Fixed and Discretionary Trusts Test

Fixed and Discretionary Trusts Test Consider whether the different tests for certainty of objects applicable to fixed trusts and discretionary trusts are appropriate. The tests for certainty of objects differ depending on whether there is a fixed trust or a discretionary trust. This essay will consider whether the different tests applicable to fixed trusts and discretionary trusts are appropriate. Initially, the complete list test applied to both types of trusts. According to this test, the trust is void unless it is possible, at the time it is created, to draw up a complete list of the class. In a fixed trust, the beneficiaries and their shares are identified in the trust instrument. The trustees have a duty to distribute the trust property according to the precise allocation made by the settlor. It is therefore necessary, for the trustees to draw up a list of all the members of the class, before division of the trust property occurs. If they are unable to establish every member of the class, the trust will be void. It can be argued that the complete list test applicable to fixed trusts is appropriate and the courts are justified in taking a strict and demanding approach. The strictness and necessity of the test best ensures compliance with the settlors intention. One may argue that the â€Å"is or is not† test should apply to fixed trusts. However, this test would not be required in fixed trusts where the beneficiaries have already been identified in the trust instrument. Hence, there is no need for the trustees to exercise their discretion in determining whether or not someone is a member of the class. Furthermore, the number of beneficiaries is more likely to be limited with fixed trusts, compared with discretionary trusts. The complete list test was also previously applicable to discretionary tests. However, this is no longer the case since McPhail v Doulton. In McPhail, the trustees were given an absolute discretion to apply the income for the benefit of employees and ex-employees of the company, and their relatives and dependants. This was estimated at a very large number and so it almost impossible to satisfy the complete list test. Hence, it would have been void as a discretionary trust. In order to avoid this, it was held to be a power of appointment, and so valid under the â€Å"is or is not† test. The House of Lords found that a discretionary trust had been created. However, they changed the test for discretionary trusts to the â€Å"is or is not† test. The test is whether it can be said with certainty that any potential claimant is or is not a member of the class. There were two different views expressed in the House of Lords regarding the appropriate test for discretionary trusts. On the one hand, it was argued that the complete list test was the appropriate test because the trustees would need to consider every possible member of a class before exercising their discretion. If the trustees are in default, the court would have to distribute the trust property equally between the members of the class. In order to do so, they would need to draw up a complete list of the class. However, the majority judgement, given by Lord Wilberforce, argued that it is not sensible or realistic to imagine a settlor to ask the trustees to consider every single member. If the settlor had intended the trustees to consider every member of the class, and, for each member to receive an equal amount, he would have stated it in the trust instrument. The fact that he did not state this, and allowed the trustees to exercise their discretion, suggests that he did not intend equal distribution of income. This reflects the aim of discretionary trusts, which is to allow trustees to use their discretion in deciding who should benefit under the trust, and in what proportions. Therefore, all the settlor expects, is that the trustees carry out an appropriate survey of the class, so there is no need to be draw a complete list. Furthermore, where the court has to distribute the money, it is not necessary to divide the money equally, because each person would get a small amount, which is not what the settlor intended. Hence, we can see that the complete list test might be appropriate in cases involving discretionary trusts concerning small family trusts. In such cases, it will be feasible for the trustees to draw up a list of the members of the class, as there will be a small number of beneficiaries involved. Therefore, it will be necessary for the trustees to consider all the members of the class before exercising their discretion. On the other hand, the complete test is too strict and inflexible in cases involving large discretionary trusts. The test would make such trusts void for lack of certainty due to the number of beneficiaries involved which would make it almost impossible to draw up a complete list. Furthermore, there will be costs in drawing up the class. The final amount each member of the class will receive would be so small as to not be of any use to a member. Thus, the complete list test would not best give effect to the intentions of the settlor. Hence, it would be more practical and appropriate to use the ‘is or is not test in such cases. However, this test is easier to state than to apply. This is illustrated by the fact that McPhail was sent back to the High Court in order to determine whether the terms â€Å"relatives† and â€Å"dependants† made the trust void for conceptual uncertainty. Although the trust was upheld, the judges gave very different views. Stamp L.J. took the literal approach that the â€Å"is or is not† test could only be satisfied if it could be said of every potential claimant that they were or, were not, within the class. On the other hand, Sachs L.J. decided that the class test is only concerned with conceptual certainty and not evidential certainty. He also thought that the burden of proof was on the person claiming to be within the class. This might be disadvantageous to individuals who cannot prove their entitlement. Megaw L.J. adopted a middle position. He held that conceptual certainty alone is insufficient and that some degree of evidential