MCQ’s
Topic 1
Assessment
True or False: A trustee can apply trust property exclusively for their own benefit.
True
False-
Correct
A trustee is under a duty to apply trust property for the benefit of the beneficiaries.
A CREST member is the registered owner of 100,000 shares in BT Group plc. It holds 50,000 of
those shares for a broker. The broker acquired its interest in the 50,000 shares on behalf of a private
investor.
Which one of the following statements is a correct description of the private investor’s position
in relation to the 50,000 shares?
The investor does not have any interest in the shares.
The investor has an equitable and beneficial interest in the shares.-
The investor has an equitable interest in the shares but not the beneficial interest.
The investor has a legal and equitable interest in the shares.
The investor is the legal owner of the shares.
Correct
The CREST member is the legal owner of the shares. The broker has an equitable interest in the
shares but no beneficial interest. The investor has an equitable and beneficial interest in the shares.
A trustee holds £50,000 on trust for a beneficiary. The trustee misapplies £10,000 of the trust money
and gifts it to the local priest. The priest does not know that the £10,000 is trust money. The trustee
misapplies another £10,000 of the trust money and purchases a car with the money. The seller knows
that the money paid by the trustee is misapplied trust money. The trustee is made bankrupt.
Which one of the following statements is a correct description of the beneficiary’s rights?
The beneficiary has an equitable proprietary interest in the £30,000 held by the trustee and in
the £10,000 given to the priest, but not in the £10,000 paid to the purchaser.
The beneficiary does not have an equitable proprietary interest in the £30,000 held by the
trustee, in the £10,000 given to the priest, or in the £10,000 paid to the seller.
The beneficiary has an equitable proprietary interest in the £30,000 held by the trustee, in the
£10,000 given to the priest, and in the £10,000 paid to the purchaser.-
The equitable proprietary interest which the beneficiary has in any assets held by the trustee
will be subordinated to the claims of the trustee’s creditors.
The beneficiary has an equitable proprietary interest in the £30,000 held by the trustee but not
in the £10,000 given to the priest or the £10,000 paid to the purchaser.
Correct
The beneficiary of a trust has an equitable proprietary interest in the trust property which can be
enforced against everyone except a purchaser of a legal interest who does not have notice of the trust.
The priest is not a purchaser. The seller has notice of the trust.
True or False: The full legal owner of an asset has an equitable interest in the asset.
False-
True
Correct
The full legal owner of an asset has only a legal interest in the asset.
,A man holds shares on trust for a beneficiary. He is also the bailee of some goods. His house is
subject to a legal charge and an equitable charge in favour of two of his creditors. He also has a
number of unsecured creditors. The man is made bankrupt.
Who is likely to be most prejudicially affected by the man’s bankruptcy?
The unsecured creditors.-
The legal chargee.
The beneficiary of the trust.
The bailor of the goods.
The equitable chargee.
Correct
An unsecured creditor has a personal right against their debtor. Unlike property rights, personal rights
do not enjoy ‘priority’ in the event of the debtor’s bankruptcy.
A woman holds shares on trust for a beneficiary. She is also the bailee of some goods. In breach of
her duties to the beneficiary and to the bailor, the woman sells the shares and the goods (for their full
market value). The purchaser believes that the woman is the full legal owner of the shares and the
goods.
Which one of the following statements is a correct description of the beneficiary’s and the
bailor’s position in relation to the purchaser?
The bailor can recover the goods from the purchaser but the beneficiary cannot recover the
shares from the purchaser.-
The beneficiary can recover the shares from the purchaser but the bailor cannot recover the
goods from the purchaser
The bailor can recover the goods from the purchaser and the beneficiary can recover the
shares from the purchaser.
The beneficiary cannot recover the shares from the purchaser and the bailor cannot recover
the goods from the purchaser.
The purchaser is an agent for the beneficiary and the bailor.
Correct
A bailor has a legal proprietary interest in the bailed goods. Generally, legal proprietary interests can
be enforced against everyone. A beneficiary of a trust has an equitable proprietary interest in the trust
property. Equitable proprietary interests can be enforced against everyone except a purchaser of a
legal interest without notice.
True or false: An intention to create a trust must be manifest in writing.
