re hay's settlement trust case summary

The decision avoided the ridiculous prospect that such potential beneficiaries could prostrate themselves before a court emphasising their attachment to the settlor in order to enrich themselves. Normally the trustee is not bound to exercise it, and the court will not compel him to do so. entitled to the trust fund on the expiration of 21 years from the date of the settlement (ie on 7 If you are the original writer of this essay and no longer wish to have your work published on LawTeacher.net then please: Our academic writing and marking services can help you! Though this condition was conceptually uncertain, owing to the court's inability to determine with certainty whether someone is of a particular faith, the trust document explicitly set out that a Chief Rabbi could determine it. 35 0 obj <> endobj Re hay's settlement & Hunter v Moss - Re hay's settlement trust The trustees were told to hold a - Studocu These notes summarise cases relating to trust and equity law. appointees might be ascertained in the future. A special power of appointment confers on the trustee an authority or a duty to distribute the fund in favour of a specific class of objects, such as the children of the settlor. trusts Subject: Trusts Through the OpenLaw Project BAILII seeks, with the assistance of law lecturers, to identify cases from the past and to make these freely and openly available on the internet to support legal education. Do you have a 2:1 degree or higher? Copyright 2013. However, an agent employed by trustees, whereby these trustees are expected to exercise the same care that an ordinary prudent man of business would exercise in respect of his own affairs in the selection and supervision of the agent, an din case there has been a failure in doing so, it could lead to personal liability for loss to the trust fund resulting (Re Luckings Will Trusts [1968] 1 WLR 866). their discretion appoint, by deed within 21 years of the settlement date, In the case of default, the fund would go to the settlors nieces and nephews in equal shares. [6] Many trusts are formed through wills, which create additional issues when determining intention. Lord Denning stating "any conceptual uncertainty" was "cured by the Chief Rabbi clause". May 1979) by virtue of the gift over in default of any valid appointment being made during the W is referred to as a donee of the power and A, B and C as the objects of the power. Sachs LJ took the approach that the burden of proof was on the claimants to prove they were beneficiaries, not on the trustees to prove the trust was valid. So, consultation of the settlor, implementation of settlors wishes or requirement of settlors consent to a particular course of action will not be needed if there is absence of express provision to the contrary. And in case of breach of trust in relation to investment it provides that the court may consider whether the trustee considered these issues, whether the investment were made pursuant to an investment strategy, and whether the trustee acted on independent advice. Where a settlor wishes to make a present disposition on trust but is uncertain as to future events and would like the trustees to react to changed circumstances and the needs of the potential beneficiaries, he may create a discretionary trust. Examples include where familiar but overly vague terms are used, such as "good customers" or "useful employees"; if the concept cannot be certain, the trust fails. If W makes a valid appointment in favour of the objects they become beneficiaries in respect of the amount of property distributed in their favour. If they substitute other trustees and are aware that their predecessors have not performed their duty well to get in and protect rust assets, they must take reasonable steps to remedy the situation, if that cannot be done, to consider proceedings against the previous trustees who were at fault, in order to make good any lose to the trust fund. The eleventh Duke brought a claim for breach of trust by failing to make any selection or an inventory of the chattels . I appreciate the point taken that the subject matter is a part of a homogeneous mass so that specific identity is of as little as importance as it is, for instance, in the case of money. D did not identify which 5% were to be held on trust (no segregation done) and no bits of law Introduction three methods creating express trust: lifetime settlor declares himself trustee (T) of property (require: valid declaration of trust) lifetime settlor transfers property to Ts to hold on trust (require: valid declaration of trust & transfer of property to Ts - constitution) Conversely, a fiduciary power is created where the appointor acquires the property in his capacity as a fiduciary or trustee. "Certainty of intention" means that it must be clear that the donor or testator wishes to create a trust; this is not dependent on any particular language used, and a trust can be created without the word "trust" being used, or even the donor knowing he is creating a trust. AB was a professional trustee of two discretionary trusts created by the late parents of D1, a Will Trust for the benefit of their issue, and a Grandchildren s Trust for the benefit of their grandchildren (i.e. This means that the complete list test in fixed trusts is approached quite liberally. Of first appearance, or on the face of it. This system for fixed trusts has operated well since IRC v Broadway Cottages and, as the more recent case of Re Tuck shows, the courts have used their licence to promote equitable outcomes. OT Computers Ltd v First National Tricity Finance Ltd [2007] WTLR 165, Re Gulbenkians Settlement Trusts [1970] AC 508, Hardcastle, I. M. Administrative unworkability a reassessment of an abiding problem in Conveyancer and Property Lawyer (1990) Jan/Feb, 24-33, Hudson, A. Elsewhere, the unworkability qualification ensures