Chapter 11 Self-Test Questions

How do the nature of the rights enforceable by beneficiaries differ depending on the trust?

The nature of the rights depends on the terms of the trust instrument and the type of trust.

The nature of the rights is identical for all types of trust.

The nature of the rights is to be determined by the beneficiaries.

The nature of the rights is to be determined by the trustee.

At what time does the beneficial interest to property that is left in a will pass to the beneficiaries on the death of the testator?

The beneficial interest passes automatically on the death of the testator.

The beneficial interest is held in suspense until the beneficiaries elect to receive it.

The beneficial interest passes to the beneficiaries once the executor has administered the estate.

The beneficial interest is held on resulting trust for the deceased until it passes to the beneficiaries.

'Beneficiaries have a right to examine trust documents because they belong to the trust and so belong, in Equity, to the beneficiaries.'

True.

False.

There are various principles relating to a beneficiary's right to information. Which of the following are true?

The court is less likely to exercise its discretion to disclose trust documents in favour of an object under a discretionary trust than a beneficiary under a fixed trust.

As objects under discretionary trusts do not have proprietary interests in the trust property, they are not entitled to see the trust documents.

Trustees are required to give reasons for their decisions as otherwise they could act arbitrarily or unfairly.

Letters of wishes are confidential.

What is the consequence of a failure to comply with the requirement of signed writing in disposing of an equitable interest?

The disposition is void.

The disposition is unenforceable.

The equitable interest reverts to the settlor via a resulting trust.

The equitable interest is transferred to the intended recipient but this is not binding against third parties.

When does section 53(1)(c) of the Law of Property Act 1925 apply?

A declares a trust in favour of B.

B asks the trustee to hold the property on trust for C.

B asks the trustee to transfer the legal estate to C who will hold on trust for D.

B assigns the interest to C.

If a beneficiary instructs the trustee to sell shares to a third party, then the beneficiary's interest in the shares is overreached. If the beneficiary changes her mind before the shares are sold, and tells the trustee not to sell the shares, and the trustee sells the shares anyway, what is the consequence for the beneficiary?

The beneficiary's interest in the shares is overreached by virtue of the original intention.

The beneficiary's interest in the shares is not overreached as the disposition was not authorized.

The beneficiary's interest in the shares was not overreached but the beneficiary cannot bring a claim against the trustee for breach of trust.

The beneficiary's interest in the shares was not overreached but the beneficiary is obliged to adopt the trustee's unauthorized transaction.

A is entitled to receive a future benefit and nominates that this benefit should be received by B. A does not make this request in signed writing. Is the assignment to B void?

It is void.

It is valid.

It is voidable.

It is unclear.

'If a beneficiary disclaims an interest under a trust, this does not need to be in writing.'

True.

False.

'If beneficiaries are entitled to trust property in succession, the only requirement for the termination of the trust is that all of the beneficiaries agree.'

True.

False.

When can the settlor exclude the operation of the rule in Saunders v Vautier?

The settlor can exclude the operation of the rule in the trust instrument.

The settlor can make an application to the court to exclude the operation of the rule.

The settlor can include instructions in a letter of wishes to the trustee obliging the trustee to refuse to allow the operation of the rule; but it is up to the trustee whether or not to follow the settlor's instructions.

The settlor cannot exclude the operation of the rule.

What does the rule in Saunders v Vautier illustrate?

The property is properly recognized as being controlled by the beneficiaries.

The property belongs to the beneficiaries in Equity.

The intentions of the settlor do not matter.

That Equity frequently frustrates the intention of the Common Law.

Which of the following need to be established in order for objects under a discretionary trust to use the rule in Saunders v Vautier?

There are fewer than five objects under the trust.

The trustees are required to distribute the whole fund.

The objects all have capacity and agree.

Any objects who must meet a condition in order to receive a distribution are informed.

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