False -
True
Correct
A person can manifest an intention to create a trust by writing, oral statements, or conduct.
By his valid will, the testator made the following dispositions:
‘1. I give £10,000 to my solicitor to be applied for the benefit of my mother.
1. I give £10,000 to my wife absolutely, confident that she will do right by our children.’
The executors of the testator’s will have paid £10,000 to his widow and £10,000 to his solicitor.
Which one of the following statements is correct?
The widow holds the money on trust for the testator’s children. The solicitor is the full legal
owner of the money.
The solicitor holds the money on trust for the testator’s mother. The widow is the full legal
owner of the money.-
The solicitor and the widow are the full legal owners of the money.
The solicitor holds the money on trust for the testator’s mother. The widow holds the money
on trust for the testator’s children.
The solicitor and the widow are the equitable owners of the money.
,Correct
The testator has imposed a duty on the solicitor: the money is ‘to be’ applied for the testator’s mother.
But the testator has not imposed a duty on the widow: the words ‘confident that she will’ are not
imperative.
Which one of the following statements is true?
Trusts can arise by reason of an implied contractual term.-
A person’s intention is ascertained by a subjective approach.
The description applied to a transaction by the contracting parties is determinative of the
nature of the transaction.
A person must use the word ‘trust’ in order to create a trust.
Certainty of intention is never affected by the other certainties.
Correct
In a contractual context, the intention of the contracting parties is ascertained from the express and
implied terms of the contract.
True or false: Only land and chattels can be held on trust.
True
False-
Correct
Almost every asset and right can be held on trust. What was the subject matter of the trust in Hunter v
Moss [1994] 1 WLR 452?
The owner of 20 ordinary shares in a private company and 20 bars of gold bullion orally declares
herself a trustee of 10 of the shares and 10 of the bars for a beneficiary. She does not segregate or
otherwise identify the 10 shares or the 10 bars which are to form the subject matter of the trust.
Which one of the following statements best describes the effect of the declaration?
There is a valid trust of 10 shares and 20 bars.
Neither the shares nor the bars are subject to a trust.
There is a valid trust of 10 shares and 10 bars.
There is a valid trust of 10 shares but no trust in respect of the bars.-
There is a valid trust of 10 bars but no trust in respect of the shares.
Correct
A person can declare a trust of x shares out of a larger number of such shares without identifying
which x shares are to form the subject matter of the trust, provided that they are all shares of the same
type and in the same company: Hunter v Moss [1994] 1 WLR 452. However, there is not a trust of
any of the bullion because a person cannot declare a trust of x physical items out of a larger number of
such items without identifying the particular x items which are to form the subject matter of the
trust: In re Goldcorp [1995] 1 AC 74.
By his valid will, the testator (deceased) made the following disposition:
‘I give to my trustees my favourite car on trust for my daughter, and the sum credited to my current
bank account on trust to give most of it to my daughter and the balance to my son.’
There is no available evidence of which car was the testator’s favourite.
Which one of the following statements best describes the effect of the disposition?
The testator has created a valid trust of his favourite car and of the sum credited to his bank
account.
The trustees are entitled to full legal ownership of a car and of the sum credited to the
testator’s bank account.
The testator has not created a valid trust.-
The testator has created a valid trust of the sum credited to his bank account but has not
created a valid trust of a car.
The testator has created a valid trust of his favourite car but has not created a valid trust of the
sum credited to his bank account.
Correct
, The intended trust of the car is void because it is not possible to identify which car was the testator’s
favourite. The intended trust of the sum credited to the bank account is void because it is not possible
to identify the beneficiaries’ beneficial entitlements – ‘most’ is too vague.
VIEW RESULTS
Formative
A woman recently died. Her valid will contains the following clauses:
‘1. I give £10,000 to my trustees to be distributed amongst my children in such shares as my trustees
shall determine.
1. I give £10,000 to my trustees to pay an ample sum to my brother.’
Which statement best describes the status of the trusts in clauses 1 and 2?
The trusts in clauses 1 and 2 are valid.
The trust in clause 1 is valid but the trust in clause 2 is void.-
The trustees can determine whether the trusts are valid or void.
