalit v JN Ltd).
The beneficial ownership of trust property is in the beneficiaries, with the trustee acting as a conduit pipe to convey the trust income (Comm.of Income Tax v Bank of Nova Scotia Trust Co.Ltd).

Purposes of Trusts

Trusts can be used for succession purposes, to roll over the destination of family property on death.
Trusts can protect family property from spendthrifts through "protective trusts" or "asset protection" trusts.
Trusts can facilitate investments through unit trusts, which are pooled investments schemes that pass profits back to individual investors.
Trusts can benefit charitable institutions, such as schools, universities, and hospitals.
Trusts can be used for non-charitable purposes, such as to upkeep the testator's tomb.

Nature of Trust and Trusteeship

A trustee is the person with the legal title of the trust property.
A beneficiary is the person who benefits from the trust or has a beneficial interest in the trust.
A settlor is the creator of the trust.
The office of trustee is onerous.
The trustee-beneficiary relationship is a fiduciary relationship.

Trustee's Duties

A trustee must act in the best interest of the trust.
A trustee must act in accordance with the terms of the trust.
A trustee must exercise probity (moral, honest, and decent behavior).
A trustee must not enrich themselves from the trust.
A trustee must avoid conflicts of interest between their personal interests and those of the trust.
A trustee must have the legal capacity to act as a trustee.
A trustee must forego opportunities that come to them in the office of trustee that would otherwise not be available to them (Boardman v Phipps).

Who May Act as Trustees

Minors and mentally disturbed persons cannot hold property and therefore cannot act as trustees.
The Crown may act as a trustee where it deliberately chooses to do so, but this is rare (Civilian War Claimants v R).

Types of Trustees

A trustee can be a corporation.
A trustee can be an individual.

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Description

Learn about the roles and responsibilities of trustees and the obligations of trusts. Understand how trustees manage trust properties and generate income for beneficiaries.