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Equity and Trusts - Re Cooks Settlement Trusts - Essay Example

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From the paper "Equity and Trusts - Re Cooks Settlement Trusts" it is clear that as much as equity safeguards, the rights of Diana over the property that is being held under the trust, she cannot also deny her children, Grace and Gillian, their rights over the trust. …
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Equity and Trusts - Re Cooks Settlement Trusts
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Trusts and Equity For an express trust to be constituted, it should fulfill three requirements including capa formalities, requirement of certainty and the constitution. This paper will serve as an advice to be used the executor of the property left by Sindy to her daughter and grandchildren, paying attention to the issues of formality and the constitution. This includes showing whether Diana has a claim over the three classes of property including Monet painting, the holiday cottage (Dundreamin); and Sindy’s interest under her father’s trust; which she was promised by her mother before she died. The constitution requirement is that the settler can declare himself the trustee of the settllor by transferring property to trustees. Notably, a trust must also be constituted, which is not achieved until the legal title to the property held under trust has been successfully transferred to trustees, which must follow the proper formalities. If a trust is not constituted, then the beneficiaries cannot claim anything because it is not enforceable. Therefore, Diana should assess whether the three sets of assets held on trust for her is enforceable. According to Turner LJ in Milroy v Lord, for a voluntary settlement to be effectual and valid, a settler is supposed to fulfil everything, which is needed in order to legally transfer the property and which must be in accordance to the nature of the property being settled. Therefore, the executor appointed by Sindy should note that for the entire asset left for her daughter and grandchildren to constitute a trust, Sindy must have transferred the trust property to the trustees and at the same complied with the specific formalities that are necessary for such assets to make a legal transfer, or else, since equity cannot perfect an imperfect gift, the trust will not be valid. Seemingly, Sindy has complied with specific formalities when transferring the assets to the trustees, but transfer of the assets to the respective trustees remains questionable because she died before fulfilling some of her intentions. Her attempts to ensure that the transfer is legal include attaching a share certificate for her Dunroamin, appending message on the Monet painting expressing her interest to donate it to her daughter and sending a message to her father’s trust expressing interest of leaving it to her daughter and grand children. However, her father’s must not be having any provision, which contradicts Sindy’s power to transfer into her children. The only tolerable grounds for non-constitution must be based on a third party. In Re Rose, R carried out two transfers of shares, whereby one was held on trus by the trustees while the other one was transferred to his wife. 1 The appropriate transfer was executed later in March 1943. The share certificates together with the forms were sent to the company in June 1943. Then, R passed on five years later. It was held that R had done all that was required to transfer shares in the transferees, and they were free to proceed and obtain the registration. As discussed above and based on this case, Sindy had done all that is required and hence her daughter has a claim over the property. In Mascall v Mascall, a farther transferred a house to his son together with a land certificate. It was later argued that the transfer was not effectual because the son did not present the documents to the land registry. 2 However, it was held that the gift was complete because the father had done everything he could in order to execute the transfer. In this case study, Sindy only provided the share certificate to the trustees and did not file it with the registrar. As such, the Dunroamin gift that was offered by Sindy to her daughter is complete; based on the fact that she had supposedly done everything he could in order to execute the transfer. In Pennington v Waine, 3 A wanted to transfer some shares to H. On September 1998, he sent a signed transfer form to P, who was acting as A’s agent. However, P failed to hand over the form to H, but he wrote to H that A intended to act as a director with the company and H had signed an approval form agreeing to become a director. Also, P had told H that he was supposed to transfer some shares belonging to A and that H was not needed to do anything. A passed on later in 1998 leaving his shares to H. Since H’s name was missing from the company’s shares, it was held that the shares were not yet transferred from A. It was, however, concluded that the whole beneficial interest was passed on to H and that A was a trustee. On appeal, the claimants argued that the transaction was not complete given that the share transfer form was not delivered to the company or H, but the appeal was dismissed. The essence of this is that A had an apparent intention to transfer a gift to H since he was informed about it and hence it was hard for A to withdraw the gift given that H had already signed the approval form. This means that Diana will be able to successfully seek remedy form a court of law if the trustees refuse to give her the property. In T Choithram International SA v Pagarani, 4 Pagarani’s comment that ‘I give to the foundation’ made him a trusted and hence legal title was in the hands of the donor himself and it was only left for him to convey this title to the other trustees. This shows that the words that Sindy wrote on the painting saying “It now belongs to you” is very strong evidence that she was willing to transfer the property to her daughter and grandchildren (Hudson, 2001). In Strong v Bird, the rules applied to imperfect and perfect gifts as well as transfers to future trustees. As such, if the donor appointed a donee to execute an incomplete gift before and then he happens to pass on, then when the executor acquires the legal title over the property, the gift becomes complete. Edward should therefore go ahead and acquire the property so the gift can be complete. As much as equity safeguards, the rights of Diana over the property that is being held under the trust, she cannot also deny her children, Grace and Gillian, their rights over the trust. A good case that can illustrate this is Cannon v Hartley. In this case, the husband promised that he would give his wife half of his parents’ estate if he became entitled to them. He also added that the remainder would go to their daughter, who was also involved in the deed, but had provided no consideration. When the husband inherited his parents’ estate and her wife passed on, he refused to share half of the estate to his daughter as per the agreement. The daughter filed a suit seeking damages at common law, though she was not entitled to seek specific performance considering that she was a volunteer. However, Romer J awarded her damages because of the consideration that equity does not frustrate a volunteer even if it cannot assist one. Edward should therefore note that the rights of Diana’s are safely guarded in the event that Diana thinks of not honoring her mother’s wish (Hudson, 2001). Diana’s claims over the three classes of property will not face any hurdles due to the fact they do not constitute of debts. This was the same case in Re Cooks Settlement Trusts, 5 whereby Buckley J disagreed with the counsel that the trust fully constituted. His argument was founded on the reasoning that the pledge was not in the form of a debt. The most important lesson from this case is that an enforceable promise is the only requirement to create a trusts – this is also referred to as choose in action. Under choose in action there are very many categories and debt is just one of them. Therefore, Edward should advise Diana that she has claim over the gifts, and he should acquire them and administer them on behalf of the beneficiaries (Hudson, 2001). Reference Hudson, A., 2001. Equity & Trusts. London: Routledge Read More
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