that trust funds are not run down in searching for a hopelessly wide class of potential beneficiaries. objects of the power, However, by requiring the trustees to hold the trust fund for 'such persons' as they should Lord Wilberforces workability criteria has been refined in the ensuing decades after McPhail v Dalton in order to produce a more coherent set of guidelines for courts of equity. W is referred to as a donee of the power and A, B and C as the objects of the power. Initial statutes relating to specific industries and practices have over Understanding the Meaning Behind and the Purpose of Contracts. Discretionary trusts are distinct from the administrative discretions that accompany all trusts. In the ordinary course of events the trustees will be required to accumulate the income that has not been distributed. A trustee acts dishonestly if he pursues a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferently whether it is contrary to their interests or not (Armitage v Nurse [1998] Ch 241). [20] This was applied in Re Harvard Securities,[21] where Neuberger J held that there was a difference between tangible property, such as wine, and intangible property, such as shares. Certainty of objects: it must be clear who the beneficiaries (objects) are. Trustees must not act for reasons which are irrational, perverse or contrary to any sensible expectation of the settler (see Re Manistys Settlement [1974] Ch 17 at 26), and there is no reason why the views of the settle should not be obtained and considered, but a trustee must exercise his independent judgment as to what is in the best interests of the trust and the beneficiaries as a whole even if this means going against the settlors wishes. The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. Discretionary Trust: Trust where the trustees have the discretion to choose which, of a defined class or group, they choose to apply the income or property of the trust to. The more modern approach typified by the latter in which it was held that a trust constituted for the benefit of a class of employees, in other that they should be able to use certain sporting facilities is typical of the increasingly enlightened approach taken by the judiciary. The material feature is that the clause is only activated if the trustees fail to distribute the property in favour of the relatives of the settlor. This page was last edited on 2 August 2022, at 13:01. The test for determining this differs depending on the type of trust; it can be that all beneficiaries must be individually identified, or that the trustees must be able to say with certainty, if a claimant comes before them, whether he is or is not a beneficiary. The court considered a discretionary distribution power given to trustees. All Rights Reserved by KnowledgeBase. In Re Kayford, the company involved took actions to protect its customers by moving their funds into a separate bank account. At this stage this is an exhaustive discretionary trust of the income in favour of the children of the settlor. Historically the property must have been segregated from non-trust property; more recently, the courts have drawn a line between tangible and intangible assets, holding that with intangible assets there is not always a need for segregation. A number of fiduciary duties are imposed on the appointor. Three of the children of D1 and D3 had already received shares of the Grandchildren s Trust, but the other three grandchildren had not. In the event of the trustees failing to distribute any part of the income to the relatives, Mr X will be entitled to the same. In the cast of trust of land, liberal powers of delegation by power of attorney are available. As a common statement of duty of care, in administering the trust, a trustee must exercise the same care and skill as an ordinary prudent man of business would exercise in the conduct of his own affairs (Speight v Gaunt (1883) 9 App Cas 1 at 19). "[15], It is a requirement that the subject matter be certain that the property intended to be in the trust be separated from other property, showing clarity in what is intended to be trust property. Another trust fund, comprising the proceeds of sale of a property intended by the settlors for D 2023 Legalease Ltd. All rights reserved, Registered company in England & Wales No. The general power of investment is always subject to the prudent person rule, which requires that if the trustees profession business or employment is or includes acting as a trustee of investing money on behalf of other persons, the trustee must, in exercising powers of investment, exercise the care, diligence and skill that a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons. like her grandchildren). The trustees may well take into account that the distribution of income will be more tax-efficient if paid to objects with lower income, and transfers of capital may be more beneficial to those with larger incomes. By the end of this chapter you should be able to: define a discretionary trust, distinguish it from a fixed trust and classify discretionary trusts, contrast a discretionary trust with a power of appointment, appreciate the individual and collective interests of objects under discretionary trusts and powers of appointment, understand a protective trust under s 33 of the Trustee Act 1925. Within express trusts this is a particularly complex area, because the test used to determine certainty varies between fixed trusts, mere powers and discretionary trusts. execution of the power to appoint contained in the settlement. A trust is an express trust where the settlor has expressed his intention to form a trust. If the donee of the power fails to exercise his discretion the court will ensure that the discretion is exercised in favour of the objects. This is determined by reference to the intention of the settlor.

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