The trust in clause 2 is valid but the trust in clause 1 is void.
The trusts in clauses 1 and 2 are void.
Correct
Certainty of subject matter comprises two requirements. The second requirement is the beneficial
entitlement requirement: it must be possible to ascertain the nature and extent of the beneficiary’s
interest in the trust property. In relation to clause 1, it is possible to ascertain the extent of each
beneficiary’s interest by reference to the trustees’ determination. However, in relation to clause 2, it is
not possible to ascertain the extent of each beneficiary’s interest because ‘ample sum’ is an uncertain
measure. (How much is an ‘ample sum’?) As a result, the trust in clause 2 is void for uncertainty of
subject matter.
A woman declares a trust of three of her five paintings, and 100 of her 200 ordinary shares in a private
company, in favour of a man. The woman does not segregate or otherwise identify the three paintings
or the 100 shares to be held on trust.
Which statement best describes the effect of the woman’s declaration?
The woman holds 100 shares and three paintings on trust for the man. She remains the full
legal owner of the other 100 shares and two paintings.
The woman holds 100 shares on trust for the man. She remains the full legal owner of the
other 100 shares and all the paintings.-
The woman holds 100 shares on trust for the beneficiary. She remains the full legal owner of
the other 100 shares. She holds the paintings on a resulting trust for herself.
The woman does not hold any shares or paintings on trust for the man. She remains the full
legal owner of all the shares and paintings.
The woman holds three paintings on trust for the man. She remains the full legal owner of the
other two paintings and all the shares.
Correct
Certainty of subject matter comprises two requirements. The first requirement is the trust property
requirement: it must be possible to identify the trust property. The woman has failed to identify the
three paintings to be held on trust and, as a result, it is not possible to identify the trust property. By
contrast, the woman’s failure to identify the 100 shares to be held on trust is not fatal because a person
can declare a valid trust of x of their (x+y) shares of the same type in the same company without
identifying the x shares to be held on trust.
A woman recently died. Her valid will contains the following clause:
‘I give £10,000 to my husband absolutely. I trust him to use it fairly vis-à-vis our children.’
Topic 1
Assessment
True or False: A trustee can apply trust property exclusively for their own benefit.
True
False-
Correct
A trustee is under a duty to apply trust property for the benefit of the beneficiaries.
A CREST member is the registered owner of 100,000 shares in BT Group plc. It holds 50,000 of
those shares for a broker. The broker acquired its interest in the 50,000 shares on behalf of a private
investor.
Which one of the following statements is a correct description of the private investor’s position
in relation to the 50,000 shares?
The investor does not have any interest in the shares.
The investor has an equitable and beneficial interest in the shares.-
The investor has an equitable interest in the shares but not the beneficial interest.
The investor has a legal and equitable interest in the shares.
The investor is the legal owner of the shares.
Correct
The CREST member is the legal owner of the shares. The broker has an equitable interest in the
shares but no beneficial interest. The investor has an equitable and beneficial interest in the shares.
A trustee holds £50,000 on trust for a beneficiary. The trustee misapplies £10,000 of the trust money
and gifts it to the local priest. The priest does not know that the £10,000 is trust money. The trustee
misapplies another £10,000 of the trust money and purchases a car with the money. The seller knows
that the money paid by the trustee is misapplied trust money. The trustee is made bankrupt.
Which one of the following statements is a correct description of the beneficiary’s rights?
The beneficiary has an equitable proprietary interest in the £30,000 held by the trustee and in
the £10,000 given to the priest, but not in the £10,000 paid to the purchaser.
The beneficiary does not have an equitable proprietary interest in the £30,000 held by the
trustee, in the £10,000 given to the priest, or in the £10,000 paid to the seller.
The beneficiary has an equitable proprietary interest in the £30,000 held by the trustee, in the
£10,000 given to the priest, and in the £10,000 paid to the purchaser.-
The equitable proprietary interest which the beneficiary has in any assets held by the trustee
will be subordinated to the claims of the trustee’s creditors.
The beneficiary has an equitable proprietary interest in the £30,000 held by the trustee but not
in the £10,000 given to the priest or the £10,000 paid to the purchaser.
