Trusts Haigh f02 1

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  • 8/13/2019 Trusts Haigh f02 1


    TrustsFall 2002

    TRUSTS 2002



    FOURREQUIREMENTSi) Settlor must have legal capacityii) The three certaintiesmust be satisfied

    - intention- subject matter - objects

    iii) the trust must be constitutedby the transfer of property to the trustee(s)iv) Any reuisiteformalitiesmust be met


    The Settlor! There are t"o elements to capacity "ith respect to the settlor! age and competency#i) Age! $inors cannot create a trust by "ay of "ill as they cannot% "ith certain e&ceptions%

    create a valid "ill# 'ith inter vivos trusts% the trust is voidable and "ill become binding onlyif he ratifies the trust upon reaching the age of majority% or% in the case of trusts concerninglong-term interests in property% he fails to repudiate the trust "ithin a reasonable time afterattaining the age of majority#

    ii) Incompetency! A person may be found incompetent to create a trust "here it is found that theyare not capable of properly understanding the nature and effect of the transaction# n the caseof a testamentary trust% the testator must also be able to understand the e&tent of the propertybeing disposed of and appreciate the needs of dependants#

    The Trustee! Any individual "ho can hold an interest in property can be a trustee# 'hile minors andincompetents may lac capacity to deal "ith property% they can generally hold legal or euitable title andcan therefore be made trustees#

    Bee!"#"$r"es! All persons "hether individuals or incorporated entities can be beneficiaries# This includesminors% mental incompetents% unborn children and even generally unascertained persons* ho"ever% entities

    that are not recogni+ed as having separate legal personalities cannot be beneficiaries


    "% Cert$"t& o! Itet"o

    ,efers to the intention to create a trust "hich is itself an intention that another person "ho is to receive

    property "ill be obliged to hold that property for the benefit of some other person

    ntention must relate to more than a mere "ish or moral obligation

    Re Shamas(./)% /1 3, (2d) 100F$#ts' Testator4s "ill included the follo"ing! 5 give all belong to my "ife# "ant her to pay my debts 6raise the family# All "ill belong to my "ife until the last one comes to the age of 2 years old# f my "ifemarries again she should have her share lie the other children if not% she "ill eep the "hole thing and see

    that every child gets his share "hen she dies#7 The "ido" did not remarry and all children attained the ageof 2#Issue' 'hat are the interests created by the "ill8(u)*+et' Taen as a "hole% the intention of the "ill seems to be that his estate vest in eual shares in hischildren subject to a life interest to his "ido" and for her to have the right to encroach on the capital for thesupport and maintenance of herself and the children until the youngest child should reach the age of 2#9iven that the estate "as not of sufficient si+e at his death to support the "ido" "ithout encroaching of thecapital% it also seems liely that his intent "as such that the "ife "ould continue to have a right to encroachon the capital after the youngest child attained 2#

  • 8/13/2019 Trusts Haigh f02 1


    TrustsFall 2002

    R$t"o' n construing "ills% the entire document and the relevant surrounding circumstances are looed at todetermine the interest intended to be granted% so that "hile one passage taen by itself "ould appear togrant an absolute interest% other passages may indicate that this "as not the intention of the testator# n this"ay the uestion of repugnancy% "here a subseuent gift is voided as being inconsistent "ith a previous% isavoided#

    ""% Cert$"t& o! Su,-e#t M$tter

    a) This has t"o aspects!i) :ertainty of the property subject to the trust obligationii) :ertainty of the amount beneficiaries are to receive

    Sprange v. Bernard (;.)% 2 , 120F$#ts' Testator "illed ?100 to her husband "ith the stipulation that the remainder 5that he does not "antfor his o"n "ants and use7 should be divided among t"o others at his death#R$t"o(u)*+et' The held that husband "as entitled to the gift absolutely# At the property and person to"hom property is given must be certain% the remainder "as void for uncertainty as the "ill suggested thatthere might be nothing left and thus nothing to hold in trust#

