Trusts — SQE1 practice questions

Margaret died last year. Clause 4 of her will leaves her residuary estate, worth about £350,000, 'to my son Dominic, in the full confidence that he will do what is right and fair by my grandchildren'. Nothing else in the will refers to the grandchildren. Dominic has told his three nieces that he intends to keep the whole residue for himself. The nieces have asked whether they can compel him to share it with them.

Which of the following best describes the effect of clause 4?

1. ADominic holds the residue on a fixed trust for the grandchildren in equal shares, because a testator's expressed wishes bind the person to whom the gift is made.
2. BDominic takes the residue absolutely, because words expressing confidence or hope do not show the certainty of intention needed to impose a trust.
3. CDominic holds the residue on a discretionary trust for the grandchildren, because the class of grandchildren is conceptually certain.
4. DDominic holds the residue on a resulting trust for Margaret's estate, because the gift fails for uncertainty of subject matter.
5. EDominic takes the residue absolutely only if the grandchildren cannot be listed completely, because otherwise a fixed trust arises.

Owen owns 1,000 ordinary shares in Calder Engineering Ltd, all of the same class and registered in his name. In a signed letter to his niece Priya he wrote: 'I now declare that I hold 100 of my Calder shares on trust for you absolutely.' Owen did not identify which 100 shares he meant and did nothing to separate them from the others. Two years later Owen was made bankrupt, and his trustee in bankruptcy claims all 1,000 shares for his creditors.

Which of the following best describes Priya's position?

1. APriya has no proprietary claim, because a trust of part of a larger holding fails unless the part has been segregated from the rest.
2. BPriya has no proprietary claim, because a gift of shares is incomplete until the shares are registered in the donee's name.
3. CPriya has only a personal claim against Owen's bankrupt estate, because a declaration of trust must be supported by consideration.
4. DPriya is entitled to 100 of the shares, because a declaration of trust of identical intangible shares is valid without segregation.
5. EPriya is entitled to 100 of the shares only if the declaration was made by deed.

Harold ran a bakery in Leeds for 40 years before retiring. He transferred £300,000 to two trustees 'to be divided equally among all persons who have at any time worked at my Leeds bakery'. The bakery's payroll records were destroyed in a flood some years ago, and the trustees cannot identify everyone who worked there. They have so far traced 85 former staff.

Which of the following best describes the validity of the trust?

1. AThe trust fails, because a fixed trust is valid only if a complete list of the beneficiaries can be drawn up.
2. BThe trust is valid, because it is enough that the trustees can say of any given person whether he or she is or is not within the class.
3. CThe trust is valid, and the trustees may divide the fund equally among the 85 former staff they have traced.
4. DThe trust fails, because the phrase 'worked at my Leeds bakery' is conceptually uncertain.
5. EThe trust is valid, and the court will direct a cy-près scheme for the fund.