Trust Law论文模板 – Foundations of Trust Law: Take Home Exam

PART A

QUESTION 1: Discuss whether Mary’s will clauses create valid charitable trusts

Charitable trust’s primary objective is to improve, uplift, or positively benefit humanity whether mentally, mentally, emotionally, or morally[1]. Charitable trusts, therefore, are mostly socially beneficial to the individuals involved in the trust. The latter provides public benefits, including education advancement, religious advancement, citizenship, or poverty relief, among other reasons. For a trust to be considered a law, it must fulfill the criteria of selection which included the trust being for charitable purposes to benefit people and satisfy the public interests accordingly[2]. This means that Mary’s dispositions are valid under the charitable trust because it fulfills the public’s criteria of providing relief and benefit. Her first disposition will benefit people on solar panel installation, which will be a huge relief because non-renewable energy can be deemed unreliable at times, especially with the many available consumers.

Additionally, solar panel installation will reduce the over-reliance on non-renewable energy and reduce poisonous gas emissions. We all know the detrimental effects of the toxic gas emissions of non-renewable energy. Therefore, its reduction in usage will promote a more reliable energy source and health improvement and promote environmental protection and conservation. All these factors largely improve the quality of life of the public, making the charitable trust valid. The 50,000 Euros set aside for the research of the electoral systems will directly impact the public on having a better voting system to avoid electoral malpractices and ensure that the leaders are voted transparently to represent the public, thus validating the charitable trust.

The pivotal case of Commissioners for Special Purposes of the Income Tax v. Pemsel developed by Lord Macnaghten explains that any trust should be a charitable trust. Its content must fall under the four pillars: relief of poverty, advancement of education, advancement of religion, and other purposeful advantages that may benefit the community that does not fall under the pillars mentioned above. In this regard, Mary’s will on the 100,000 donations towards advancing the new religion of patinism fulfills the pillar of religious advancement, making the charitable trust valid and legal[3]. Paganism religion is based on the primary goal of uniting all the existing religions into one, thus eliminating all others. The religion requires its followers to follow and adhere to the strict moral code of living in purity. These ethics or moral conduct are established and published by the religious leader, and therefore the followers should only obey the instructions without asking any questions whatsoever. From this explanation, we can conclude that the paganism religion bars the freedom of its followers from making queries in understanding its moral belief, and its members are only expected to follow the beliefs blindly. From a different perspective, one may conclude that this religion is not liberating and should be avoided and not funded. However, even though the tenets of the paganism religion significantly differ from our understanding of what religion should be, the law of charity is not only driven by beliefs in one deity but the belief in some authority or supernatural power[4]. In this regard, the courts may not successfully construct the religion parameters and dispositions due to their affiliations but only gives the primary criteria to be fulfilled and followed[5]. Therefore, the criteria are that the religion has to be dependent on a belief in a being, supernatural power, or principle, which, in this case, is the leader of the paganism religion. Additionally, the religion has to have a code of conduct that is present, as the code of conduct is available and constructed by the religious leader for its followers to follow[6].

For a charitable trust to be valid, it has to meet and fulfill specific critical requirements. First, the settlor, who is the individual who wants to do a charitable trust, must have the intent to develop a charitable trust[7]. An intent for developing a charitable trust requires a trustee who functions to administer and take charge of the trust to decide the charitable trust[8]. Mary’s intent for the charitable trust is clearly expressed through her will, a legal document that ensures the deceased’s desires are met as required under the supervision of the legal lawyer present when the will was being written down. Therefore, the intent is clear, and the trustee here is the lawyer who will decide on the property and its effective distribution of the mentioned clauses.

The intent of the charitable trust must be clearly expressed in terms of elaboration of the trust property to be provided[9]. Mary’s will, which contains the intent of the charitable trust, has clearly been expressed through the clauses. Each clause has a unique specification, including the amount of money and the purpose it is meant to fulfill and the population to benefit in the designated community or society. For example, the first clause mentions 1,000,000 Euros for fitting houses in Central London with solar panels to reduce the people in London from relying on the non-renewable.