certainty is required. Thus, Re Bayden illustrates the difficulty in applying the ‘is or is not test to discretionary trusts. However, the fact that this matter has not arisen in any later cases suggests that it has not been a practical problem. It can be argued that the â€Å"is or is not† test is inappropriate to use as a test for discretionary trusts. This is because the same test is also used in powers of appointment, and since powers and trusts are different from each other, their tests should not be the same. This may be justified on the basis that the â€Å"is or is not† test is more flexible and appropriate, than the complete list test, in cases involving large discretionary trusts. Using the complete list test would invalidate large discretionary trusts on the basis that a complete list cannot be provided. This would clearly not provide a satisfactory result. Therefore, it is suggested that the complete list test is appropriate in fixed trusts since it best ensures compliance with the settlors intentions. Similarly, whilst the â€Å"is or is not† test is probably not the ideal test to apply in discretionary trusts, it is more appropriate than the complete list test used in fixed trusts. Question 2 In his will, Colin leaves  £100,000 to the Hillingbridge Tennis Club, an unincorporated association, to enable it to build an extension to its existing pavilion. The money is paid to Morris, the treasurer of the club, who puts it into a specially opened bank account, which he calls the Extension Account. Soon afterwards, the club is wound up. Discuss Colin left  £100,000 to Hillingbridge Tennis Club to be used for the building of an extension to the pavilion. However, this purpose can no longer be carried out since the club is wound up. There will be a dispute as to who gets the  £100,000. In order to solve this dispute, it will be necessary to work out how the money was held by the club. An unincorporated association has no legal personality and so it is not a legal entity that can hold money. This means that the club cannot be a beneficiary. Hence, a gift to it cannot take effect as a gift on trust for the associations purposes as it offends the beneficiary principle. Furthermore, it is unlikely that the sports club is a charitable association, and so the money cannot take effect as a purpose trust since, such trusts are usually void. The money was paid to the treasurer of the club, Morris, who holds legal title of it. However there is much controversy as to what the basis on which the money is held. The courts have struggled for ways to determine this. Colin left the money to the club for a particular purpose. Therefore, one approach is that the money is held under a Re Denley purpose trust. Under the Re Denley principle, the terms of the trust are stipulated by the donor and the unincorporated association has to use the money in accordance with those terms. In Re Denley, it was held that where a trust is expressed in the form of a purpose, it may still be deemed valid if it can be said to be for the direct or indirect benefit of one or more ascertainable individuals.† Thus, if it is held to be a Re Denley purpose trust, although the members of the club are not beneficiaries, they will have sufficient locus standi to overcome the beneficiary principle, and to enforce the trust. This is only possible in ‘inward looking associations where the performance of the purpose of the trust will benefit the members, who are identifiable persons. It can be argued that the building of the extension to the pavilion will benefit the members since they will need to contribute less money towards the construction of the extension. The building of an extension will also improve the facilities in the club and the members of the club will financially benefit from this. In Re Denley it was not possible to uphold the gift on the basis of the contract holding theory because the gift was not made to an association. However, in our case, the club is as unincorporated association and so the money may have been held in accordance with the contract holding theory. This is the standard approach to the problem of property holding in unincorporated associations. Under the contract holding theory, the money will be considered as a gift to the members subject to their contractual rights and liabilities towards one another. Hence, the trust cannot be subject to the terms stipulated by Colin. It will be subject to the terms of the contract between the members who, collectively, can decide what to do with it. They may use the money according to the purpose for which it was given but are not required to do so. Thus, in Re Lipinski, money left by the testator was, prima facie, subject to the stipulated terms. However, it was held that the gift could be upheld under the contract holding theory provided that the stipulated purpose was an expression of the motive of the gift rather than a binding purpose. This could be the approach adopted here so that the purpose stipulated by Colin is considered to be only a motive. The club did give effect to Colins stipulation as Morris had put the money into a specially opened bank account, which he calls the ‘Extension Account. It may be assumed from its name that the money in the account was to be used in building the extension. However, it is unlikely that the money was used to build the extension since the club wound up soon afterwards. Therefore, in Re Reechers, it was held that a gift to an unincorporated association would have taken effect under the contract holding theory, if it had remained in existence. The gift would have been valid as an accretion under the contract holding theory. Therefore, when an unincorporated association own funds, for ordinary everyday use, there is an assumption that the money is held on contract holding theory and, the gift is an accretion to those funds. This may be applied to the case here if the money in the ‘special account is held to be the ordinary funds of an association. This is unlikely to be the case since it may also be argued that the building of an extension is an ordinary use of funds. Alternatively, it may be argued that this is