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Public Policy and the Express Private Trust

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kazzasingh's version from 2018-04-24 15:36

Gifts subject to a condition subsequent

Question Answer
Jenner v Turner (1880)Assets were held on trust for the testatrix's brother. He had a life interest BUT it was subject to the condition that he did not marry a domestic servant. The brother ended up marrying a maid. HELD: this was a valid condition and his interest was terminated.
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Need for conceptual certainty

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Re Barlow's WT (1979)If you do not have a conceptually certain condition then the condition will fail. The requirement of conceptual certainty is much looser then that required for a discretionary trust. HELD: "friend" was sufficiently certain as a concept. It was enough that one person to show for definite that they met the condition. It was not invalidated because there might have been uncertainty between potential recipients.
Ellis v Chief Adjudication Officer (1997)Ms E gifted her flat to her daughter on the condition that she could remain in the flat under her daughter’s care. The daughter evicted her mother and sold the flat. HELD: The condition was not void for uncertainty, and it was fair to construe it as requiring the daughter to allow her mother to continue to live in the flat, and provide her with a decent standard of living (condition subsequent).
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Gifts contary to public policy

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Blathwayt v Baron Cawley (1975)A gift to a son conditional on him not converting to Roman Catholicism. HELD: it's perfectly ok to put a religious restriction on a gift.
Inheritance (Provision for Family and Dependants) Act 1975Specifically provides that if you do not make reasonable provisions for your family and dependents, your family has to power to vary your will. It can even unravel dispositions you have made within the last 6 years of your life (in order to make reasonable provisions for your failures).
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The Protective Trust

Question Answer
Brandon v Robinson (1811)Concerned a beneficiary who had a life interest (that was subject to a condition that it should not be granted, transferred or otherwise assigned to anybody else). The beneficiary went bankrupt so the asset was going to have to be assigned to pay off the debt, and the assignee claimed the interest from the life interest.
3-prong test for a PT (Trustee Act 1925 s33)(a) determinable interest (b) forfeiture clause, specifying the determining events (c) discretionary trust kicking in after forfeiture
Re Wittke [1944]One does not have to use the specific phrase "on protective trusts for". HELD: "upon for" satisfies Trustee Act 1925 s33
Cf Re Trafford's Settlement [1985]The phrase "on protective trusts for" was used but looking at the rest of the trust instrument, it made it clear that it was not about s33
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Forfeiting Events

Question Answer
Re Balfour's Settlement (1938)The trustee attempted to take income from the protective trust to indemnify himself for a breach instigated by the beneficiary. HELD: forfeiting event --> determinable interest came to an end.
Re Walker (1939)Concerned retrospective forfeiting events. HELD: the prior bankruptcy of the beneficiary (that had happened even before the protective trust had been created) could be a determining event.
Re Baring's ST (1940)Concerned a court order as the beneficiary was in contempt of court. HELD: the court's attempt to sequester his income and court order was enough to trigger forfeiture.
Re Dennis's ST (1942)The beneficiary was purporting to relinquish his rights under the protective trust. HELD: that attempt to relinquish his rights was enough to trigger forfeiture.
Re Richardson's WT (1958)A beneficiary was not paying maintenance following his divorce. Therefore there is a order of a divorce court attempting to impose a charge over the income to secure future payment. HELD: this triggered forfeiture and caused his interest to come to an end.
Re Tancred's Settlement (1903)A beneficiary appointed an attorney to manage his assets. The attorney would receive the income and deduct his income from it. HELD: even though he was not passing on the full income to the beneficiary, this did not amount to forfeiture.
Re Oppenheim's WT (1950)A beneficiary who was not of sound mind so a receiver was appointed to look after their assets. HELD: this did not amount to forfeiture even though the income went to the receiver instead of the beneficiary.
Re Longman (1955)The trust property was shares in a company and the beneficiary authorised his trustee to pay any dividends that he received to his creditors. During the relevant period, no dividends were ever declared on the shares so there was nothing to pay out. HELD: this was NOT a determining event.
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Orders of the Court

Question Answer
Re Allsopp's Marriage ST (1959)A protective trust set up for the benefit of the husband as part of a marriage settlement. Twelve years after getting married, the marriage was dissolved. The court extinguished the rights of the husband and in doing so they said that discretionary trust was so closely connected with the husband's determinable life interest that that was also extinguished. HELD: an order of the court may not only just trigger forfeiture, it could cause the whole endeavour (resulting trust) to collapse.
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Operation of the discretionary trust

Question Answer
Re Smith (1928)The trustees are entitled under the discretionary trust to spend money for a primary beneficiary in a way that never actually places assets in his hands. That way creditors cannot get at them
Re Bullock (1891)Because the trustees have a discretion (as it is a discretionary trust), not only are they perfectly at liberty to pay to the beneficiary if they want, they can do so even if they know that the effect of this will be that the money does go to his creditors. HOWEVER, the trustees cannot accumulate the income.
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Gift to another, to be reclaimed at a later date?

Question Answer
Tinsley v Milligan (1994)Both were in a same sex relationship (cohabiting). T was registered as the sole legal owner of the property so that M could make false benefit claims. M was left off the title deeds so it looks like she was poorer than so it looks like she's poorer than she is. They share the profits of the scam for several years. After a while, M has a change of heart and confesses and stopped making claims. T disapproved so moved out even though T is the registered owner. M stays in occupation so T sues her for posession. M then counter-claims and seeks an order of the court for sale and a declaration that T is the legal owner and holds the property on trust for both of them in equal shares. T says that she cannot be denied absolute ownership of the house because to do so, M would have to rely on her illegal purpose as evidence of why the house was put in T's name alone. HELD: everything on turns on whether or not you need to mention the illegality in order to prove your case. There needs to be a distinction between situations where the presumption of a resulting trust arises and situations where presumption of advancement (an outright gift) arises. If there is a presumption of advancement and you are trying to get the property back, you will need to adduce some evidence to rebut that presumption.
Tribe v Tribe (1996)Father transferring shares in the family company to his son in order to put them beyond the reach of creditors. Presumption of advancement applied. Son did not want to return the money. HELD: we will allow you to rely on your own illegal actions if you have repented. Indeed, the father had repented as he never did end up cheating his creditors out of their claims.
Patel v Mirza [2016]Contract law case --> HELD: having to rely on your own illegality should no longer be regarded as an automatic bar to bringing a claim.
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Transactions at an undervalue in the years preceding bankruptcy

Question Answer
Insolvency Act Section 423Unravelling any transaction at an undervalue (however far back in the past) because you did it with the purpose of defrauding creditors
Insolvency Act Section 339If you've gone bankrupt, we can unravel transactions upto 5 years and you do not have to show that they were intended to defraud creditors.
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