1007300
Description
Mind Map by ali_c_1987, updated more than 1 year ago
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Created by ali_c_1987
almost 11 years ago
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S1 C1 - Trust Law
- Main features of
a Trust - STAT
- Separation between legal owner of trust
property and those who benefit from it
- Trustees must use the trust property in
accordance with the purpose for which the trust
was created, according to the terms of the trust
- A trust can be enforced only by the beneficiaries
(unless the settlor reserves the right when created)
- Trust property is separate from both the trustees' private
property and the property of the person who created the trust
- STAT - makes a trust well suited for OPS provision, because the trustees must hold and
invest the assets to provide benefits and the assets are separate from those of the
sponsoring employer, which means they're secure even if the employer becomes insolvent
- STAT - makes a trust well suited for OPS provision, because the trustees must hold and
invest the assets to provide benefits and the assets are separate from those of the
sponsoring employer, which means they're secure even if the employer becomes insolvent
- Separation between legal owner of trust
property and those who benefit from it
- Classifications
of Trusts
- Private
trusts
- Trusts for the benefit
of an individual or
class of persons
- Trusts for the benefit
of an individual or
class of persons
- Public
trusts
- Trusts established
for some charitable
purpose
- Trusts established
for some charitable
purpose
- Private
trusts
- Creation of a private trust
- Established by a
written document
- Cannot be revoked unless:
- There was
fraud, duress
or mistake
present at
creation
- The terms of
trust provide
for this
- There was
fraud, duress
or mistake
present at
creation
- PA2004 requires
all funded OPS
which are based
in the UK to be
established under
irrevocable trust
- Cannot be revoked unless:
- Established by a
written document
- The Three Categories - ISO
- Certainty of INTENTION
- Settlor
must
show a
clear
intention
to create
a trust
- Settlor
must
show a
clear
intention
to create
a trust
- Certainty of SUBJECT MATTER
- Trust property
must be clearly
identified or
identifiable
- Trust property
must be clearly
identified or
identifiable
- Certainty of OBJECTS
- The beneficiaries of the trust and the benefits they
receive must be certain. If a class of persons are the
beneficiarie, the definition must be clear so that a
Court is able to decide if a claimant falls within a
class (not necessary to identify all at any particular
time e.g. unborn dependants)
- The beneficiaries of the trust and the benefits they
receive must be certain. If a class of persons are the
beneficiarie, the definition must be clear so that a
Court is able to decide if a claimant falls within a
class (not necessary to identify all at any particular
time e.g. unborn dependants)
- Certainty of INTENTION
- Rule against
Perpetuities
- Rule of trust law that a private trust
cannot last forever
- Trusts created
on or after 6
April 2010 - law
states that a
trust must
terminate within
125 years
(regardless of
any contrary
provision in the
trust instument)
- Before
2010,
maximum
period was
80 years
- Schemes registered with HMRC are generally
exempt from this requirement, though the rule
may apply to discretionary trusts arising on
death, so scheme trust deeds usually specify
a perpetuity period
- Schemes registered with HMRC are generally
exempt from this requirement, though the rule
may apply to discretionary trusts arising on
death, so scheme trust deeds usually specify
a perpetuity period
- Before
2010,
maximum
period was
80 years
- Trusts created
on or after 6
April 2010 - law
states that a
trust must
terminate within
125 years
(regardless of
any contrary
provision in the
trust instument)
- Rule of trust law that a private trust
cannot last forever
- Breach of Trust
- When a
trustee acts
outside the
terms of the
trust
instument or
fails to
discharge his
legal duties
- A trustee acting in
breach of trust is
personally liable for any
loss that has been
caused to the trust fund
and may be sued by the
beneficiaries to the full
extent of his personal
assets.
