Deck 21: Fixed Trusts; and Powers of Appointment

Question 1

Which of the following is not a conventional classification of powers based on the nature of the class of objects?

A) Superhuman powers
B) General powers
C) Special powers
D) Hybrid powers

Answer 1

A

Question 2

Which of the following statements about powers of appointment is false?

A) Powers can be mere or fiduciary, depending upon whether the donee has obligations in relation to the exercise of the power.
B) A power exercisable by will is known as a testamentary power.
C) A power of appointment exercisable by will can also be exercised by deed.
D) The donee of a general power of appointment can choose to make an appointment in his or her own favour.

Answer 2

C

Question 3

Shortly before her death in 2008, Cassandra set up a trust under which property is held on trust for her husband George, and on his death for their children in equal shares, or in such shares as George, might by deed or will appoint. George died earlier this year, having fallen out with the children. In his will he left all his property to Cedric (a very close friend) 'including any property over which I can exercise a power of appointment'.
Which one or more of the following statements is true?

A) George has failed to make a valid appointment, so the primary trust in favour of the children in equal shares will operate.
B) George has exercised the power in the correct manner, so the appointment in favour of Cedric is effective.
C) Even if the purported exercise of the power in favour of Cedric is ineffective, the children will get nothing if George used all the property during his lifetime.
D) Because George is the donee of a power of appointment, not a trustee, the children have no rights which they can enforce.

Answer 3

A

Question 4

Last year, Rebecca left her residuary estate (worth £1million) to Tony and Teresa on trust to be divided between her grandchildren in such shares as David might by deed appoint.
Which of the following statements (there may be more than one) are true?

A) David is under no obligation to make a decision about the division of the estate.
B) If one of the grandchildren is dead, David could choose that grandchild's surviving spouse as a beneficiary instead.
C) In the absence of a decision by David, the fund would probably be divided in equal shares between all of the children and grandchildren in equal shares.
D) David cannot appoint himself as a beneficiary (unless he is one of Rebecca's grandchildren), but he can agree with one of the grandchildren to appoint her in return for a share of what she receives.

Question 5

The Fielding Family Trust provides that property is held upon trust until 2030 to provide for the education of Francis Fielding's grandchildren, when the capital is to be distributed between such direct descendants of Francis Fielding as Francis Fielding's widow (Jasmine Fielding) shall by deed or will appoint. The trust expressly states that, should Jasmine Fielding (who is still alive) die making no appointment, the capital is to be divided in equal shares between the grandchildren of Francis Field.
The grandchildren have all completed their education to degree level and would like to distribute the capital immediately. Jasmine is prepared to assist.
Which, if any, of the following scenarios would allow the trust fund to be distributed immediately?

A) Jasmine and the grandchildren are, between them, entitled to control the whole of the trust fund, so, provided they are of full age, they can call upon the trustees to terminate the trust.
B) Jasmine can execute a deed appointing the grandchildren as beneficiaries. In consequence, the only beneficiaries will be the grandchildren, who, if of full age, can call upon the trustees to terminate the trust.
C) Jasmine and the grandchildren do not need to do anything. Because the grandchildren have completed their education, the trustees have a duty to distribute the fund immediately. In the absence of any appointment by Jasmine, the trustees must distribute the fund between the grandchildren.
D) Jasmine can execute a deed declaring that she will not exercise her power of appointment, and this will operate as a valid release of the power. In consequence, the only beneficiaries are the grandchildren, who, if of full age, can call upon the trustees to terminate the trust.

Question 6

Which of the following statements is false?

A) In a fixed trust the interests of the beneficiaries have already been defined by the settlor.
B) A trust in favour of 'such of my children who survive me' is an example of a fixed trust.
C) A trust in favour of 'Rufus Stone and Michael Heath in such proportions as my trustees shall decide' is an example of a fixed trust because the names of the beneficiaries have already been identified.
D) A lottery syndicate where members share any winnings in proportion to the size of the stake they have contributed is an example of a fixed trust.

Question 7

Which of the following statements is true?

A) .A nominee trust is a kind of trust used by movie stars who have been shortlisted for an Oscar.
B) A custodian trust is used by people incarcerated in prison.
C) A bare trust is used by bears.
D) Nominee trusts can be used by a person seeking to conceal their ownership of property.

Question 8

Which of the following statements is true?

A) The beneficiaries under a fixed trust must be ascertainable at the time the trust is set up.
B) A trust to divide a fund in equal shares between 'such of my children who survive me' can only be valid if the person setting up the trust is already dead, otherwise the birth of new children will change the size of the class, and therefore the shares of the beneficiaries.
C) The beneficiaries under a fixed trust must be described in such a way that they are individually identifiable.

Question 9

Which of the following statements is false?

A) Immediately ascertainable beneficiaries with a vested interest under a fixed trust have immediate proprietary interests in the assets of the trust.
B) Immediately ascertainable beneficiaries who have vested interests which, collectively, comprise the whole of a trust fund, can require the trustees to transfer the trust fund to them or according to their directions.
C) Immediately ascertainable beneficiaries who have contingent interests in a fixed trust have immediate proprietary interests in the assets of the trust.

Question 10

Which of the following statements is true?

A) .A gift in a trust 'to Lucinda if she obtains an honours degree' is vested because, since the beneficiary is identified by name, she is immediately ascertainable.
B) A trust created by Alison in her will 'to such of my children who may be living at the date of my death' confers only contingent interests because the children are not named.
C) A gift in a trust to Martin when he reaches the age of 18 years is contingent until Martin reaches that age.
D) A gift in a trust 'to Lavinia's first-born child' gives that child a vested interest as soon as that child is born.