Law of express trust Case Study Example | Topics and Well Written Essays - 1000 words

Law of express trust - Case Study Example It may be either a person or a legal entity; iv) Beneficiary, i.e. the person for whose benefit the trust was created. v) Purpose of the trust, i.e. the trust must have a purpose, which is legally valid. Express Trusts are further broadly classified into i) Living Trust: It is also known as inter vivos trust is made for the advantage of another during the lifetime of settlor. ii) Testamentary trusts: These are created by the will of the settlor. That means, the settlor's property will be converted into trust property only after his death. iii) Revocable Trusts: It is a trust where the setlor has full control over the trust property, and he can change or annul the trust at any time. This is a trust, which is at the whims and fancy of the settlor. iv) Irrevocable Trusts: As the name implies, this is a trust, which cannot be revocable except the consent of the beneficiaries, and trustees. Moreover, the trust does not fizzle out once the purpose of the trust is fulfilled. v) Fixed Trusts: These are those trusts where the trust property will be shared by the beneficiaries as per the calendar fixed by the settlor. In distributing the property, the trustee has no discretion to play. Gartsi de v IRC [1968] AC 553 the Inland Revenue argued that as each beneficiary might be entitled to income from the trust fund, they should each be charged as if they were entitled to the whole of the fund. vi) Discretionary Trusts: They are those trusts where the trustee has absolute power in management, administration and distribution and allocating the shares of the trust property to beneficiaries. This trust offers many tax benefits to the beneficiaries, as no interest is created to them until the property is distributed. Rights of beneficiaries: Under a discretioanry trust, the rights of individual beneficiaries are not clear. In Re Smith [1928] Ch 915 it was held that the trustees had to draw up a "complete list" of beneficiaries, but this principle is changed in McPhail v Doulton [1971] A.C. 424, 451, in case of family trust. Court's Jurisdiction: Schmidt v Rosewood Trust Ltd [2003] UKPC 26, [2003] 3 All ER 76: In this case the court held that 1) The court has inherent jurisdiction to supervise and even intervene in the administration of a trust if necessary. And there is no exception even in discretionary trust. 2) This inherent jurisdiction is the fundamental of law of trust. 3) The right to seek the court's intervention did not depend on entitlement to a fixed and transmissible interest. 3) The court has the discretion to intervene to maintain the balance between the competing interest of beneficiaries, the trustees and the third parties. Gartside v IRC [1968] 1 All ER 121 at 134.Re Manisty's Settlement [1973] 2 All ER 1203 at 1211-1212, Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 549. Questions: 1. Transactions made by the trustees in the course of management of trust property: The trustees made the following three transactions: 1. Sale Vintage care for 15,000 during the last year to Crowther's son, 2. Payment of legal management fee of 25,000 to the solicitors firm in which the trustees are partners. 3. Decided to invest from existing deposits in to a) partly