re hay's settlement trust case summary re hay's settlement trust case summary

Section 13 introduced the general principle and abolished the rule against excessive accumulation, except for charities. That is why without the express authority of the trust deed, the consent of the beneficiaries or an order of the court, even a professional trustee could not charge. The Court will look at the whole of the document to ascertain the testator's intention, rather than dismissing the trust because of individual clauses. The exception to this rule is found in Hunter v Moss,[19] which concerned 50 shares meant to be transferred to an employee out of a total holding of 950. [41], As such, simply giving the trustees this power was not enough to defeat uncertainties. Re Hay's Settlement Trusts [1982] Re Manisty's Settlement [1974] ''The court contrasted the exercise by trustees of an. A non-exhaustive discretionary trust of income exists where the trustees may legitimately decide not to distribute the income and the settlor has specified the effect of non-distribution; for instance, the undistributed income may be accumulated or paid to another. Within express trusts this is a particularly complex area, because the test used to determine certainty varies between fixed trusts, mere powers and discretionary trusts. The test for determining this differs depending on the type of trust; it can be that all beneficiaries must be individually identified, or that the trustees must be able to say with certainty, if a claimant comes before them, whether he is or is not a beneficiary. If the donee of the power fails to exercise his discretion the court will ensure that the discretion is exercised in favour of the objects. Property had been placed in trust for the daughter of the family, fearing that she might fritter it away. Re Hay's Settlement Trusts [1982] 1 WLR 202 by Lawprof Team Key point Affirmed Re Manisty - a power cannot be void for administrative unworkability Facts In a trust deed trustees were directed to hold trust funds for any persons (with the exception of the settlor, her husband and Ts) or purposes they appoint with 21 years of settlement Disclaimer: This essay has been written by a law student and not by our expert law writers. The rules developed by the courts for certainty of object are important, since in recent decades litigation surrounding the selection of beneficiaries has increased. In IRC v Blackwell Minors Trustees (1925) 10 TC 235, the accumulation of undistributed surplus income at the discretion of the trustees was treated as capital of the beneficiary, and not liable to income tax. the authority to deal with property that one does not own a right given to the donee of the power (power-holder) to dispose of property that is not within bounds established by the donor of the power (the property owner)for persons (objects of power) or purposes within the scope of the power. However, a special power of appointment may or may not create a trust power. TASK1) A contract is an agreement between two or more parties. I must keep in mind the distinction between uncertainty as to the events prescribed by the testatorin which the conditionis to operate (which is generally speaking fatal to the validity of such a condition) and difficulty in ascertaining whether those eventshave happened or not, which is not necessarily fatal to such a validity. In this case the trustees were given a power to add objects to a class of potential beneficiaries which excluded the settlor, his wife and certain named persons. This does not necessarily invalidate the trust, as Jenkins J (as he was then) said in Re Coxen:[35]. shares: Rimer QC held that since the shares were all identical, the lack of However, this strict approach stands in contrast to other cases such as Re Tuck, in which it was accepted that a third party could rule on an expression that appeared on the face of it to be lacking in conceptual certainty. When delegation of power is considered, two different matters are taken into account. segregation between the shares did not invalidate the trust. Copyright 2003 - 2023 - LawTeacher is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. The next type of uncertainty, ascertainability, is where it is impossible to find the beneficiaries, either because they have died, moved or changed names. Free resources to assist you with your legal studies! The court considered a discretionary distribution power given to trustees. Otherwise, trusts would have been failed if there is one individual who cannot be said to be the "given postulant". term of the settlement, D owned 950 out of 1,000 issued shares in Moss Electrical Co Ltd, D declared that he held 5% of issued share capital (1000) on trust for C. Shares never implemented due to change of mind, tax reasons, etc. Drafters use three principal devices to resolve problems of potential uncertainty. An exhaustive discretionary trust is one where, during the trust period, the trustees are required to distribute the income or capital, or both, but retain a discretion as to the mode of distribution and the persons to whom the distribution may be made. The problem was that these bottles were not individually identifiable, and Oliver J held that: .mw-parser-output .templatequote{overflow:hidden;margin:1em 0;padding:0 40px}.mw-parser-output .templatequote .templatequotecite{line-height:1.5em;text-align:left;padding-left:1.6em;margin-top:0}. appoint, the deed of appointment had not, as the settlement itself required, designated the Past this, there is no requirement that particular language be used. The difference was that before any appointment the trustees were to hold the trust fund on Certainty of subject matter: it must be clear what property is part of the trust and property, including sum of money, cannot be separated. However, the next sections will show that the question of who