re hay's settlement trust case summary

A general power of appointment is one which entitles the donee of the power to appoint in favour of anyone, including himself. The flexibility of the complete list test has proved to be very sensible, because it allows the court to make every effort to enforce the trust. shares: Rimer QC held that since the shares were all identical, the lack of By tradition, it can be said that the duty is to hold balance between different beneficiaries or classes or beneficiaries. I I The terminology was adopted by Emery (1982) 98 LQR 55 1 . There is a requirement that the beneficiaries of a trust, known as the objects, be certain. re settlement trust the trustees were told to hold trust fund for persons or as they should in Skip to document Ask an Expert Sign inRegister Sign inRegister Home Ask an ExpertNew The second is whether the trustees as a body may delegate to one or some of their number or to a third party the exercise of their powers and the discharge of their duties as trustees. In the case of the latter, it is of the essence of the power that the trustees do prefer some beneficiaries over others. The leading case is Keech v Sandford (1726) Sel Cas Ch 61. Duties and powers of a trustee are listed according to the proper law by which the trust is governed. The sensible logic behind this decision is that an obligation to carry out such a survey could itself run down the trust fund through expenses, and thus defeat the object for which it was intended in the first place. In its report, the Law Commission concluded as follows: Sections 13 and 14 of the Perpetuities and Accumulations Act 2009 reflected the opinion of the Law Commission. "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. [N]ow, apart from the authorities, I should gather from the terms of the will that it was a mere power that was conferred on the husband, and not one coupled with a trust that he was bound to exercise. The first principle when deciding if there is certainty of intention is the nature of the language used; the words, as said in Wright v Atkyns,[5] "must be imperative". term of the settlement, D owned 950 out of 1,000 issued shares in Moss Electrical Co Ltd, D declared that he held 5% of issued share capital (1000) on trust for C. Shares never implemented due to change of mind, tax reasons, etc. Discretionary trusts are trusts which require that the trustees exercise their powers, in the same way as a fixed trust, but allow some discretion in how to do so, in a similar manner to mere powers. For example, S may transfer property by will to his widow, W, for life with remainder to such of his children A, B and C, as W may appoint by will. You should not treat any information in this essay as being authoritative. However, the rule is also in a form of protection for the individual trustee whose considerations cannot be outvoted by a majority. Although there is no requirement to use any particular form of words, the intention must be clear (Re Kayford 1975) The most common example is where the settlor - the owner of the property - transfers property with a declaration, whether written or oral, that the transferee (i.e. Trust disputes the trustees perspective in Private Client Business (1998) 3, 127-140, Wilson, S. Textbook on Trusts (10th ed, OUP, 2011), Sarah Wilson, Textbook on Trusts (10th ed, OUP, 2011) 66, Alastair Hudson, Equity and Trusts (7th ed, Routledge, 2013) 199, Leahy v Attorney-General of NSW [1959] AC 457, A. J. Oakley, The Modern Law of Trusts (9th ed, Sweet & Maxwell, 2008) 43, Jill Martin, Modern Equity (18th ed, Sweet & Maxwell, 2009) 107, Alastair Hudson, Understanding Equity and Trusts (4th ed, Routledge, 2013) 44, This is derived from the decision in Re Benjamin [1902] 1 Ch 723, Watt, G. Cases and Materials on Equity & Trusts (8th ed, OUP, 2011) 255, I. M. Hardcastle, Administrative unworkability a reassessment of an abiding problem in Conveyancer and Property Lawyer (1990) Jan/Feb, 24, John Wood, Trust disputes the trustees perspective in Private Client Business (1998) 3, 127. 0000001257 00000 n <]>> A trust will not be formed if it is clear that some other intention was there, such as the intention to make a pure gift, as in Jones v Lock. trust to pay the income thereof to 'any person or persons whatsoever' or any charity as they The defendant, John Greatorex (D), had been drinking with his friend H. With Hs permission D proceeded to drive Hs car, with H himself as a passenger. UK health and safety laws have been established over the last 200 years. It was first stated in Wright v Atkyns,[4] by Earl Eldon LC. Modern Equity (18th ed, Sweet & Maxwell, 2009), Oakley, A. J. xb```f``:xb a\X^A3VN +3u#yWLI@bW]}@If a (d10)0(A-`0d. Published: 21st Sep 2021. The relevant property is transferred to the trustees and the scope of the trustees discretion expressed in the trust instrument. In a fixed trust the trustees do not have a discretion to decide the extent of the beneficial interest which the objects may enjoy, for example trustees hold specified property on trust for the children of the settlor, D, E and F, in equal shares absolutely. Free resources to assist you with your legal studies! The trustees are required to distribute the income each year as it arises, but have a discretion regarding the persons who may actually