trivial since, according to the contract holding theory, the money belongs to the members, who may do whatever they want with it. The contract holding theory overcomes the beneficiary principle because although none of the members own a share, collectively, they own the club. Therefore, together, the members can change the terms of the contract, or make any other changes to it, and this is sufficient to satisfy the beneficiary principle. The contract holding theory also overcomes the objection based on perpetuity because the members can collectively access the property and dispose of it, in accordance with the terms of the contract between them. What happens to the money upon dissolution of the club depends on whether the money is held on a Re Denley purpose trust or the contract holding theory. If the money is held on a Re Denley purpose trust, then on the dissolution of the club, the trust will fail and the money will be put on a resulting trust for Colins estate. Colin left the money in his will to the club and the fact that it has been given to Morris implies that Colin is dead. In Re West Sussex, the court assumed that the money was held on trust to carry out the purposes of the association and when it failed, the property was held on a resulting trust to the people who contributed in proportion to their contribution. However, the trust in Re West Essex was not described as a Re Denley trust. On the other hand, in Re Bucks Constabulary Fund, the court reached a different conclusion although the facts were similar to Re West Sussex. It was held that on the dissolution of the Friendly Society the money was to go the members. The decision in Re Bucks reflects the approach adopted today. Therefore, it is likely that the gift will be upheld under the contract holding theory and so the money will go to the members who own it collectively. The club has always been in the ownership of the members, and so it is the contract between them, which determines what happens to the money. Providing that the contract between the members does not prohibit it, the members can divide the money equally between themselves. As the matter concerns the contract between members, there can be no resulting trust since, such trusts only occur in equity. It is likely that the members of the unincorporated association are alive. Hence, the doctrine of bona vacantia will not apply here. Bibliography Burrough v Philcox (1840) 5 My Cr 72 IRC v Broadway Cottages Trust [1955] Ch 20 Neville Estates v Madden [1963] Ch 832 McPhail v Doulton [1971] AC 424 Re West Sussex Constabulary Fund [1971] Ch 1 Re Reechers WT [1972] Ch 526 Re Badens DT (No 2) [1973] Ch 9 Re Lipinskis WT [1976] Ch 235 Re Bucks Constabulary Fund [1978] 2 All ER 571 OT Computers v First National Tricity Finance [2003] EWHC 1010 Haley McMurty, Equity Trusts, (Sweet Maxwell, 2006) at p.52, p.142 Watt, Trusts,(Oxford University Press, 2006) at p. 82 Kevin Boone, The K-Zone http://www.kevinboone.com/lawglos_CertaintyOfObjects.html

Lyndon B. Johnson and Literacy Tests Essay

Over the last fifty years, a lot has changed when it comes voting and racial discrimination. The marches from Selma to Montgomery, Alabama have changed our history as a whole, forever. The intentions of the three marches were for African Americans to have the right to vote just like the white men. There were three different attempts for the marches from Selma to Montgomery: March 7, March 9, and March 21, 1965. The attempts to gain their voting rights came at a price they were beaten, clubbed, murdered, trampled upon and all kinds of things by the police during these marches. At least Even though the Civil Rights Act of 1964 had just been passed only a couple months before, African Americans were still being discriminated at the polls. They were not allowed to vote and if they were allowed to register than they were given literacy tests, which majority of them failed. Unlike during 1965 when the marches took place, African Americans did not have the right to vote, they were segregate d, discriminated upon, etc. Martin Luther King, the spokesperson or leader for the people during marches, wanted to march in a nonviolent manner to show the police and everyone else that they were not animals and they would not give up until they were given the rights that they deserve. The result of these marches came when President Lyndon Johnson address Congress involving the matter asking for legislation that would prohibit the polls in using barriers to prevent African Americans from voting. The Voting Rights Act of 1965 was passed that August 1965. This piece of legislation basically states that the government can’t discriminate during the voting process based on race and also prohibits the use of literacy tests as a requirement to vote because most black people during this time could neither read or write. Also under this act the United States attorney general had to challenge the use of poll taxes for local and state elections. Things in this, the twenty-first century, are much better than they were during Selma marches because there is a lot less racism and discrimination towards African Americans. African Americans have the same rights as white men, as do women, as written in the Bill of Rights. If Selma would have never occurred, or occurred in a violent manner rather than the nonviolent way it was, Africans Americans might not have the right to vote to this day, or worse. Also, without out the success of the Selma to Montgomery we would more than likely not have as many African Americans in political office as we do today. Times are so much better now than they were fifty years ago because African Americans now have 100% freedom and all of their rights. African Americans, as well as women, get to vote without having to worry about being discriminated against, as well as tested. Selma created leeway for a greater number of African Americans to become involved in political affairs at local, state, and national levels. Selma affected our political system a lot and without it we more than likely wouldn’t have some of the people we do in major positions in the government, such as President Obama.