Correct
The beneficiary of a trust has an equitable proprietary interest in the trust property which can be
enforced against everyone except a purchaser of a legal interest who does not have notice of the trust.
The priest is not a purchaser. The seller has notice of the trust.
True or False: The full legal owner of an asset has an equitable interest in the asset.
False-
True
Correct
The full legal owner of an asset has only a legal interest in the asset.
,A man holds shares on trust for a beneficiary. He is also the bailee of some goods. His house is
subject to a legal charge and an equitable charge in favour of two of his creditors. He also has a
number of unsecured creditors. The man is made bankrupt.
Who is likely to be most prejudicially affected by the man’s bankruptcy?
The unsecured creditors.-
The legal chargee.
The beneficiary of the trust.
The bailor of the goods.
The equitable chargee.
Correct
An unsecured creditor has a personal right against their debtor. Unlike property rights, personal rights
do not enjoy ‘priority’ in the event of the debtor’s bankruptcy.
A woman holds shares on trust for a beneficiary. She is also the bailee of some goods. In breach of
her duties to the beneficiary and to the bailor, the woman sells the shares and the goods (for their full
market value). The purchaser believes that the woman is the full legal owner of the shares and the
goods.
Which one of the following statements is a correct description of the beneficiary’s and the
bailor’s position in relation to the purchaser?
The bailor can recover the goods from the purchaser but the beneficiary cannot recover the
shares from the purchaser.-
The beneficiary can recover the shares from the purchaser but the bailor cannot recover the
goods from the purchaser
The bailor can recover the goods from the purchaser and the beneficiary can recover the
shares from the purchaser.
The beneficiary cannot recover the shares from the purchaser and the bailor cannot recover
the goods from the purchaser.
The purchaser is an agent for the beneficiary and the bailor.
Correct
A bailor has a legal proprietary interest in the bailed goods. Generally, legal proprietary interests can
be enforced against everyone. A beneficiary of a trust has an equitable proprietary interest in the trust
property. Equitable proprietary interests can be enforced against everyone except a purchaser of a
legal interest without notice.
True or false: An intention to create a trust must be manifest in writing.
False -
True
Correct
A person can manifest an intention to create a trust by writing, oral statements, or conduct.
By his valid will, the testator made the following dispositions:
‘1. I give £10,000 to my solicitor to be applied for the benefit of my mother.
1. I give £10,000 to my wife absolutely, confident that she will do right by our children.’
The executors of the testator’s will have paid £10,000 to his widow and £10,000 to his solicitor.
Which one of the following statements is correct?
The widow holds the money on trust for the testator’s children. The solicitor is the full legal
owner of the money.
The solicitor holds the money on trust for the testator’s mother. The widow is the full legal
owner of the money.-
The solicitor and the widow are the full legal owners of the money.
The solicitor holds the money on trust for the testator’s mother. The widow holds the money
on trust for the testator’s children.
The solicitor and the widow are the equitable owners of the money.
,Correct
The testator has imposed a duty on the solicitor: the money is ‘to be’ applied for the testator’s mother.
But the testator has not imposed a duty on the widow: the words ‘confident that she will’ are not
imperative.
Which one of the following statements is true?
Trusts can arise by reason of an implied contractual term.-
A person’s intention is ascertained by a subjective approach.
The description applied to a transaction by the contracting parties is determinative of the
nature of the transaction.
A person must use the word ‘trust’ in order to create a trust.
Certainty of intention is never affected by the other certainties.
Correct
In a contractual context, the intention of the contracting parties is ascertained from the express and
implied terms of the contract.
True or false: Only land and chattels can be held on trust.
True
False-
Correct
Almost every asset and right can be held on trust. What was the subject matter of the trust in Hunter v
Moss [1994] 1 WLR 452?
The owner of 20 ordinary shares in a private company and 20 bars of gold bullion orally declares
herself a trustee of 10 of the shares and 10 of the bars for a beneficiary. She does not segregate or
otherwise identify the 10 shares or the 10 bars which are to form the subject matter of the trust.
Which one of the following statements best describes the effect of the declaration?
There is a valid trust of 10 shares and 20 bars.
Neither the shares nor the bars are subject to a trust.
