Equity & Trusts Introduction Flashcards

What is the 'Statute of Frauds 1677' and its relevance to trusts?

Answer: It required certain transactions, including declarations of trust of land, to be evidenced in writing to be enforceable

The Statute of Frauds 1677 (now mainly replaced by the Law of Property Act 1925 for trusts of land) required declarations of trust of land and other specified transactions to be evidenced in signed writing to be enforceable — preventing fraud through false oral claims.

What is a 'secret trust'?

Answer: A trust created by a testator who leaves property to someone (the 'secret trustee') on the understanding that they will hold it for another person, with the arrangement not appearing on the face of the will

A secret trust allows a testator to achieve confidentiality about the true beneficiary. In a fully secret trust, the legatee appears to take beneficially on the face of the will but has secretly agreed to hold for another. Half-secret trusts appear on the face of the will to hold on trust but the beneficiary is not named.

What is 'tracing' in equity?

Answer: The equitable process of following trust property or its substitute into the hands of a recipient who holds it subject to the claimant's proprietary claim

Equitable tracing allows a beneficiary or claimant to follow trust property (or its traceable proceeds) through a series of transactions and assert a proprietary claim to it, even if it has been mixed with other funds. It depends on establishing a fiduciary relationship.

What is the 'in personam' nature of equitable remedies?

Answer: Equitable remedies act against the person of the defendant, ordering them to do or refrain from doing something, rather than directly affecting property

Historically, equity operated in personam — acting on the conscience of the defendant personally. An injunction or order for specific performance obliges the defendant to act or refrain from acting; contempt of court follows non-compliance.

What is a 'pension trust'?

Answer: An occupational pension scheme structured as a trust, with the employer as settlor, professional trustees to manage the fund, and employee members as beneficiaries

Occupational pension schemes are trust-based arrangements where the employer (settlor) contributes to a fund managed by trustees for the benefit of employee-beneficiaries. They are regulated by the Pensions Act 1995 and overseen by The Pensions Regulator.

What is 'knowing receipt' as a basis for personal liability in equity?

Answer: A person who receives trust property with knowledge that it was transferred in breach of trust is personally liable to account to the beneficiaries

Knowing receipt is a form of third-party liability in equity where a person who receives trust property (or its traceable proceeds) in breach of trust with knowledge of the breach is personally liable to account to the beneficiaries, as a constructive trustee.