Personal Narrative My Roots Essay - 1016 Words

At only seven years old, pulling the starter rope on my older brother’s Boston Whaler is no easy task. After a dozen tries, I finally call for my dad who is on the other dock dealing with the fishing gear. In what seems to take hours, he walks over to me and shakes his head. Before we had even gotten to the Marina, Dad asked if I needed him to start the engine, and of course I declined, wanting to feel like a â€Å"big kid.† With one simple tug from my father’s strong arm, the old Briggs Stratton engine purred to life, as if brand new. Switching into the forward gear, I roared off the dock in search of circling birds, a clear indicator that fish were nearby. My great- grandfather, Stephen Foster Briggs, was born on December 4th 1885, in†¦show more content†¦He wouldn’t let us start up the engine (falsely claiming it didn’t work, but I knew it was because he was afraid we would crash it), so my siblings and I would push ourselves around and around the huge circular driveway until it became dark and we’d get dangerously close to the surrounding bushes, threatening to scratch the beautiful paint job. Watching from the upstairs window, I jealously saw many take it out for a spin at my grandparents summer parties, some as undeserving as little children would have been after a few drinks. Shiny and red, it looked like the perfect child’s toy, but it was actually one of the more complicated and technologically advanced of my great-grandfather’s inventions at the time it was introduced in 1922. With a 2 horsepower engine and it’s amazing affordability, it was a unique automobile that no one else had on the market. A failed attempt in automobiles brought Stephen Briggs back to the inventing room, this time focusing more on engines for other uses, and finally coming up with the stationary Type â€Å"P† engine. This revolutionized the 4-cycle gasoline engine industry and set the course for Briggs Stratton. By the 1940’s, Briggs Stratton was one of the country’s largest manufacturers of small gasoline engines for home and farm use. Ultimately, â€Å"Briggs Stratton† and â€Å"Lawn mower† became almost synonymous. Lightweight, easy to use, and durable; the company’s engines took the lead inShow MoreRelatedThe Border Is A Fight Essay1073 Words   |  5 Pagesidea in a poem form, text named â€Å"The border Is a Fight†, that describes the dramas of a Mexican family that has to cross the border every day in a hope to get a better future. Whereas, Juanita Lopez demonstrates it through an essay that uses personal narratives of the author’s rel atives to illustrate her point of view. 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The Civil War And Its Beginnings - 1917 Words

Outline The Civil War and Its Beginnings Thesis: At the outset of the American Civil War the South was right in its decision in seceding from the Union because of the political and financial pressures put upon them. I. When the Civil War began, the South was the side that was right because they felt that the North was invading them and they must protect their way of life. A. South was dragged into war by pressure put on them politically. 1. Missouri Compromise 2. Disagreement over Federal vs. States powers B. The differences in which the north and south handled there resources. 1. Northern industrial vs. Southern agriculture 2. North made cotton into clothes etc. vs. South who grew the cotton II. The Southern states were forced to secede because the North had more people and states and because of this they were able to take control of the government and elect a pro Union President, and along with that the abolitionistists and were getting more brutal. A. 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