benefit. I see no words in the will to justify me in holding that the testatrix intended that the children should take if her husband did not execute the power., The authorities do not show, in my opinion, that there is a hard-and-fast rule that a gift to A for life with a power to A to appoint among a class and nothing more must, if there is no gift over in the will, be held a gift by implication to the class in default of the power being exercised. How would you distinguish a mere power of appointment from a trust power. The trust was subject to a power of selection in the surviving child. Normally the trustee is not bound to exercise it, and the court will not compel him to do so. She regarded the children of the second marriage as being members of her family (i.e. In a trust deed trustees were directed to hold trust funds for any persons (with the exception of the settlor, her husband and Ts) or purposes they appoint with 21 years of settlement, Trustees executed the deed of appointment, transferring the funds to another discretionary trust with themselves as the trustees, with the power to appoint beneficiaries of both the fund and income among any person in the world, Nieces and nephews sought to claim the money, The power was valid, the delegation was invalid, An intermediate or hybrid power of appointment vested in a trustee to appoint to anyone in the world except specified persons was not, despite the fiduciary duties of the trustees, rendered invalid merely by the width of the power. View examples of our professional work here. A more recent case is Protheroe v Protheroe [1968] WLR 519 where the husband, a joint owner with his wife of a leasehold property, purchased the freehold reversion; it was held that because he was a trustee the freehold reversion became subject of the trust although the husband was entitled to recoup the expense of the purchase. i> (12V(0fZ/p|3"r4[3< This was considered to be a period of 21 years. Re Hay's Settlement Trusts [1982] 1 WLR 202 by Lawprof Team Key point Affirmed Re Manisty - a power cannot be void for administrative unworkability Facts In a trust deed trustees were directed to hold trust funds for any persons (with the exception of the settlor, her husband and Ts) or purposes they appoint with 21 years of settlement The effect is that in the case of a non-charitable trust, the trustees are entitled to accumulate the trust income for as long as they consider reasonable. In Paul v Constance,[7] it was held that the phrase "the money is as much yours as it is mine" was sufficient to translate to a trust. The trustee in bankruptcy is only entitled to funds paid to the object in the exercise of the discretion of the trustees. %PDF-1.4 % Since the 1950s, the courts have been more willing to conclude that there was intention to create a trust, rather than hold that the trust is void. There were children but the husband died intestate without having exercised the power. By means of an express provision in the trust deed, a settlor may provide that, either generally or in specific circumstances, the decision of a majority of the trustees will prevail. appointees might be ascertained in the future. This was refused, so the trustee himself took a lease for his personal benefit. D1, D2 and D3 were between them the other trustees of the trusts. In the case of delegation by trustees as a body a statutory power to employ agents was created by the Trustee Act 1925, s 23, which has now been outdated and replaced by the more comprehensive provisions in the Trustee Act 2000 (TA 2000). objects of the power, However, by requiring the trustees to hold the trust fund for 'such persons' as they should The rules on the first two certainties are relatively straightforward: there must be certainty of intention, which in substance means that that the settlor must have made it clear that he intended (rather than hoped or expected) that the trust property would be used in a certain way; and there must also be certainty of subject matter, whereby the court is able to identify the exact property that is to be the subject of the trust. In addition to duties imposed by statute, a trustee will always have fiduciary duties and obligations. execution of the power to appoint contained in the settlement. 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! Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. The Court will look at the whole of the document to ascertain the testator's intention, rather than dismissing the trust because of individual clauses. 