The beneficiary of the intended charitable trust must be a definite individual(s)or a segment of the population chosen or the public. The deceased clauses stipulate the definite segment of the population that will benefit from the clause. For example, the first clause mentions Central London as the definite segment that will benefit from the solar panel installation. The third clause mentions the paganism religion as the segment selected to benefit from the 100,000 Euros for the advancement of the religion.

Therefore a trust that is designed for specific people or populations for gains or profits cannot be qualified to be a charitable trust[10]. This means that a valid charitable fund has no form of gain, but rather it’s voluntary and non-profitable. All the three clauses in Mary’s will do not mention any form of gain or profits, thus making it a valid charitable trust. Additionally, the charitable trust must be substantial enough to have an impact on the definite segment selected. The amount of money indicated in Mary’s will is quite huge and can impact the selected population segment.

In conclusion, a charitable trust must fulfill different purposes, including advancement in religion, poverty relief, and advancement of human rights, among other beneficial advancements to humanity. As illustrated in Mary’s will, a charitable trust must identify the specific benefits and the population segment that will benefit. The settlor, trustee, beneficiary, and the specification of the trust must be available and clearly stated and explained, as in the case of Mary’s will, disqualifying it as a valid charitable trust.

PART B

QUESTION 3: Discretionary trust- Advice to Dominica and Peter

The function of a trustee who, in this is Glen, is designated to act following the existing laws and policies and the terms of the discretionary trust to take care of the interests of the beneficiaries. However, the trustee can make mistakes in performing their duties, as in the case of Glen, who mistakenly allocated Mary 50 000 Euros of the trust fund, thinking that she was also Tami’s child. In this case, Glen acted against the discretion of the terms where the trust was only meant for Tami’s children, Dominica and Peter.  One step to be taken by Tami’s children, Dominica and Peter, is for Glen to file for a breach of duty in court. A breach of duty will ensure that transaction is set aside for the court to conduct an objective test[11]. The rule in Hasting Bass explains that when a discretionary trustee acts under the guidelines provided in terms of the trust but the effect of the guidelines is quite different from that intended, the court can interfere with offering an amicable solution in the given case[12]. In this case, Glen mistakenly allocated funds to Mary based on his perception that she was Tami’s child.  The law of mistake explains that a test for mistake or error requires that the mistake is of sufficient gravity because it was unjust for the outcome of the fund allocation. It is also a mistake to avoid correcting the error made. In this case, the grave mistake committed is allocating funds to Mary, who was not among the beneficiary. This mistake has sufficient gravity to call upon the court action on the matter.

Dominica and Peter can also sue Glen, the discretionary trustee Glen for liability of the fund allocation to a non-beneficiary. According to the law, a discretionary trustee is obligated to effectively manage and ensure the funds are effectively allocated according to the guidelines of the trustee.[13] In this case, the discretionary trust only benefits Tami’s children, Dominica and Peter, because they are her birth children. Additionally, even though Tami took care of Mary and was part of their family, she was not adopted legally to make her one of Tami’s children and therefore cannot be a beneficiary of the trust fund. Before taking and accepting the trustee’s responsibility, the latter has to be aware of the duties and responsibilities to be fulfilled and therefore liable for any outcome.[14] With this understanding, Dominica and Peter can sue Glen for the liability of issuing fund allocation to a non-beneficiary. 

Additionally, Dominica and Peter are at liberty to sue Glen for breach of trust allegation as the beneficiaries of the trust fund. A breach of trust can be effected through legal proceedings in a case where the beneficiaries feel that the action of the discretionary trustee had wrongly and negatively prejudiced their interests in the entire or partial trust fund[15]. In this case, the decision of Glen allocating 50,000 euros of the discretionary trust fund to Mary is something that jeopardizes Dominica and Peter’s interests. A breach of trust claim can be affected if the trustee has failed to effectively delegate his duties in supervising the trust properly, resulting in loss or devaluation of the trust fund.[16] In this case, Glen failed to act as per his duties, causing funds to be allocated to Mary rather than the beneficiaries. In this regard, the beneficiaries in a discretionary trust fund have the liberty and right to legal action for breach of trust on whether distribution or transaction has been made to them[17]. This essentially means that even though a transaction had not been made to Dominica and Peter but Mary, they can have the right, and it’s within the jurisdiction of the law, to take legal action against Glen.