    Re Romaniuk (.;/)% @; Alta# 3, (2d) 22=* 21 >T, 2.@F$#ts' Testator4s "ill attempted to create a trust in favour of her nieces and nephe"s# The "ill contained

    t"o paragraphs "hich raise some uncertainty as to the subject matter of the trust# n one paragraph she"rote! 5The rest of the contents of the house and my personal belongings are to be available to my brothersto divide among BC and DC and the rest sold as "ell as the house and car7# n a follo"ing paragraph% she"rote 5The money from the sale of my house% car and other propertyas "ell as the money from my bondsand ban accounts is to be divided into four eual shares and put in trust to be given to nieces andnephe"sC on their each reaching 2E7Issue' s the description of the subject matter uncertain such as to void the trust as a result of therelationship bet"een the t"o paragraphs8(u)*+et' The phrase 5and other property7 is capable of several interpretations# The :ourt has no cleargrounds upon "hich to determine "hich interpretation "as intended# As a result the subject matter of thetrust in favour of the nieces and nephe"s fails for lac of certainty#

    """% Cert$"t& o! O,-e#ts

    ,efers to certainty about "ho the beneficiaries of the trust are# The test for certainty depends of "hether the trust is fi&ed or discretionary*

    The test for a fixed trustreuires that one be able to!o etermine "hether any person is a member of the class of beneficiaries

    o dentify every member of the class 6 the trustee must be able to mae a complete list

    The test for a discretionary trustreuires that one be able to!o etermine "hether any given person is or is not a member of the class

    o ne need not identify every single potential member of the class* ho"ever%

    o A distinction e&ists bet"een conceptual uncertainty and evidential uncertainty# (seeBadens

    Deed Trusts o. !)o Ge" test establishes same test for po"ers and for trusts

    "c#hail v. Doulton(nRe Badens Deed Trust) .C A: @2@/Test !or )eter+"$t"o o! #l$ss " $ )"s#ret"o$r& trust/


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    TrustsFall 2002

    distribution to and among beneficiaries# To hold that a principle of eual division applies todiscretionary trusts is parado&ical# >ual division is surely the last thing the settlor intended#ther"ise% "hy create a discretionary trust8

    Gotes that there can still be case "here the definition of the class is so "ide that the trust is

    administratively un$orka%le#:onsider!

    'hat about the problem of ascertaining intent8 Hudgment assumes that the settlor did not intend eualdivision# B gives D a violin subject to a charge of ?0 infavour of J# D is not obliged to pay J ?0* rather% J is entitled to ?0 from the proceeds of thesale of the violinC#In rem and not in personam

    b# ot a trust o%ligation) The person "ho holds the property subject to a charge is not a trusteeof the property for the third party# The person holding the property can pay off the charge andretain the property himself# Further% there are no fiduciary duties attached#


  • 8/13/2019 Trusts Haigh f02 1


    TrustsFall 2002

    c# ot lia%le for loss due to fault! The person "ho holds the property subject to a charge is notliable for a loss to the property not due to his o"n fault#

    d# Rights of a %ona fide purchaser for value! The interest of a person "ho has the benefit of acharge can be defeated by a bona fide purchaser for value "ithout notice#

    """% Perso$l O,l"*$t"os

    A grant 5subject to7 or 5on condition that7 payment be made to a third party may be interpreted as agift su%*ect to a personal o%ligation on the part of the donee#

    ifferent from a charge in that the third party has no claim on the property itself but has an euitable

    claim against the donee personally#

    An obligation is normally interpreted as personal "hen it is made in consideration of% or is subject to%

    payment to a particular person# 'here property is merely given subject to a payment of a certain sum%the effect is to create a charge#

    "4% Po5ers $) Po5ers o! A66o"t+et

    A legal right given to another to useKdeal "ith property#

    Lo"ers can be administrative or dispositive# Administrative po"er allo"s the donee of the po"er to

    efficiently manage the property for "hich the po"er is given (can include po"er to mortgage% sell orinvest)# ispositive po"ers allo" the donee to dispose of the property#

    A po"er of appointment allo"s the holder of the po"er to decide "ho out of a given class shouldreceive a share of the property or to determine the si+e of the chares given#

    Lo"ers can be appointed either general% specific or hybrid# A general po"er can be given to anyone# A

    specific po"er can be given only to members of a specified class# A hybrid po"er can be given toanyone e&cept members of a forbidden group#

    'hile the discretion given under a discretionary trust is similar to a po"er of appointment% the

    difference is that there is no obligation to e&ercise a po"er of appointment "hereas the discretiongranted under a discretionary trust must be e&ercised#


    i) $a&imi+ing property valueso importance attributed to freedom to dispose of property

    ii) >vidence of o"ner4s intention

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