Equity & Trusts - Declaration of dispositions, transfer formalities, certainty of
objects, rules against perpetuity
Note: for multi-part qus involving will gifts, follow: STEP 1, STEP 2, STEP 4.
Note: for multi-part qus involving will trusts, follow: STEP 1, STEP 2, STEP 4,
STEP 5, STEP 6.
[IF SEVERAL DISPOSITIONS] [STEP 1] Introduce answer
[WILL GIFTS / TRUSTS] This scenario concerns the validity of gifts / trusts made under
X’s will. To make a valid gift by will requires certainty of intention, subject and object. To
make a valid trust by will requires, sufficient certainty of intention, subject and object,
satisfying the beneficiary principle, and perpetuity rules.
- Unlike lifetime gifts and trusts, there is no need to consider the validity of the
declaration of the trust or transfer of the asset concerned as this will be
accomplished by the testator’s personal representatives after his death.
[LIFETIME GIFTS / TRUSTS] X has attempted multiple dispositions. If X has made a
perfect gift, or created a completely constituted trust, then the property which was the
subject matter of that gift or trust will be transferred to its intended recipient, and X will
not be able to recover the property.
[SKIP IF ‘WILL IS VALID’] [STEP 2] Assess the validity of the will (do for all
relevant parts of the qu together if several gifts are made from the same will)
First, we need to assess the validity of the will itself.
Validity of X’s will
Wills
- Formalities:
- Will maker is the testator/testatrix
- Wills l must normally be made in writing and signed by the testator in the
presence of two witnesses, who must then witness the testator’s signature
by signing the will in their presence (S.9 Wills Act 1837).
- Codicils:
- Documents by which a will can later be altered, must also be signed and
witnessed as per s.9 Wills Act 1837.
- Legal effect:
, - Wills do not take effect until the testator’s death
- Until then, the beneficiary has the expectancy/hope of receiving their gift,
and the testator can change their will
- Failure of gifts in wills:
- Ademption - gifts fail when the testator no longer possesses the specified
property when they die (i.e. gave it away during their lifetime)
- Lapse - if the beneficiary dies before the testator
- Lapsed specific or pecuniary gifts fall into the residuary estate
- Lapsed residuary gifts pass under intestacy rules
- The witness/beneficiary rule - s.15 Wills Act 1837
- If a will is witnessed by a beneficiary or a beneficiary’s husband,
wife or civil partner, then the will is validly witnessed but the gift to
the witness fails (s.15 Wills Act 1837).
- Wills are revoked by:
- The marriage/civil partnership of the testator
- Destruction of the will with an intention to revoke
- Make a new will which covers the same property as the first
- Codicils can revoke individual gifts
Intestacy rules
- Apply to the whole estate if the deceased made no will
- Apply to the residuary estate (i.e. what’s left after if there is no residuary gift
contained in the will
- PRs/executors of the will will use the estate to pay debts and tax, and give any
valid gifts in the will. The rest is shared between the deceased's relatives
‘statutory next of kin’, depending on who survives them.’
[STEP 2] Identify the type of disposition
[INSERT WILL CLAUSE / GIFT AS TITLE]
X is attempting / trying to create a lifetime gift / gift by will / fixed trust / discretionary
trust with an obligation to distribute rather than a power of appointment / power of
appointment rather than an obligation to distribute under a discretionary trust / purpose
trust…. There may be an issue with [LIST PROBLEM AREAS FROM BELOW].
Will / lifetime gift - gift without the formation of a trust.
Fixed Trusts:
, A fixed trust is one in which trustees have no discretion as to how the trust property is to
be allocated between the beneficiaries.
- Where each beneficiary’s share is not specified, an equal distribution is
presumed.
Discretionary Trusts:
A discretionary trust is one where someone, usually the trustee, is under a duty to select
beneficiaries from a class and decide how much they are to receive (Mettoy Pension
Trustees Ltd v Evans).
- Until selected, no object (i.e. possible beneficiary) has an equitable interest in the
trust property. Until the trustees decide that an individual is to have a share of the
trust income or capital, the individual merely has a hope / ‘a spes’ / expectancy,
that they will be chosen by the trustees
- Trustees of a discretionary trust are under a duty to distribute property in favour
of members of the class of objects (but they have a discretion as to which
members to choose)
- If the trustees do not carry out their duty within the time specified in the trust
instrument (or if none, within a reasonable time), the objects can get the court to
intervene
- The court could order a particular distribution, or appoint new trustees
Powers of appointment:
Powers of appointment are where a person has the authority to distribute the property,
but the donee of a power is not obliged to distribute the property.
The duties of donees given powers of appointment are (outlined in Re Hay’s Settlement
Trusts):
- 1) they must consider periodically whether or not he should exercise the power;
- 2) consider the range of objects of the power; and
- 3) consider the appropriateness of individual appointments.
The courts can intervene if the donees of the power do not consider a request from a
potential beneficiary, but cannot if the donees do not exercise the power to distribute the
property to them.
