Chapter 6 Multiple choice questions

. Which of the following is not an aim of the rules against perpetuities and the rule against excessive accumulation?

To prevents capital from being tied up indefinitely.

To prevent gifts from vesting at too remote a time in the future.

To prevent wealth from being concentrated in the hands of too few people.

To prevent income from being accumulated for too long a period.

. Suppose a trust is settled for A for life and B in remainder. Which of the following best describes the interest of B?

'vested in possession'

'vested in interest'

'contingent'

"conditional"

. If John died in 2007 and his will contained a gift in favour of 'such of my grandchildren as qualify as lawyers'. Which of the following will be a life in being at common law?

John's children alive at the effective date of the gift

John

John's great grandchildren

"John's widow"

. Which of the following statements best encapsulates the so-called 'wait and see' principle?

According to this principle a gift is void where the beneficiary dies before the end of the perpetuity period.

According to this principle a gift is deemed valid at the end of the perpetuity period if the contingency might be met at some later date.

According to this principle a gift is deemed valid until it is clear that it cannot vest within the perpetuity period.

According to this principle a gift is void where the beneficiary's spouse (the so-called "spectral spouse") dies before the end of the perpetuity period.

. Which of the following is not a statutory life in being under the Perpetuities and Accumulations Act 1964 s. 3(5)?

In the case of a disposition to a class of persons, the parents of any member or potential member of the class.

The settlor of an inter vivos trust.

In the case of a disposition to a class of persons, the grandparents of any member or potential member of the class.

The testator of a testamentary trust.

. Which of the following results from accumulation of income?

Increase in the trust fund available to the beneficiaries entitled to capital.

Increase in the trust fund available to the beneficiaries entitled to income.

Increase in the trust fund available to all beneficiaries.

The trustees have to consider whether to sell income-producing assets.

. What of the following is not a period during which income on a disposition (made in 1990) may be accumulated?

The life of any person or persons living or en ventre sa mère (in their mother's womb) at the death of the grantor, settlor or testator.

The life of the grantor or settler.

A term of 21 years from the death of the grantor, settlor or testator.

A term of 21 years from the date of the disposition.

. In Re Tyler [1891] 3 Ch 252, the testator gave a fund to the trustees of the London Missionary Society and directed them to keep his family vault at Highgate Cemetery 'in good repair, and name legible, and to rebuild when it shall require'. If the trustees failed to comply with his request the monies were directed to pass to another charity, namely the Bluecoat School, Newgate Street, London. It was held that the condition for the maintenance and repair of the vault was valid and binding on the first charity. Further, that the gift over to the second charity on failure to comply with the condition was good. It was held that the rule against perpetuities has no application to a transfer, on a certain event, of property from one charity to another.
Which rule or rules against perpetuities was this arrangement designed to avoid?

The rule against excessive accumulation of income.

The rule against remoteness of vesting.

The rule against inalienability of capital.

All of the options given are correct.

. Which of the following statements is not true?

It is permitted to establish a trust to protect another person from their creditors.

It is permitted to establish a trust to protect ones creditors from one's insolvency.

It is permitted to establish a trust to protect ones own wealth from one's own creditors.

It is permitted to establish a trust to protect one's own creditors from another person's insolvency.

. Which of the following encapsulates the ratio of Blathwayt v Baron Cawley [1976] A.C. 397, House of Lords?

Everyone is free to choose how they discriminate.

Choice is no excuse for discrimination.

Discrimination is the same thing as choice.

Discrimination is not the same thing as choice.

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