Equity & Trusts Introduction Flashcards

What is the 'Hague Convention on the Law Applicable to Trusts and on their Recognition' (1985) relevant for?

Answer: It provides rules for recognising trusts in countries that do not have an indigenous trust law concept

The Hague Convention on Trusts (incorporated into UK law by the Recognition of Trusts Act 1987) provides conflict of laws rules for recognising trusts created under the law of a country where trusts are recognised, even in civil law jurisdictions that do not have a concept of trust.

What is a 'discretionary trust'?

Answer: A trust where the trustees have discretion as to how to distribute income or capital among a class of beneficiaries

In a discretionary trust, the trustees have power to choose which members of a class of beneficiaries receive distributions, how much, and when. No individual beneficiary has a fixed entitlement, though they have a right to be considered.

What is a 'fixed trust'?

Answer: A trust where each beneficiary's entitlement is fixed by the trust deed and cannot be varied by the trustees

In a fixed trust, the beneficial interests are specified in the trust deed (e.g., 'equally between my children'). The trustees have no discretion as to distribution — the entitlements are predetermined.

What is a 'bare trust'?

Answer: A trust where the trustee holds property for a sole, absolutely entitled adult beneficiary who can direct the trustee

A bare trust (or simple trust) arises where the trustee holds property for a single beneficiary who is of full legal capacity and absolutely entitled. Under Saunders v Vautier, the beneficiary can collapse the trust at any time.

What is the 'rule against perpetuities' as applied to trusts?

Answer: A trust interest must vest within the perpetuity period, or it is void; under the Perpetuities and Accumulations Act 2009 the period is 125 years

The rule against perpetuities prevents future interests from being too remote. Under the Perpetuities and Accumulations Act 2009, the statutory perpetuity period for most trusts is 125 years, replacing the old 'lives in being plus 21 years' common law rule.

What is 'cy-pres' in charity law?

Answer: A doctrine allowing a court to apply charitable funds to a similar purpose where the original charitable purpose has failed or become impractical

Cy-pres (from the Norman French 'as near as possible') is a doctrine under the Charities Act 2011 allowing courts or the Charity Commission to apply charitable property to a purpose as near as possible to the original one, where the original purpose has failed or become impossible or impracticable.