EQUITY AND TRUSTS
LARGE GROUP 1 – Monday 27th September 2021 @ 09:00 (D Crowley)
Student Guide
What is a trust?
Context
In this large group you will:
1. examine the concept of a trust; and,
2. gain an overview of the module.
At its most simple, a trust is an arrangement where a trustee is given property to
look after for the benefit of a beneficiary, for a period of time.
The trust is a useful tool for lawyers in a wide range of circumstances. For
example:
1. An individual client might want to share his wealth with his children but, due to
their young ages, he would prefer not to make outright gifts to them.
A trust allows the client instead to put the property under the control of a
trustee to manage it for the benefit of the children.
2. As well as family trusts, businesses may instruct their lawyer to set up a trust to
provide pensions or other benefits for their employees.
3. You may have to create a charitable trust for your client. For example, the
Microsoft billionaire, Bill Gates, has created a trust whereby the trustees use the
extensive trust property to promote world health and reduce extreme poverty.
4. Trusts also feature in many investment schemes and finance arrangements.
In each of these cases, the basic arrangement will involve property (which could
be land, company shares or other investments) being managed by trustees for
those who are intended to benefit from the arrangement.
As a lawyer, you may be involved in the following examples of trust work,
ADVISING:
1. on the steps needed to create a trust;
2. on the duties which trustees owe when they run the trust; and
3. beneficiaries on their remedies if trustees breach their duties.
During the course, you will study each of these areas.
When we look at the concept of a trust, it is also important to be aware that trusts
give rise to a special form of property ownership which is split between:
1. the trustees (LEGAL OWNER); and,
2. the beneficiaries (BENEFICIAL OWNER).
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,Outcomes
By the end of this Large Group, you should be able to:
1. explain the meaning of a trust;
2. use appropriate terminology;
3. describe in outline:
(a) how a trust is created;
(b) the duties of trustees,
(c) how disputes are resolved; and,
(d) the effect of a trust on property ownership.
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, 1. INTRODUCTION AND DEFINITION OF A TRUST
1.1: Why should the law enforce trusts?
A Trust is a form of an ownership of property.
Activity 1
Denise Barlow, a single parent, made a will as follows;
This is the last will and testament of me Denise
Barlow of Flat 5, Garton Towers, Farlow, Essex which I make
on 3 February 2018.
I give all my property to my partner, Paul Jackson, to hold it
on trust and to look after it for the benefit of my daughter,
Kylie, until she is 21 when he should transfer all my
property to her.
(Assume that the will was properly signed and witnessed.)
Effectively, Paul is a caretaker that looks after the property in question.
Denise was killed in a car accident last week. Kylie is six years old.
Paul has a gambling addiction and wants to use Denise’s property to pay off his
extensive debts.
1 Should the law compel Paul to use the property as Denise wished?
Yes – Denise’s intention is for Kylie to receive all of her property, and this
should be enforced. However, this arrangement doesn’t fall into any common
law pigeonhole. It is not a contract – so Kylie cannot rely on any contractual
rights. Kylie also hasn’t given any consideration for this property – she hasn’t
paid for her interests in her mother’s property.
2 Justify your answer to 1.
Paul was not given the money to spend it on himself. Denise left Paul the
money on the basis that he should keep it safe for Kylie, therefore, it would be
unjust not to force him to do so. Equity recognises that this kind of
arrangement creates a relationship which the law should protect. We call
this type of relationship, a TRUST!
Trusts are often needed to for situations like this where someone is given
property to look after for the benefit of someone else, such as children under
18.
Equity has:
a. developed a set of rules governing how such trusts are created. They can
be created:
i. by will; OR,
ii. in the creators lifetime;
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