Chapter 14 Scenario Questions

Ava is a trustee. She has a power to distribute the income for the maintenance of Lori until Lori's 30th birthday. Subject to that power, Ava will hold the property for Nora and Flora in equal shares absolutely. Ava considered distributing income to Lori on her 29th birthday but decided not to. The day after Lori's 30th birthday, Ava decides to exercise her power and distribute income to Lori.
Is the exercise of the power valid?

This is a trust power and trust powers do not lapse even if they have not been exercised within a reasonable time. The distribution of income to Lori was valid.

This is a fiduciary power and Ava met her duty by considering whether or not to exercise the power. So, the appointment was valid.

This is a fiduciary power which can be exercised late at Ava's discretion. The distribution was valid.

This is a fiduciary power which cannot be exercised late. Even though it was only a day late, the distribution was not valid and Ava holds the property on trust for Nora and Flora equally.

Ghita is a trustee of a discretionary trust. Ghita thinks that Georgia falls within the class of objects and makes a distribution to Georgia. It turns out that Georgia does not fall within the class. Georgia has spent the money in good faith.
What personal claim is available to Ghita?

Ghita has a personal claim against Georgia for her unconscionable receipt of trust property.

Ghita has a personal claim against Georgia in unjust enrichment.

Ghita has no personal claim against Georgia as there is no way to get property back after it has been wrongfully distributed.

Ghita would have a personal claim against Georgia in unjust enrichment but Georgia can rely on the change of position defence.

Sandra creates a trust in favour of her daughter, Sheila. The terms of the trust state that the property will be held on trust for Sheila until she reaches the age of 30. Sandra appoints Tony to be the trustee. Sheila is now 34.
What obligations is Tony under in relation to administering the trust?

Tony has no obligation to distribute the trust property to Sheila until Sheila has requested payment.

Tony had an obligation to distribute the trust property to Sheila once she turned 30.

Tony has acted in breach of trust by failing to distribute the property to Sheila.

Tony has an obligation to ask Sheila if she would likely the property to be transferred to her.

Esmerelda leaves property on trust for her nephew, Albert. Albert is four years old. The trustee, Rita, is unclear how to administer the trust property.
How should Rita administer the trust property for Albert?

Albert is a minor and so cannot hold property or receive the benefit of property. Consequently, the trust is invalid.

Albert is a minor and so cannot receive the benefit of property. Rita must hold the property in suspense until he reaches adulthood at which point he can receive the benefits of the property.

Rita has a discretion to pay income from the property to Albert's parents or for his maintenance or education.

Rita has an obligation to pay income from the property into a bank account in Albert's name.

Quiz Content