Equity & Trusts Essay Example for Free

rectitude Trusts EssayAnswerIntroduction In order to grow a logical place, it is necessary to have three certainties of sureness, formalities, and perfect constitution. A confide will be abruptly constituted where the rights, which are to form the subject matter of the cartel, are vested in the intended perpetrateee. In nickname v Knight1 Lord Langdale, a hidden discourse confidence bunsnot be created unless three certainties are have these are certainty of intention, certainty of subject matter and certainty of beneficiaries. Settlors specify the number of beneficiaries to create laid combine, for example a trust in favor of my children. In Vandervell v IRC2, Vandervells bank held the wakeless title to shares on a resulting trust for him and, upon his instructions, interchangered them to the Royal College of Surgeons (RCS). The IRC argued that (1) Vandervell had made a well-grounded transfer of the furrow to the RCS, despite disposing of his equit adequat e interest with extinct writing, and (2) he had a beneficial interest in the option to purchase, which was highly valuable. Consequently Vandervell had substantially increased his tax li world power.As to (1), it was held that an instruction to transfer the legal title out of a trust stoply did not join to a disposition of an equitable interest, so s. 53(1)(c) of the LPA 1925 did not bite. For (2) and this is the really twisted thinking because Vandervell did not intend to render an outright empower of the benfits that would follow from the pattern of the option to purchase the comp whatever stock, he must have intended the trust comp some(prenominal) to don those welfares for somebody else.Certainty of intention Intention is important to create a valid trust. Technical wrangling are not require. The question is whether, on the proper construction of the words are utilise, the settlor or shieldator has shown an intention to create a trust and conversely, the use of the w ord trust does not conclusively paint a picture the initiation of a trust. A precatory expression of hope or desire, or suggestion or request, is not sufficient.Certainty of subject matterTestamentary dowers have failed where they concerned the bulk of my estate, or such(prenominal) parts of my estate as she shall not have sold or remaining part of what is unexpended or all of my other houses. In Hunter v Moss, the CA held that a declaration of trust of 50 shares from a holding of 950 did not fail for uncertainty of subject matter.Certainty of beneficiariesA trust may fail for uncertain beneficiaries. Therefore, the trustees need to be able to identify who the beneficiaries should be, certainty of objects. The requirement for the existence of identified beneficiaries is called the beneficiary Principle. The beneficiary Principle states that a valid trust must be for the benefit of ascertainable somebodys- the trust must have beneficiaries. In consequence, equity will not sucke r a trust to carry out a purpose since the benefits of carrying out a purpose are not owed to some(prenominal) specific individuals. Hence, the principle is also framed as the no purpose trust rule.The beneficiary Principle states that a valid trust must be for the benefit of ascertainable individuals- the trust must have beneficiaries. The first objection may be seen in a celebrated dominance of Sir go forthiam Grant M.R. in Morice v Bishop of Durham4. Every trust has an obligation. Margaret wilkie Rosalind, Equity Trusts, (2004 -2005), Press. pg 19This rule similar to privity rule of contract law only parties of the contract may enforce it even though some third company may benefit from the performance of a contract, that factual benefit al unmatched gives him no interest down the stairs the contract, and thus no right to enforce it.In Re Astors Settlement Trust5, Lord Astor purported to create a trust for the maintenance of good understanding between nations and preservati on of the independence and integrity of newspapers.Ramjohn M. Unlocking Trusts, (2005) Pg 228. The coquet held that the trust was void for uncertainty on the ground that the means by which the trustees were to attain the stated aims were un contract and the person who was entitled, as of right, to enforce the trust was unnamed. In the other words, a trust creates rights in favour of the beneficiaries and imposes correlative duties on the trustees. If at that place were no persons with the power to enforce such rights, then equally there can be no duties imposed on trustees.In IRC v Broadway Cottages Trust6, it was held that for a trust to be valid the trustees must be able to draw up complete name of the beneficiaries. They had to overcome any conceptual or evidential uncertainties that might arise and locate all the beneficiaries, since otherwise the trust computer storage could not be properly distri justed.It has been recognised, even so in Re Gulbenkian7 and McPhail v Doul ton8 that this test is very fascinate for fixed