Additionally, Dominica and Peter have the right to sue Mary, who benefitted from the trust fund, yet she was not a beneficiary. Only the named beneficiaries in the discretionary trust fund can benefit from the trust. This means that Glen performed his duties ill-intended in allocating funds to Mary, who was not a beneficiary. A discretionary trustee has access to all the information and documentation about the trust fund, and therefore missing the information of beneficiaries is highly unlikely. Beneficiaries have a right to seek a petition from the court to have the whole trusted suspended and surcharged[18]. This means that Mary can be sued for accepting the funds knowing that she rightly did not deserve the funds because she was not a beneficiary. This is supported by Mary knowing she was not legally Tami’s daughter even though they had lived together almost her entire life. Dominica ad Peter has a higher ground of suing Mary and petitioning against the refund of the funds allocated to Mary despite her having used the funds. The beneficiaries have the jurisdiction within the law to petition the court against Glen and Mary, who acted against the trust guidelines[19]. The discretionary trust fund is legal documentation that must follow the set policies and guidelines to ensure the beneficiaries’ interest is protected. In this regard, trustees function under the law, ensuring that are the legalities of the process are followed to the core, including the fund allocation to the right beneficiaries[20]. Therefore mismanagement of the trust fund and negligence are punishable by law. This means Glen is liable for the unscrupulous process, which led to an error where a non-beneficiary ended up benefiting from the fund. Having known that she was not a legal daughter to Tami, Mary should not have accepted the funds and even used the funds for other purposes. 

In conclusion, a discretionary trust is a trust that is essentially arranged to benefit the beneficiaries, which is given to a trusted individual or group of individuals who allocates the funds as stipulated in the legal documentation.  The lack of adherence to the trust guidelines leads to situations where funds are wrongly allocated, thus failing to protect the interests of the beneficiaries, as seen in the case of Dominica and Peter. Therefore, in this scenario, Dominica is within their legal jurisdiction to take legal action against Glen, the discretionary trustee for several breaches. Mary, a non-beneficiary, ended with the fund’s allocation.

Bibliography

Blackwell, T.E., 1938. The Charitable Corporation and the Charitable Trust. Wash. ULQ24, p.1.

Chapman, C.M., Hornsey, M.J. and Gillespie, N., 2021. To What Extent Is Trust a Prerequisite for Charitable Giving? A Systematic Review and Meta-Analysis. Nonprofit and Voluntary Sector Quarterly, p.08997640211003250.

Chevalier-Watts, J., 2012. Charitable trusts and advancement of religion: On a whim and a prayer?. Victoria University of Wellington Law Review43(3), pp.403-422.

Eisenstein, I.H., 2002. Keeping Charity in Charitable Trust Law: The Barnes Foundation and the Case for Consideration of Public Interest in Administration of Charitable Trusts. U. Pa. L. Rev.151, p.1747.

Johns vjohns (2004) 3 NZLR

Knott v Cottee (1852) 16 beav 77

Macdonald, T., 2009. The Hastings-Bass Principle. Edinburgh Student L. Rev.1, p.55.

McLaughlin, N.A. and Weeks, W.W., 2010. Hicks v. Dowd, conservation easements, and the charitable trust doctrine: setting the record straight. Wyo. L. Rev.10, p.73.

Norbury, M., 2018. Tax cases: Mercanti: Recovering control of a discretionary trust. Taxation in Australia53(1), pp.39-41.

Re Whitely (1886) 33ChD 347

Ridge, P., 2020. When is the Advancement of Religion Not a Charitable Purpose. Can. J. Comp. & Contemp. L.6, p.360.

Ritson, P., 2020. Charitable trusts: Supreme Court decision highlights the pitfalls of raising money for charitable purposes. Bulletin (Law Society of South Australia)42(7), pp.12-14.