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. In considering the duty to act impartially in relation to the exercise of a discretion, there is a clear distinction to be made between the exercise of an administrative power and the exercise of a dispositive power. Indeed a trust under which the settler retained control would be a charade. Therefore, Lord Wilberforces criteria represents an important practical qualification of the courts zeal to implement a trust if at all possible, vitiating such an arrangement where a class of persons is so hopelessly wide or capricious that a trustee or a judge would have little hope of fulfilling their obligations without running down the trust fund significantly. . In Re Hay's ST,[26] Megarry VC said that: A mere power is very different [from an ordinary trust obligation]. o If the power of appointment originally given to the trustees ( in favour of such When enduring powers of attorney were introduced by the Enduring Powers of Attorney Act 1985, s 2(8) it was expressly provided that a power of attorney granted under section 25 could not be an enduring power of attorney. Moreover the trustee in bankruptcy is not entitled to claim funds paid to third parties (such as tradesmen and hoteliers) in discharge of obligations bona fide undertaken by the potential beneficiaries. This is the case if, on the date of the creation of the trust, the settlor has not only identified the beneficiaries under the trust but also quantified the interest vested in each beneficiary. The courts development of case law in the second half of the last century to the present day has been deliberately flexible and accommodating, so that trusts can be enforced in favour of beneficiaries where possible. The rule is applicable to trusts of all kinds including trusts of land, trusts of personalty, settled land, charitable trusts and pension funds. The duty to get in assets thought to belong to the trust, however, is not absolute one, and in case of dispute over the trusts entitlement to a particular asset, or if the cost of getting in the asset might outweigh the value of the same, the trustees are entitled to, and should, use their discretion acting as prudent men of business. It was held that a mere power of appointment was given to the husband and not a trust power. Calouste Gulbenkian, a wealthy Armenian oil businessman, made a settlement in 1929 that said the trustees should "in their absolute discretion" while his son Nubar Gulbenkian was still alive, give trust property to: " Nubar Sarkis Gulbenkian and any wife and his children or remoter issue for the time being in existence whether minors or . This is reflected in the provisions of the Trustee Act 1925, s 15. 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. In Re Kayford, the company involved took actions to protect its customers by moving their funds into a separate bank account. The accumulated income is treated as capitalised income or capital in both trust law and tax law. This is not necessarily fatal; the test for deciding if it is or not was laid out by Wynn-Parry J as: "mere difficulty of ascertainment is not of itself fatal to the validity of the gift. The weight of such an argument will vary with the facts of each case. In this case the clause entitling Mr X to a beneficial interest is an express gift over in default of appointment. To export a reference to this article please select a referencing stye below: UK law covers the laws and legislation of England, Wales, Northern Ireland and Scotland. trust fund to be held by themselves on a similar trust to that created by the settlement. There was no gift over in default of appointment. In April 1980 the trustfund consisted of a property in Edinburgh and investments worth over140,000, with an annual income of over 11,000. _ ,v It was held that the trustee was obliged to assign the lease to the child and account for the profits. 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. [27] This states that the trustees must be able to say with certainty, when a potential beneficiary comes before them, that he either is or is not a beneficiary.[28]. The trustees are required to decide in whose favour the property (income and capital) may be distributed. [41], As such, simply giving the trustees this power was not enough to defeat uncertainties. Following his duties, a trustee is expected to reach certain standards. *You can also browse our support articles here >. The trust instrument or statute can grant wider and more defined powers of delegation. With regard to charitable trusts, the Law Commissions recommendation for a modification of the accumulation period was enacted in s 14 of the Perpetuities and Accumulations Act 2009. 0000002867 00000 n 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! In practice, a strict test is required for fixed trusts where it must be possible to identify each constituent member of a class. 0000000899 00000 n The Chief Rabbi in London was designated to decide any question as to who was an approved wife and whether the separation was due to the fault of the baronet. )R?;65(:!8qH[OoU~5>f"\ @N^w`Dsp\{ygx/C^]ly\YC*OxH[0xU#OcsMm D~(Byqf+5 2}SC(7Nvi_my$r9xmQ6H1}-lY6;j>#kfM>A|ec{F^X T "!%E)>o^T@6h/!^>oKlV :2V. If a trust instrument contains an express power it is normally in clear terms to that effect. That is why without the express authority of the trust deed, the consent of the beneficiaries or an order of the court, even a professional trustee could not charge. The combined effect of s 164 of the Law of Property Act 1925 and s 13 of the Perpetuities and Accumulations Act 1964 was that the settlor became entitled to select any one (but only one) of a specified number of periods as the maximum period during which the trustees may accumulate the income. [23] Fixed trusts are trusts for a specific, named list of individuals, with Alastair Hudson giving the example of "10,000 to be held upon trust equally for the complete team of 11 Sunderland Football Club players who started the 1992 Cup Final at Wembley".

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