trusts, but creates unfair and unjust results for arbitrary trusts. The nature of a discretionary trust is that allows the trustees to make a reasonable choice between the beneficiaries, and the strict application of the test would be defeat the trust and settlers intention where the majority of the beneficiaries were clearly identified and located but some of them were not. Although the trustee would be able to make a reasonable selection, the complete list test would invalid the trust. Lord Wilberforce recognised this as unsatisfactory while giving judgement in McPhail v DoultonWhen settlors create discretionary trust, the trustees are required to exercise their discretion to select the beneficiaries from among a layer of objects and/or determine the quantum of interest that the beneficiaries may enjoy. The new-fashioned test for certainty of objects in respect of discretionary trusts is known as the individual ascertain ability test, or the is or is not test, or the any given postulant test. This test was laid down by the House of Lords in McPhail v Doulton (sub nom Re Baden) and Re Gulbenkian9.The test is very get for fixed trusts, but creates unfair and unjust results for discretionary trusts. Although the trustee would be able to make a reasonable selection, the complete list test would invalid the trust. Lord Wilberforce recognised this as unsatisfactory while giving judgment in McPhail v Doulton (1971) The basis for the Broadway Cottages principle is stated that to be that a trust cannot be valid unless, if need be, it can be exercised by the judgeship and the court can only execute it by ordering an equal distribution in which every beneficiary shares.A new test has been adopted for power and discretionary trusts. This test means that the power will be valid if it can be said with certainty whether any given individual is or is not a member of the class and the power does not simply fail becaus e it is impossible to ascertain every member of the class according to in McPhail v Doulton. In case of Re Hays Settlement Trusts10 the trust may be valid although identify of all the objects is not known. In the case of wide-ranging discretionary trust and the trustee has applied his mind to the size of the problem should he then consider in individual cases whether, in relation to other possible claimants, a limited grant is appropriate.In Re Barlows Will Trusts11, the testatrix, by her will, directed her executor to sell her collection of valuable paintings subject to the provision that any member of my family and any friends of mine be allowed to purchase any of the paintings at a catalogue outlay complied in 1970. The executors applied to the court to ascertain whether the direction was void for uncertainty and guidance as to the appropriate method for identifying members of the testatrixs family. Hanbury Martin, Modern Equity, 17th Edition, (2005), Pg 95The Court held that the direction as to friends was valid, for the properties were to be distributed in currency and quantum of the gifts did not very with the class. Despite the expression friends being conceptually uncertain, the transfer by will amount to a series of individual gifts to persons who satisfied a specific description. The court also gave a signpost on the identification of friends family. These are as followsThe relationship with the testatrix was required to be a long standing,The relationship must have been social as opposed to business or pro,When circumstances permitted, they met frequently. The expression family meant a blood relationship with the testatrix.A friend was a person who had a relationship of long standing with the testatrix, which was a social as opposed to a business or professional relationship, and who had met her frequently when circumstance permittedFor the benefit of all assiduous lawyers working within the European brotherhood are conceptually or sufficient ly certain and it is possible to make a complete list of lawyers. However, the list will be too large, so it is possible to fail the trust. The court was prepared to walk out that inhabitant was sufficiently certain, but held the trust void for administrative unworkability as a class was farthest too large.In Re Denleys Settlement Trusts12, Goff J upheld a trust under which a piece of land was to be used as a recreation ground for the employees of a particular company. Goff J regarded the Subsequent commentary on the case has tended to treat the case as merely one of a particular kind of discretionary trust according to Re Grants Will Trusts 13, or as a trust for persons with the purpose being treated merely as a superadded direction or motive for the gift Re Lipinskis Will Trusts 14. Thus, the case appears to have been enter to deny that it represents a true departure from the beneficiary principle.In Re Lipinskis will Trusts15 however Oliver j followed the principle of Re Denle ys Trust Deed by finding that although a trust for the erection of buildings of the hull Judeans (Maccabi) Association