Sheehan, D., 2019. Equitable remedies for breach of trust. In Research Handbook on Remedies in Private Law. Edward Elgar Publishing.

Somerville, V.V., To explain how the question arose it is necessary first to re-call Lord Macnaghten’s definition of” charity” in Commissioners of Special Purposes of the Income Tax v. Pemsel: I.

Spica, J.P., 2019. Settlor-Authorized Fiduciary Indifference to Trust Purposes and the Interests of Beneficiaries. ACTEC LJ45, p.73.

Target Holdings limited V Redfern

Thomas, G. and Hudson, A., 2010. The law of trusts. Oxford University Press.

Vestal, A.D., 1957. Critical Evaluation of the Charitable Trust as a Giving Device. Wash. ULQ, p.195.

Weers Jr, G., 2016. The charitable trust model: an alternative approach for Department of Defense accounting. NAVAL POSTGRADUATE SCHOOL MONTEREY CA MONTEREY United States.

Wolfsbauer, C. and Bobbin, P., 2017. When and why a Discretionary Trust?. Equity31(5), p.12.


[1] Chapman, C.M., Hornsey, M.J. and Gillespie, N., 2021. To What Extent Is Trust a Prerequisite for Charitable Giving? A Systematic Review and Meta-Analysis. Nonprofit and Voluntary Sector Quarterly, p.08997640211003250.

[2] Eisenstein, I.H., 2002. Keeping Charity in Charitable Trust Law: The Barnes Foundation and the Case for Consideration of Public Interest in Administration of Charitable Trusts. U. Pa. L. Rev.151, p.1747.

[3] Somerville, V.V., To explain how the question arose it is necessary first to re-call Lord Macnaghten’s definition of” charity” in Commissioners of Special Purposes of the Income Tax v. Pemsel: I.

[4] Weers Jr, G., 2016. The charitable trust model: an alternative approach for Department of Defense accounting. NAVAL POSTGRADUATE SCHOOL MONTEREY CA MONTEREY United States.

[5] Ridge, P., 2020. When is the Advancement of Religion Not a Charitable Purpose?. Can. J. Comp. & Contemp. L.6, p.360.

[6] Chevalier-Watts, J., 2012. Charitable trusts and advancement of religion: On a whim and a prayer?. Victoria University of Wellington Law Review43(3), pp.403-422.

[7] McLaughlin, N.A. and Weeks, W.W., 2010. Hicks v. Dowd, conservation easements, and the charitable trust doctrine: setting the record straight. Wyo. L. Rev.10, p.73.

[8] Ritson, P., 2020. Charitable trusts: Supreme Court decision highlights the pitfalls of raising money for charitable purposes. Bulletin (Law Society of South Australia)42(7), pp.12-14.

[9] Blackwell, T.E., 1938. The Charitable Corporation and the Charitable Trust. Wash. ULQ24, p.1.

[10] Vestal, A.D., 1957. Critical Evaluation of the Charitable Trust as a Giving Device. Wash. ULQ, p.195.

[11] Wolfsbauer, C. and Bobbin, P., 2017. When and why a Discretionary Trust?. Equity31(5), p.12.

[12] Macdonald, T., 2009. The Hastings-Bass Principle. Edinburgh Student L. Rev.1, p.55

[13] Target Holdings limited V Redfern.

[14] Re Whitely (1886) 33ChD 347

[15] Thomas, G. and Hudson, A., 2010. The law of trusts. Oxford University Press.

[16] Knott v Cottee (1852) 16 beat 77

[17] Johns johns (2004) 3 NZLR

[18] Spica, J.P., 2019. Settlor-Authorized Fiduciary Indifference to Trust Purposes and the Interests of Beneficiaries. ACTEC LJ45, p.73.

[19]Sheehan, D., 2019. Equitable remedies for breach of trust. In Research Handbook on Remedies in Private Law. Edward Elgar Publishing.

[20] Norbury, M., 2018. Tax cases: Mercanti: Recovering control of a discretionary trust. Taxation in Australia53(1), pp.39-41.

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