27 terms

Limiting the Life of Private Trusts


Terms in this set (...)

Law Reform (Miscellaneous Provisions)(Scotland) Act 1968, s18
Where someone becomes entitled to a liferent interest despite not being alive at the date of execution, they will take absolute ownership at the age of majority.
Abolition of Feudal Tenure etc (Scotland) Act 2000, s50-52
Existing entails were converted into absolute ownership in 2004.
Drybrough's Trs v Drybrough's Trs (1912)
The law relating to liferents does not apply to annuities. They are different because there is a gauranteed income, whereas there is not with a liferent.
Reid's Trs v Dashwood (1929)
Five daughters were left the estate in liferent, to their children in fee. One of the daughters was not born at the execution of the deed and so was not entitled to a liferent but instead a share of the fee. It seems unlikely that this was intended by the legislation.
M'Culloch v M'Culloch (1725)
Attempted to create a very long lasting trust, however the deed creating it was unintelligible. This was unacceptable and so was struck down. There was a "contradictory and unintelligible dispositon".
M'Nair v M'Nair (1791)
A trust was designed to provide a variety of periodic payments for generations to come. It was challenged on teh grounds that perpetuity was ultra vires and irrational. The trust deed was allowed to stand as there is no rule against perpetuity in Scotland.
Earl of Strathmore v Earl of Strathmore's Trs (1831)
The settlement was to last for 30 years and the court stated: "There is no rule yet known in the law of Scotland which prevents the execution of a trust [of this kind]". As long as the provisions are not against morality or public policy it can stand.
Suttie v Suttie's Trs (1846)
A trust deed was challenged for perpetuity and the court was again unanimous in upholding the settlement.
McCaig v University of Glasgow (1907)
The truster wanted statues to be built of himself and his family, however this would have no public benefit when completed and so the purposes were not acceptable. The directions were invalid and thus ineffectual.
McCaig v Kirk Session of the United Free Church of Lismore (1915)
There was no heir-at-law to claim the estate if the purposes were found to be invalid. However, the closing of a public tower to make a monument to the family was contrary to public policy. It was "wasteful glorification" and it would be dangerous to support".
Lindsay's Ex v Forsyth (1940)
The trust was to exist in perpetuity to provide flowers to the graves of the deceased and her mother. This was "extranagant to the point of caprice" and conferred no benefit on any indentifiable living person. It was held to be invalid.
Trusts, s1
The court will supply agreement of beneficiaries without capacity if the proposed variation will not prejudice them.
Trusts, s5
Accumulation is allowable for one of six periods laid out in the Act.
- Life of the grantor
- 21 Years from death
- Minority of someone living at death
- Minority of entitled person
- 21 years from settlement
- Minority of person living at the date of settlement.
Law Reform (Miscellaneous Provisions)(Scotland) Act 1968, s6
Adds two further periods to the Trusts (Scotland) Act 1961, s5.
Accumulations Act 1892
In relation to income accumulated to buy land, the minority of the person entitled to the income is the appropriate period.
McIver's Trs v Lord Advocate (1973)
The accumulation was to continue until the son reached 22. This was struck down because it did not accord with any of the six periods (majority being 21). The court replaced this with accumulation until the truster's death (the most likely in the circusmtances) which was much shorter.
Re Dodwell & Co Ltd's Trust Deed [1979]
The equivalent accumulation restrictions in England were held not to apply to trusts created by legal persons. This is not within the mischief the law was designed to prevent.
England (
There is no a control on accumulation, but instead there is a sunset rule on the lifetime of private trusts set at 125 years (roughly a lifetime plus a minorty).
South Africa (Trust Property Control Act 1988, s13)
The courts have the power to bring a trust to an end where there is an unforseeable change in circumstances. Similar to cy-pres for public trusts.
Canada (Maitoba Perpetuities and Accumulations Act 1983)
There is no restriction placed on accumulation. This has not yet been problematic, however as the provision has only been in force 30 years the problems may not have manifested themselves yet.
Jersey (Trusts Act, s15)
The law was altered in 2006 to remove all restrictions on accumulation.
Trusts, s9
It is only competent to create a liferent interest in favour of a person in life at the date the deed was executed.
Accumulation Act 1800 (Thellusson Act)
It was illegal to accumulate income under a trust except during a number of specified periods.
Re Berkely [1968]
The restrictions strike at the mischief of accumulating excessive income at the expense of the present generation in favour of amassing capital for a generation to come.
Fraser v Rose (1849)
A condition that a daughter had to estrange herself from her mother was not acceptable. And the trust was given effect to without the condition.
Professor Simes
"It is socially desirable that the wealth of the world be controlled by its living members and not by the dead".
Union Bank v Campbell (1929)
The accumulation rules are too complex. Lord JC Alness: "I confess that I have found the task of interpretation and co-ordintion of the several provisions of the Act to be one of unusual difficuly".