- Usually a beneficiary would
claim an indemnity from the
trustee requiring him to make
good any loss to the trust fund
(in addition, if the trustees has
benefited, a beneficiary can
require payment of the profit
into the trust fund)
- A trustee may be held responsible for the acts of co-trustees if he has not exercised
due care in ensuring they've properly discharged their duties. Where more than one
trustee is liable for the breach, liability is joint and several - means beneficiary can claim
the complete loss from any one trustee separately or from all, or several of them jointly
- Many trusts contain provisions that seek to limit the trustees' liability for breach of trust
- Many trusts contain provisions that seek to limit the trustees' liability for breach of trust
- A trustee may be held responsible for the acts of co-trustees if he has not exercised
due care in ensuring they've properly discharged their duties. Where more than one
trustee is liable for the breach, liability is joint and several - means beneficiary can claim
the complete loss from any one trustee separately or from all, or several of them jointly
- Usually a beneficiary would
claim an indemnity from the
trustee requiring him to make
good any loss to the trust fund
(in addition, if the trustees has
benefited, a beneficiary can
require payment of the profit
into the trust fund)
- A trustee acting in
breach of trust is
personally liable for any
loss that has been
caused to the trust fund
and may be sued by the
beneficiaries to the full
extent of his personal
assets.
- When a
trustee acts
outside the
terms of the
trust
instument or
fails to
discharge his
legal duties
- Variation of Trust
- May be necessary or
desirable to amend the
provisions of a trust
from time to time in
order to meet changes
in cicumstances.
Number of possible
methods:
- Exercising a power of
amendment contained in
the trust deed (subject to
its precise terms)
- Obtaining the consent of all
the beneficiaries, provided
they're not minors or
suffering from incapacity
- Exercising a statutory power to ament the trust
- Obtaining a Court order
or other authorisation
from the Court to modify
the terms of the trust
- Obtaining a Court order
or other authorisation
from the Court to modify
the terms of the trust
- Exercising a statutory power to ament the trust
- Obtaining the consent of all
the beneficiaries, provided
they're not minors or
suffering from incapacity
- Exercising a power of
amendment contained in
the trust deed (subject to
its precise terms)
- May be necessary or
desirable to amend the
provisions of a trust
from time to time in
order to meet changes
in cicumstances.
Number of possible
methods:
- Termination of a Trust
- A trust may be terminated where
the trustee has distributed its
proceeds to the beneficiaries or
where there are express terms
under the trust deed which bring
the trust to an end
- Where all the actual
or potential
beneficiaries are in
existance and hve
legal capacity to do
so, they can require
all trust property be
transferred to them,
bringing the trust to
an end (not possible
where the class of
beneficiaries may
change or where it is
contingent on a
particular event
occuring)
- Where all the actual
or potential
beneficiaries are in
existance and hve
legal capacity to do
so, they can require
all trust property be
transferred to them,
bringing the trust to
an end (not possible
where the class of
beneficiaries may
change or where it is
contingent on a
particular event
occuring)
- A trust may be terminated where
the trustee has distributed its
proceeds to the beneficiaries or
where there are express terms
under the trust deed which bring
the trust to an end
- Distinctions between
a Trust and a Contract
- A Contract is enforceable only if it is made
by deed or supported by consideration,
whereas a beneficiary under a trust can
enforce the trust even though he has given
no consideration
- A trust cannot be
terminated as a result
of a major breach of
trust, whereas a major
breach of contract may
lead to the termination
of the contract
- As long as the Contracts
(Rights of Third Parties) Act
1999 is excluded, only the
parties to a contract can enforce
it whereas a trust can be
enforced only by the
beneficiaries unless the settlor
specifically reserves the right
when created
- Most trusts, unlike contracts, exist for a long period of time -> usually capable of
variation. In addition, the Courts have the power to vary the provisions of a trust
instrument and to advise the trustees on the proper scope of their powers
- Most trusts, unlike contracts, exist for a long period of time -> usually capable of
variation. In addition, the Courts have the power to vary the provisions of a trust
instrument and to advise the trustees on the proper scope of their powers
- As long as the Contracts
(Rights of Third Parties) Act
1999 is excluded, only the
parties to a contract can enforce
it whereas a trust can be
enforced only by the
beneficiaries unless the settlor
specifically reserves the right
when created
- A trust cannot be
terminated as a result
of a major breach of
trust, whereas a major
breach of contract may
lead to the termination
of the contract
- A Contract is enforceable only if it is made
by deed or supported by consideration,
whereas a beneficiary under a trust can
enforce the trust even though he has given
no consideration
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