There is a valid trust of 10 shares and 10 bars.
There is a valid trust of 10 shares but no trust in respect of the bars.-
There is a valid trust of 10 bars but no trust in respect of the shares.
Correct
A person can declare a trust of x shares out of a larger number of such shares without identifying
which x shares are to form the subject matter of the trust, provided that they are all shares of the same
type and in the same company: Hunter v Moss [1994] 1 WLR 452. However, there is not a trust of
any of the bullion because a person cannot declare a trust of x physical items out of a larger number of
such items without identifying the particular x items which are to form the subject matter of the
trust: In re Goldcorp [1995] 1 AC 74.
By his valid will, the testator (deceased) made the following disposition:
‘I give to my trustees my favourite car on trust for my daughter, and the sum credited to my current
bank account on trust to give most of it to my daughter and the balance to my son.’
There is no available evidence of which car was the testator’s favourite.
Which one of the following statements best describes the effect of the disposition?
The testator has created a valid trust of his favourite car and of the sum credited to his bank
account.
The trustees are entitled to full legal ownership of a car and of the sum credited to the
testator’s bank account.
The testator has not created a valid trust.-
The testator has created a valid trust of the sum credited to his bank account but has not
created a valid trust of a car.
The testator has created a valid trust of his favourite car but has not created a valid trust of the
sum credited to his bank account.
Correct
, The intended trust of the car is void because it is not possible to identify which car was the testator’s
favourite. The intended trust of the sum credited to the bank account is void because it is not possible
to identify the beneficiaries’ beneficial entitlements – ‘most’ is too vague.
VIEW RESULTS
Formative
A woman recently died. Her valid will contains the following clauses:
‘1. I give £10,000 to my trustees to be distributed amongst my children in such shares as my trustees
shall determine.
1. I give £10,000 to my trustees to pay an ample sum to my brother.’
Which statement best describes the status of the trusts in clauses 1 and 2?
The trusts in clauses 1 and 2 are valid.
The trust in clause 1 is valid but the trust in clause 2 is void.-
The trustees can determine whether the trusts are valid or void.
The trust in clause 2 is valid but the trust in clause 1 is void.
The trusts in clauses 1 and 2 are void.
Correct
Certainty of subject matter comprises two requirements. The second requirement is the beneficial
entitlement requirement: it must be possible to ascertain the nature and extent of the beneficiary’s
interest in the trust property. In relation to clause 1, it is possible to ascertain the extent of each
beneficiary’s interest by reference to the trustees’ determination. However, in relation to clause 2, it is
not possible to ascertain the extent of each beneficiary’s interest because ‘ample sum’ is an uncertain
measure. (How much is an ‘ample sum’?) As a result, the trust in clause 2 is void for uncertainty of
subject matter.
A woman declares a trust of three of her five paintings, and 100 of her 200 ordinary shares in a private
company, in favour of a man. The woman does not segregate or otherwise identify the three paintings
or the 100 shares to be held on trust.
Which statement best describes the effect of the woman’s declaration?
The woman holds 100 shares and three paintings on trust for the man. She remains the full
legal owner of the other 100 shares and two paintings.
The woman holds 100 shares on trust for the man. She remains the full legal owner of the
other 100 shares and all the paintings.-
The woman holds 100 shares on trust for the beneficiary. She remains the full legal owner of
the other 100 shares. She holds the paintings on a resulting trust for herself.
The woman does not hold any shares or paintings on trust for the man. She remains the full
legal owner of all the shares and paintings.
The woman holds three paintings on trust for the man. She remains the full legal owner of the
other two paintings and all the shares.
Correct
Certainty of subject matter comprises two requirements. The first requirement is the trust property
requirement: it must be possible to identify the trust property. The woman has failed to identify the
three paintings to be held on trust and, as a result, it is not possible to identify the trust property. By
contrast, the woman’s failure to identify the 100 shares to be held on trust is not fatal because a person
can declare a valid trust of x of their (x+y) shares of the same type in the same company without
identifying the x shares to be held on trust.
A woman recently died. Her valid will contains the following clause:
‘I give £10,000 to my husband absolutely. I trust him to use it fairly vis-à-vis our children.’
