Trusts

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three parties truster trustee and beneficiary

must be legal transfer of property

clear purpose

trusts act 1921 and 1961

charities and trustee investment act 2005

classification of trusts

inter vivos trusts (among living persons)

mortis causa trusts (in the event of death)

private and public trusts

inter vivos trusts are set up in the lifetime of the truster

mortis causa trusts set by truster, to become effective after his death e.g. will.

A public trust is set up for the benefit of the public or a section of the public, eg the national trust of Scotland.

a private trust is set up for a specific individual eg my children in an educational trust, and employees in an employee benefit trust.

trust must have identifiable beneficiaries.

children who are not yet born when a will is written may be beneficiaries if they are identifiable.

clear purposes

trusts must have a clear purpose. if they do not then it will be null and void. they must be implied or expressed.

must be a declaration of trust to make clear a trust intention.

Macpherson v MacPhersons curator bonis

trust purpose must not be illegal, immoral or contrary to public policy

McCaigs Trustees v Kirk Session of the United Free Church of Lismore

reasons for creating trust

to administer the estate of a deceased person.

to protect the vulnerable

liferents

bankruptcy- trustee in sequestration administers assets of bankrupt person in interests of creditors.

in finance- to hold property separate

in tax planning- assets put into trusts in countries where tax rates are low.

charitable purposes most charities operate through the use of trusts.

to protect from the trustors insolvency

employee share schemes

is writing needed in order to set up a trust

normally not needed apart from the following circumstances

where truster is to be the sole trustee of the property

where the trust relates to land

where the trust is created by will

2 and 3 from requirements of writing act 1995

appointment of trustees

power of appointment can be in trust deed

3 of trusts act 1921- power of trustees to assume w trustees (unless excluded by deed)

S22 of the trusts act 1921- court may appoint trustees where does not permit, or a sole trustee lacks capacity o absent from the UK or 6 months

ceasing to be a trustee

death of trustee

liquidation and striking off of a corporate trustee

removal of trustees by the court on petition under S23 trusts at 1921

resignation by a gratuitous trustee- unless a sole trustee S3 trusts act 1921

rights of trustees

right to be reimbursed for any expenses and liability legitimately incurred on the trust purposes.

they are assumed to act gratuitously unless payment has been provided for

powers of trustees

three sources

the trust deed

statute with and without application to the court - S4 trusts act 1921

the common law as a last resort- where impossible to fulfil trust purposes otherwise