Chapter 10 Multiple choice questions

. The case of Saunders v Vautier (1841) is authority for which principle?

All living beneficiaries may collectively agree to bring a trust to an end and divide the property as they see fit or resettle it on new terms.

The trustees can vary the terms of a trust if they obtain the collective consent of the beneficiaries.

All the beneficiaries of a trust may bring it to an end if they are all over 18, legally competent to consent, and collectively entitled to the trust property.

The court can override the views of a beneficiary to vary a trust in the event of an emergency.

. In which of the following scenarios will the rule in Saunders v Vautier (1841) be able to be applied successfully?

Max establishes a discretionary trust for his brother and sisters, Connor (68), Hannah (57), and Martha (60). The remainder of the trust is held for Max's daughter, Chantal (12). The three siblings are advised by their solicitor that the trust is inefficient in relation to the tax payable both by themselves and will be costly for Chantal, when she receives her interest in the future. They wish to end the trust and resettle it on more favourable terms.

Rupert (32), Roger (36), and Robert (38) are beneficiaries of a trust. All of them are successful businessmen, but due to the recent international recession, their personal incomes have significantly declined in the past 12 months. All three are heavily invested in a struggling chain of restaurants called 'Casa Carne'. As the chain, which has much promise, urgently needs an injection of fresh capital to continue trading, they approach the trustees and instruct them to invest more heavily in 'Casa Carne' or they will end the trust and do so themselves.

Bridget, a rather fierce great aunt, reluctantly established a trust to benefit each of her three nephews when they turn 40. She thought all of them lazy and feckless so set the age deliberately high 'in the fervent hope that by then, they will have stopped sucking their thumbs and made something of themselves'.
The three nephews, Bobby (25), Louis (23) and Tony (21) are indeed rather lazy and fond of the good things in life and currently find themselves rather short of money. They wish to end the trust and split the money between themselves immediately.

Nathan establishes a trust under which his son, Alan (25) and daughter, Caroline (19) hold a life interest with the remainder to be divided equally amongst their children. Presently, neither Alan nor Caroline have children. Alan and Caroline have lost faith in the trustees and wish to end the trust.

. In which of the following situations could the court exercise its inherent jurisdiction to vary the terms of a trust?

1 - A variation to permit money to be spent protecting farmland owned by the trust from being polluted by a nearby chemical spill incident.
2 - A variation to resolve a family argument over a trust which favours the children of the settlor's third (and final) marriage by equalizing the entitlement of all the settlor's children.
3 - A variation permitting the trustees to be remunerated for their services.
4 - A variation that reorganizes the beneficial interests of the parties in such a way as to minimize the beneficiaries' liability to pay tax.

1 and 2

1

3 and 4

3

. Which case led directly to the introduction of the Variation of Trusts Act 1958?

Chapman v Chapman (1954)

Re Downshire Settled Estates [1953]

Re New [1901]

Re Tollemache [1903]

. Which of the following statutory provisions could be used to vary the terms of a trust to include maintenance provisions for a minor beneficiary?

1 - Section 1 Variation of Trusts Act 1958
2 - Section 53 Law of Property Act 1925
3 - Section 53 Trustee Act 1925
4 - Section 57 Trustee Act 1925

1 and 2

2 and 3

1 and 3

2 and 4

. In Re Ball's ST [1968], Megarry J commented on the extent of the court's power to vary a trust under the Variation of Trusts Act 1958. Complete the missing word in the following quote:
'If an arrangement changes the whole ................. of the trust, then it may well be said that it cannot be regarded merely as varying that trust'.

Subsistence

Substance

Subject matter

Substratum

. Which of the following is an "unascertained person" for the purposes of s 1(1)(b) Variation of Trusts Act 1958?

Members of a class under a discretionary trust

Beneficiaries who have not yet been born

Beneficiaries whose entitlement depends on a future status

Beneficiaries who only have a remote chance of benefitting

. Which of the following statements best expresses the ratio of Re Suffert [1961]?

The court will not provide consent for persons who, at the time of application, satisfy the condition upon which a future beneficial interest depends.

The court will always take the settlor's intentions into account in considering whether to consent to a proposed variation.

The court will not provide consent for persons who are difficult or impractical to contact in person.

The court will not consent to a variation that provides only non-financial benefits to those on whose behalf it is consenting.

. The Variation of Trusts Act 1958 gives the court the power to provide consent for the variation of a trust for certain types of beneficiaries. For which of the following beneficiaries would the court be able to provide consent?

1 - Miriam, a 78 year old beneficiary of a trust who suffers from advanced Alzheimer's disease.
2 - Adult cousins living in Mali, whose precise whereabouts are unknown
3 - The unborn children who hold the remainder interest in a trust.
4 - A brother who disagrees with the rest of the beneficiaries about a proposed variation.
5 - Whoever marries Serena (14).

2, 3, and 4

1, 2, and 3

3, 4, and 5

1, 3, and 5

. A trust has been established under which the children of the settlor's son, Ben and Corinne, will benefit. Both are minors. Which of the following arrangements would not be approved by the court?

A variation to reduce the tax liability of the children when they become entitled.

A variation to defer their entitlement from the age of 21 to 25, in order that they are sufficiently mature.

A variation to reduce Ben's interest in favour of Corinne, as she is severely disabled and will require greater financial support throughout her life.

A variation to remove Ben and Corinne as beneficiaries and replace them with Molly and Neil, the children of the settlor's daughter.

. Identify the section of the Variation of Trusts Act 1958 which authorizes the court to give consent to a variation on behalf of the following beneficiaries:

1 - Any future children of a marriage.
2 - Susan (8) and Anna (14).
3 - Any of David's children who are working for the family business in 2020.
4 - Florence and her children, the beneficiaries under the discretionary trust, should Malcolm forfeit his entitlement under a protective trust by using heroin again.

i - Section 1(1)(a)
ii - Section 1(1)(b)
iii - Section 1(1)(c)
iv - Section 1(1)(d)

1 = i; 2 = iii; 3 = iv; 4 = ii

1 = iii; 2 = i; 3 = ii; 4 = iv

1 = ii; 2 = iv; 3 = iii; 4 = i

1 = iii; 2 = ii; 3 = i; 4 = iv

. Section 1 Variation of Trusts Act 1958 requires any proposed arrangement to be of 'benefit' to the beneficiary on whose behalf the court is consenting.

This statement is:

True.

False.

True for beneficiaries under section 1(1)(a)-(c).

False, except for beneficiaries under section 1(1)(d)

. In Re Weston's ST [1969], which benefit did the court view as most important?

The financial benefits of moving the trust to Jersey.

The financial benefits of keeping the trust in England.

The social benefits to the children of moving to Jersey.

The social benefits to the children of staying in England.

. The court may find an arrangement to delay a beneficiary's entitlement under a trust to be a benefit.
Which of the following cases illustrates this statement?

Re Holt's ST

Re Ball's ST

Re Downshire Settled Estates

Re T's ST

. What is the ratio of the decision in Goulding v James (1997)?

The intentions of the settlor are only relevant insofar as they relate to those beneficiaries on whose behalf the court is being asked to give consent for a variation.

The intentions of the settlor must be respected, where they relate to those beneficiaries on whose behalf the court is being asked to give consent for a variation.

The intentions of the settlor are irrelevant in the court's decision whether to give consent for a variation.

Goulding v James (1997) confirms the decision in Re Steed's WT [1960] that the settlor's intentions must be followed when considering whether to approve a variation.

Chapter 10 Multiple choice questions

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