was expressed as a purpose trust. It was in fact for the benefit of ascertainable individuals, namely, the members of the club, and he therefore held the trust to be valid.It was argued that because the testator had made the gift in memory of his late wife, this tented to perpetuity and precluded the association members for the time being from enjoying the gift beneficially. Oliver J rejected this argument. Applying the principle of Re Lipinskis Will Trusts to this disposition therefore, it might well not fail for certainty of objects.In Re Endacott16, a testator transferred his residuary estate to the Devon Parish Council for the purposes of providing some useful memorial to myself. The trust was failed for uncertainty of objects.In Pettingall v pettingall 17, the testators executor was given a fund in order to spend 50 per annum for the benefit of the testators black mare. On her death, any surplus funds were to be taken by the executor. The court held that in the view of the willingness of the executor to carry out the testators wishes, a valid trust in favour of the animal was created. The residuary legatees were interested not in the validly of the gift in its failure. In Re Dean18, the testators directed his trustees to use 750 per annum for the maintenance of his horses and hounds should they live so long. It was held that the trust was valid.In Re Kelly19, the court took the view that lives in being were required to be human lives. In any event, the court is entitled to take judicial notice of the lifetime of animals. In Re Haines, The Times, 7th November 1952, the court took notice that a cat could not live for no longer than 21 years. In Re Thompson20, the Pettingall principle was unjustifiably extend to uphold a trust form the promotion and furtherance of throw off hunting. A trust for the building of a memorial or monument in memory of an individual is not charitable, but may exist as a valid purpose trust if the trustees express a desire to perform the task.In Mussett v Bingle,21 a testator bequeathed 300 to his executors to be used to erect a monument to the testators wifes first husband. The court held that the gift was valid. Similarly, a gift for the maintenance of a specific grave or particular graves may be valid as private purpose trusts but additionally the donor is required to jump the gift within the perpetuity period, otherwise the gift may be invalidated. In Re Hooper 22, a bequest to trustees on trust to provide so far as they can de jure do so for the care and upkeep of specified graves in churchyard was upheld as a private trust. The perpetuity period was satisfied by the phase so far as they can legally do so.ConclusionTheoretically, according to general rule all four stages required to transfer to be completed before the trust was upheld but practically this principle is relaxed now. To honour the intention of settlor and comfort unconscionability, equity use the maxim that equity will perfect an imperfect gift and equity regards, as done that which ought to be done.BibliographyHanbury Martin, Modern Equity, 17th Edition, (2005), London Sweet Maxwell, Pg 95-116Penner, J. E. The Law of Trusts, 4th Edition, (2004), London Butterworths, Pg 103- 137Ramjohn M. Unlocking Trusts, foremost Edition, (2005), Hodder Stoughton, Pg 25-45, 227-2364) Margaret wilkie Rosalind, Equity Trusts, (2004 -2005), Oxford University Press. pg 18-361 (1840) All ER, 3 Beav 148, Ramjohn M. Unlocking Trusts, (2005), Pg 252 1967 2 AC 291, HL3 (1994) 1 WLR 452, Margaret wilkie Rosalind, Pg 25-454 (1804), 9 Ves 399, ER 656, Ramjohn M. Unlocking Trusts, (2005), Pg 2285 (1952) All. ER 1067 Ch 534, Penner, J. E. The Law of Trusts, (2005), Pg 25-456 (1955) HL, Ch 20 Ramjohn M. Unlocking Trusts, (2005) Pg 37, 38, 42-447 (1970) AC 508, Penner, J. E. The Law of Trusts, 4th Edition(2005 ), Hodder Stoughton, Pg 25-458 (1971) AC 424, Ramjohn M. Unlocking Trusts, maiden Edition, (2005) 39, 42, 115, 1229 (1970) AC 424, Margaret wilkie Rosalind, Equity Trusts, (2004 -2005),10 1982 1 WLR Penner, J. E. The Law of Trusts, (2004), Pg 103- 13711 (1979) 1 All ER 296 Hanbury Martin, Modern Equity, 17th Edition, (2005), Pg 95-11612 (1969), WLR 457, 1 Ch 373, Ramjohn M. Unlocking Trusts,(2005) pg 233, 24313 1979 ALL ER 359, Ramjohn M. Unlocking Trusts,(2005) pg 24014 1976 W.L.R 522, Ch 253, Hanbury Martin, Modern Equity, 17th Edition, (2005)15 1976 W.L. R 457, Ch 235, Hanbury Martin, Modern Equity, 17th Edition, (2005)16 (1960) W.L.R. 799 Ch 232, Penner, J. E. The Law of Trusts, (2004), Pg 103- 13717 (1842) 11 Lj Ch 176, Hanbury Martin, Modern Equity, (2005), Pg 95-11618 (1889) All ER, 41 Ch D 552, Margaret wilkie Rosalind, Equity Trusts, (2004 -2005), 2319 1932, IR 255, Margaret wilkie Rosalind, Equity Trusts, (2004 -2005) pg 1920 1934 CA, Ch 342, Hanbu ry Martin, Modern Equity, (2005), Pg 95-11621 1876 WN. 170, Penner, J. E. The Law of Trusts, (2004), pg. 28022 1932 WLR. 327 1 Ch 38, Ramjohn M. Unlocking Trusts, 1st Edition, (2005), pg. 232 235