the beneficiaries are (in other words, the certainty of objects pillar) has caused some controversy, especially with respect to discretionary trusts. By tradition, it can be said that the duty is to hold balance between different beneficiaries or classes or beneficiaries. Held: The trust was not held valid for the sisters' absolute benefit, but rather as a trust for the purpose of providing for the sisters; that purpose trust was held valid because there were individuals (i.e. Free resources to assist you with your legal studies! Hunter's Will Trust, Gilks v. Harris - [1962] 3 All ER 1050; [1963] Ch 372; [1962] 3 WLR 1442; . When exercising their power of investment, there is legislation in each jurisdiction which sets out a list of matters to which trustees should have regard. Sachs LJ took the approach that the burden of proof was on the claimants to prove they were beneficiaries, not on the trustees to prove the trust was valid. The material feature is that the clause is only activated if the trustees fail to distribute the property in favour of the relatives of the settlor. Such powers impose no duties on the donee of the power, save for a distribution in favour of the objects if the appointor wishes to exercise his discretion. Thus, the trustees may have a power or discretion over the type of investments that may be made by the trust, whether to appoint agents on behalf of the trust, whether to apply income for the maintenance of infant beneficiaries, whether to make an advancement on behalf of a beneficiary, whether to appoint additional trustees, etc. re settlement trust the trustees were told to hold trust fund for persons or as they should in Skip to document Ask an Expert Sign inRegister Sign inRegister Home Ask an ExpertNew If W makes a valid appointment in favour of the objects they become beneficiaries in respect of the amount of property distributed in their favour. [43] But if the gift were given to a wide class of people for a charitable purpose, it will be valid.[44]. To export a reference to this article please select a referencing stye below: UK law covers the laws and legislation of England, Wales, Northern Ireland and Scotland. The alternative type of express trust that may be created is a fixed trust or a trust with an interest in possession. deed of appointment was nevertheless invalid as being too wide and outside the power In the Constance case, Constance was described as a man of "unsophisticated character" who did not know he was creating a trust[12] nevertheless, the courts found that was what he had done. Once the class is determined as being conceptually certain then the matter of a beneficiarys inclusion is a question of fact, rather than law. Another trust fund, comprising the proceeds of sale of a property intended by the settlors for D 2023 Legalease Ltd. All rights reserved, Registered company in England & Wales No. Although there is no requirement to use any particular form of words, the intention must be clear (Re Kayford 1975) The most common example is where the settlor - the owner of the property - transfers property with a declaration, whether written or oral, that the transferee (i.e. Dishonesty in this situation is not restrained to deceit. By means of an express provision in the trust deed, a settlor may provide that, either generally or in specific circumstances, the decision of a majority of the trustees will prevail. The Modern Law of Trusts (9th ed, Sweet & Maxwell, 2008), Watt, G. Cases and Materials on Equity and Trusts (8th ed, OUP, 2011), Wood, J. The combined effect of s 164 of the Law of Property Act 1925 and s 13 of the Perpetuities and Accumulations Act 1964 was that the settlor became entitled to select any one (but only one) of a specified number of periods as the maximum period during which the trustees may accumulate the income. A trustee held a lease of a market on trust for a child. Trustees have no power to delegate under a power of appointment and is thus invalid this offended the principle that that unless authorised to do so a trustee could not delegate his powers. Decided cases illustrate how unpredictable this question is likely to be. This is an excellent way of ensuring an equitable outcome for the known beneficiaries who it would surely be wrong to disinherit on the basis of an absence of others, over whom they have no control while giving absent beneficiaries notice of their rights. The first principle when deciding if there is certainty of intention is the nature of the language used; the words, as said in Wright v Atkyns,[5] "must be imperative". This system for fixed trusts has operated well since IRC v Broadway Cottages and, as the more recent case of Re Tuck shows, the courts have used their licence to promote equitable outcomes. So, consultation of the settlor, implementation of settlors wishes or requirement of settlors consent to a particular course of action will not be needed if there is absence of express provision to the contrary. The trust instrument or statute can grant wider and more defined powers of delegation. This is the case if, on the date of the creation of the trust, the settlor has not only identified the beneficiaries under the trust but also quantified the interest vested in each beneficiary. D1, D2 and D3 were between them the other trustees of the trusts. years after the death of the last surviving niece or nephew, Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Public law (Mark Elliot and Robert Thomas), Introductory Econometrics for Finance (Chris Brooks), Principles of Anatomy and Physiology (Gerard J. Tortora; Bryan H. Derrickson), Commercial Law (Eric Baskind; Greg Osborne; Lee Roach), Criminal Law (Robert Wilson; Peter Wolstenholme Young), Marketing Metrics (Phillip E. Pfeifer; David J. Reibstein; Paul W. Farris; Neil T. Bendle), Rang & Dale's Pharmacology (Humphrey P. Rang; James M. Ritter; Rod J.