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Trusts - Coggle Diagram

- - - - Land ownership
      - Tax planning
      - Testamentary planning
    - - Pension funds
      - Other forms of tax-efficient employee remuneration
      - Investment funds
      - Corporate tax avoidance
      - Share ownership
  - - - DISCRETIONARY trust, the trustee knows who the potential beneficiaries are but has the power to determine who benefits and in what shares (flexible)
      - FIXED trusts the interests of the beneficiary are fixed
    - - CHARITABLE trusts are an exception to the general rule (known as the beneficiary principle) that a trust must have a beneficiary
      - NON-CHARITABLE PURPOSE trusts are private trusts set up for very specific purposes
    - - TESTAMENTARY trusts are those created via a will
      - INTER VIVOS are created in the lifetime of an individual
    - - BARE trust involves the trustee simply holding legal title on trust for the sole benefit of a beneficiary
      - The trustee has no discretion and no active management duties. They are merely required to follow the instructions of the beneficiary e.g., shares
    - - RESULTING and CONSTRUCTIVE trusts arise by OPERATION OF LAW- they are imposed by the courts
      - STATUTORY trusts are neither resulting nor constructive but which arise as the result of the application of a specific statutory rule
      - EXPRESS trust arises in response to a person's INTENTION to create it
  - - - The beneficiaries of a trust can ‘collapse’ the trust by directing that the trustee transfers legal title to them or to another person that they choose
      - Results in the equitable interest merging into the legal interest and brings the trust to an end
    - - Ensure that trusts must be brought to an end within a defined period (125 years)
- - - - E.g., it is common to acquire residential land using a secured loan (i.e. a mortgage). This does not prevent the owner occupying the land as their home
  - - - A trust cannot bring or defend a legal action in its own name- it is the trustees who, as legal owners of the trust property, must carry out these functions
      - When exercising their rights as legal owners, trustees must act in the best interests of their beneficiaries
  - - - Executors: appointed by deceased
      - Administrators: appointed by court
    - - They have a personal right against the executor relating to the proper administration of the estate
- - - - AUTOMATIC
        
        This gives the settlor Saunders v Vautier rights, allowing them to collapse the trust and recover the property
        
        If the trust had failed from the OUTSET (e.g., certainty), the settlor can then attempt to correct that problem
        
        If a trustee is holding legal title but the trust has failed, equity imposes a resulting trust meaning that they hold the property on trust for the settlor
        
        If the trust fails at a LATER DATE (e.g., the purpose can no longer be fulfilled), the resulting trust ensures that the surplus trust property is returned to the settlor
        
        Default trusts that arise when a transfer on trust fails, either wholly or partly
      - PRESUMED
        
        Due to the maxim that equity is cynical, and questions why a person would transfer their own property to someone else
        
        The presumption of resulting trust can be rebutted by evidence that the transferor did not intend the property to be held on trust for them
        
        Where a person makes a gratuitous transfer of property to a third party, equity raises a presumption of a resulting trust
        
        A resulting trust will only arise if there is no evidence rebutting the presumption
        
        Arise in response to a transfer of legal title, but the intention of the settlor is relevant to the determination of whether a resulting trust has arisen
      - Arise where a legal owner has transferred ownership of their property to a third party but, for some reason, equity recognises that they should retain or regain the beneficial interest in that property
    - - Institutional constructive trust
        
        Triggering events
        
        To perfect an imperfect gift or trust
        
        To compel parties to perform a specifically-enforceable contract
        
        To prevent fraud
        
        Over profits made in breach of fiduciary duty
        
        Imposed automatically in response to a trigger event
        
        Orthodox form of constructive trust which arise because the conscience of a legal owner is affected in some way, preventing them from denying the beneficial interest of another person
      - Constructive trust as remedy
        
        Property representing the traceable proceeds of a breach of trust or fiduciary duty
        
        Not imposed automatically
        
        Result of a claimant asserting their rights in the property and seeking to claim beneficial ownership of the property or a share of the property (rather than making an alternative proprietary claim such as a lien or relying upon a personal remedy)
        
        Misapplication of property in which the claimant can establish an equitable proprietary interest
      - Imposed to correct unconscionability
      - Common intention constructive trust
        
        Both are registered as legal owners and therefore hold it as legal joint tenants, but dispute about whether their shares in the land are equal
        
        The court assesses the common intention of the parties to determine their respective equitable interests in the land
        
        Land registered in the name of just one individual but the other is seeking to establish that they also have a beneficial interest in the land
        
        Used to resolve disputes as to beneficial ownership of land where there is no express trust declared over the property
  - - - The intention of the legal owners of the property is simply not relevant
- - - - Power VALID if satisfies the ‘is/is not test’ (the ‘any given postulant test’)
    - - The donee of a fiduciary power has NO obligation to exercise the power and thus no obligation to survey the class before doing so
- - - - Retain the property
      - Re-attempt the intended express trust
    - - A transfers property to B intending B to hold it on trust for C and D but fails to specify their beneficial entitlements
        
        Trust fails for uncertainty of SUBJECT MATTER
      - A transfers property to B intending B to hold it for a non-charitable purpose which does not fall within a recognised exception to the beneficiary principle
        
        Trust fails for non-compliance with the beneficiary principle
      - A transfers property to B intending B to hold it on trust but fails to properly identify the intended beneficiaries
        
        Trust fails for uncertainty of OBJECTS
    - - Trust fails to due lack of CONSTITUTION there is nothing to result back to the settlor (they already have legal title to property)
      - The implied trust would be a CONSTRUCTIVE trust which perfects the failed trust
    - - Purpose of a non-charitable trust can no longer be carried outbut funds remaining and no gift-over
      - Property held on a resulting trust for the settlor’s estate
      - Private express trust has run for the full 125 year statutory perpetuity period but funds remaining and no gift-over
    - - Self-declaration of trust which fails for uncertainty of objects or subject matter will simply have no effect
      - A testamentary trust which fails for uncertainty of objects or subject matter will be void
    - - Insufficient certainty whether individual intended to be a trustee
      - Effect of the provision will be a straightforward gift individua.
    - - No intention to create an express trust
      - Evidence that the transferor intended a gift, then that is the effect of the transfer
      - NO evidence, will be properly categorised as a presumed resulting trust
  - - - If B provides no consideration, there is a presumption of resulting trust
        
        Evidence A intends to make a gift to B, presumption easily rebutted and B will become the full legal owner of the property
      - If B provides NO consideration and can adduce no evidence A intended to make a gift, B will hold the asset on a resulting trust for A
      - If B provides consideration for the transfer, there is no presumption of resulting trust
        
        The transaction is a SALE
    - - Sole contributor
        
        Donee will hold the shares on resulting trust unless it can be shown that this was not contributor's intention
        
        E.g. donee provided consideration or contributor demonstrated an intention to make a gift
      - Multiple contributors
        
        Both contribute towards the purchase price but ONE becomes the sole legal owner
        
        Both contribute towards the purchase price, one contributes more than another but they become JOINT legal owners of the asset
        
        Regardless of how legal title is held, BOTH will be treated as having equitable interests which reflect their respective contributions to the purchase price
        
        In absence of evidence to the contrary, a presumed resulting trust (a ‘purchase money resulting trust’) will determine respective equitable interests