Purpose trusts:
objects, rules against perpetuity
Note: for multi-part qus involving will gifts, follow: STEP 1, STEP 2, STEP 4.
Note: for multi-part qus involving will trusts, follow: STEP 1, STEP 2, STEP 4,
STEP 5, STEP 6.
[IF SEVERAL DISPOSITIONS] [STEP 1] Introduce answer
[WILL GIFTS / TRUSTS] This scenario concerns the validity of gifts / trusts made under
X’s will. To make a valid gift by will requires certainty of intention, subject and object. To
make a valid trust by will requires, sufficient certainty of intention, subject and object,
satisfying the beneficiary principle, and perpetuity rules.
- Unlike lifetime gifts and trusts, there is no need to consider the validity of the
declaration of the trust or transfer of the asset concerned as this will be
accomplished by the testator’s personal representatives after his death.
[LIFETIME GIFTS / TRUSTS] X has attempted multiple dispositions. If X has made a
perfect gift, or created a completely constituted trust, then the property which was the
subject matter of that gift or trust will be transferred to its intended recipient, and X will
not be able to recover the property.
[SKIP IF ‘WILL IS VALID’] [STEP 2] Assess the validity of the will (do for all
relevant parts of the qu together if several gifts are made from the same will)
First, we need to assess the validity of the will itself.
Validity of X’s will
Wills
- Formalities:
- Will maker is the testator/testatrix
- Wills l must normally be made in writing and signed by the testator in the
presence of two witnesses, who must then witness the testator’s signature
by signing the will in their presence (S.9 Wills Act 1837).
- Codicils:
- Documents by which a will can later be altered, must also be signed and
witnessed as per s.9 Wills Act 1837.
- Legal effect:
, - Wills do not take effect until the testator’s death
- Until then, the beneficiary has the expectancy/hope of receiving their gift,
and the testator can change their will
- Failure of gifts in wills:
- Ademption - gifts fail when the testator no longer possesses the specified
property when they die (i.e. gave it away during their lifetime)
- Lapse - if the beneficiary dies before the testator
- Lapsed specific or pecuniary gifts fall into the residuary estate
- Lapsed residuary gifts pass under intestacy rules
- The witness/beneficiary rule - s.15 Wills Act 1837
- If a will is witnessed by a beneficiary or a beneficiary’s husband,
wife or civil partner, then the will is validly witnessed but the gift to
the witness fails (s.15 Wills Act 1837).
- Wills are revoked by:
- The marriage/civil partnership of the testator
- Destruction of the will with an intention to revoke
- Make a new will which covers the same property as the first
- Codicils can revoke individual gifts
Intestacy rules
- Apply to the whole estate if the deceased made no will
- Apply to the residuary estate (i.e. what’s left after if there is no residuary gift
contained in the will
- PRs/executors of the will will use the estate to pay debts and tax, and give any
valid gifts in the will. The rest is shared between the deceased's relatives
‘statutory next of kin’, depending on who survives them.’
[STEP 2] Identify the type of disposition
[INSERT WILL CLAUSE / GIFT AS TITLE]
X is attempting / trying to create a lifetime gift / gift by will / fixed trust / discretionary
trust with an obligation to distribute rather than a power of appointment / power of
appointment rather than an obligation to distribute under a discretionary trust / purpose
trust…. There may be an issue with [LIST PROBLEM AREAS FROM BELOW].
Will / lifetime gift - gift without the formation of a trust.
Fixed Trusts:
, A fixed trust is one in which trustees have no discretion as to how the trust property is to
be allocated between the beneficiaries.
- Where each beneficiary’s share is not specified, an equal distribution is
presumed.
Discretionary Trusts:
A discretionary trust is one where someone, usually the trustee, is under a duty to select
beneficiaries from a class and decide how much they are to receive (Mettoy Pension
Trustees Ltd v Evans).
- Until selected, no object (i.e. possible beneficiary) has an equitable interest in the
trust property. Until the trustees decide that an individual is to have a share of the
trust income or capital, the individual merely has a hope / ‘a spes’ / expectancy,
that they will be chosen by the trustees
- Trustees of a discretionary trust are under a duty to distribute property in favour
of members of the class of objects (but they have a discretion as to which
members to choose)
- If the trustees do not carry out their duty within the time specified in the trust
instrument (or if none, within a reasonable time), the objects can get the court to
intervene
- The court could order a particular distribution, or appoint new trustees
Powers of appointment:
Powers of appointment are where a person has the authority to distribute the property,
but the donee of a power is not obliged to distribute the property.
The duties of donees given powers of appointment are (outlined in Re Hay’s Settlement
Trusts):
- 1) they must consider periodically whether or not he should exercise the power;
- 2) consider the range of objects of the power; and
- 3) consider the appropriateness of individual appointments.
The courts can intervene if the donees of the power do not consider a request from a
potential beneficiary, but cannot if the donees do not exercise the power to distribute the
property to them.
Purpose trusts:
