Equity and Trusts: Analysis of a Deed of Trust and Testamentary Trusts

This report provides a comprehensive legal analysis of a Deed of Trust, examining its formation, requirements, and implications within the context of Equity and Trusts. The assignment delves into the specifics of a case involving a deed assigning land and shares, exploring the roles and responsibilities of trustees, beneficiaries, and the testator. It investigates the validity of the trust, the impact of the testator's change of mind, and the legal consequences of her instructions to the trustees. The report examines the concept of testamentary trusts, wills, and codicils, addressing issues of revocation and the execution of the testator's intentions. It considers the transfer of land and shares, the rights of beneficiaries, and the obligations of the trustees, concluding that the trustees were obligated to honor the original covenants of the will regarding the land, but not the shares due to a lack of legal capacity to transfer them. The analysis incorporates relevant legal principles and case law, providing a detailed understanding of trust law.

EQUITY AND TRUSTS

A Deed of Trust can be characterized as a legal agreement, which in essence is
formulated by the legal owner of the property. Generally formation of trust is allowed to be
either in oral or written form. However, in relation to trust for land, Section 53 of the Property
Act 1925 mandates the trust to be evidenced in a written format. In order to form a valid trust a
certain intention to form a trust on the trustees shall be compulsorily present, in respect to a
specific property and the extent of interest conferred on the beneficiary. Through the medium of
a deed, in case of trusts for assignment of interests in land the legal owner shall primarily appoint
trustees for the concerned property, and set out terms of trusts on the basis of which the trustees
shall hold the title in the property, and subsequently transfer the same in the name of the
beneficiaries (Hough and et. al., 2010). A document shall not be considered as a deed if the
document clearly reflects the intention of creation of the a trust or expresses itself as a deed.
Moreover, to render a documents as a valid deed it shall mandatorily be signed by the parties,
which are known as the settlor and the trustee. Further it shall be signed in presence of the
witnesses, and shall become effective only from the time it is delivered to the trustee.
In accordance to the given facts, Lucy executed a deed of covenant with David and
Jones. The deed particularly assigned the ownership of land to Molly, for life, which is acquired
by Lucy after the deed is executed. The remaining of the property was to be assigned to Molly's
husband if he survives Molly. Then it also provided for the right of the issue which shall be
conferred equally. The covenant further provided that in the event of failure of any issue, the
property shall go to Jack. Apart from the land, the deed also provided for transfer of shares
which was held by her in Pluto Leisure Ltd. to the trustees for in favour of her sisters. It is
important to note that David and Jones have been named as the trustees to the settlement, as weel
as executors of the will. Further the fact that Lucy fell out of the family and had change of mind
in relation to the covenants of the will, shall not hold any relevance. However, her instructions to
the trustees to not honour the deed are required to be assessed.
At this point of discussion the relevance of testamentary trust or will trust is required rto
be established. This kind of trust becomes functional at the time of death of the person who
forms the will, and is known as the testator. It may be formed in relation to one or more
testamentary trust, and can address any of the portion of the estate. The number of parties
involved in this type of testamentary trust can be divided into four parties – settlor, trustee,
beneficiary and probate court (Revocable and Irrevocable Trusts, 2016). Settlor is the person
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who creates the trust and grants it to persons as named in the will, while trustee is the person(s)
who is assigned the duty to take care of execution of the will in a systematic manner. Generally,
the name of the trustee is mentioned din the court, in other circumstances the probate court is
empowered to appoint the trustee. Beneficiaries are the ones who are liable to receive the
ultimate benefits from the property, and lastly, the probate court is responsible to oversee the
manner in which the trust is being handled by the trustee.
The occasion of a will is required to be undertaken after the death of the settlor, and is in
relation to the estate so developed by the person in his lifetime. It can formed in various forms
such as to oversee some specific assets, a trustee may be appointed to further transfer the asset to
to the beneficiary in accordance to certain circumstances and so on (Lafuente Sánchez, 2015). In
accordance to the facts one of the primary issues which shall be dealt with is whether the will
shall be considered as revoked or not. As evident from the circumstances Lucy made an oral
communication to the trustees to not honour the will, however, there was no indication to the
effect of destroying the said deed or making a codicil to over power the same.
Codicil can be termed as a testamentary document which is required to be implemented
in the same manner as will (Peisah and Shulman, 2012). Law has enabled the codicils to amend,
revoke or add covenants to the will, only in the case there exists a specific reference to the
currently existing will or last modified will. This infers that a Will can be republished through
the medium of a codicil, and in order to establish the relevance of a codicil in the court of law, a
clear reference to the existing Will is a substantial enough. In order to revoke the Will, the
content so mentioned in the codicil shall be similar enough to establish the relation between the
Will and the codicil. It is an established fact that in the event a Will is not inclusive of a
revocation clause, the Codicil shall operate in the form of testamentary instrument to revoke the
Will. However, there are various other methods through which a Will can be revoked or
terminated by the testator during his/her own lifetime. Some of the methods of revocation of a
Will are through the medium of a codicil, declaration in writing, destruction, by marriage or
divorce (Termination of trusts—overview, 2016).
On analyzing the available options in light of the given circumstances it can be concluded
that the option of destruction of the old will, creation of a new will or a codicil and amending the
existing will shall be the available options. However, it is clear from the circumstances of the
given scenario that Lucy has not exercised any of these options, and rather instructed the trustees
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to not honour the transaction. Before she could given any further instructions, she died and
hence, the trustees are left with no option but to honour the covenants of the will. It has been
opined by the court that execution of a will on a general basis is undertaken on the basis of the
beneficiaries in favour of which the will has been formed (Hinks, 2011). Therefore one of the
primary issues which is required to be addressed is that if the trustees are still liable to honour the
covenants in the manner they were originally required to be registered. In light of the laid down
laws and facts it can be concluded that the trustees since the Will of Lucy was not destroyed, and
neither did they receive any instructions from Lucy to destroy the same, it shall hold good in law
and make the trustees liable to exercise their obligations under the Will. Moreover, it is also
important to note that the change in mind was not accompanied by any such action with legal
validity, and hence, a mere restriction from her side to not transfer the shares would not repudiate
a legal document (Law of Property Act 1925, 2016).
Therefore, if David and Jones are entitled to exercise their obligation under the Will as a
trustee and executor, then they are required to transfer the land in name of the entitled party, as
well as transfer 10,000 shares to her sisters. The issue which may arise in the case of land firstly
would be in relation to which of the estates would be covered in the transfer of land in pursuance
to the statement of 'thereafter acquired land'. In respect to the same, the said words shall be
interpreted to mean all the estate which is acquired by Lucy pursuant to execution of the Will,
and hence in pursuance to the same it can be concluded that only the land located in Ealing
(Greenlands) shall be assigned to the concerned persons. Next what is required to analyzed is
who shall amount to be the beneficiaries in the case of transfer of land. In light of the available
circumstances and the laid down laws, it can be inferred that the estate shall be transferred in the
name of Molly for life. Therefore, in pursuance to the Will, Molly shall be entitled to receive
ownership of the land situated in Ealing (Greenlands). Moreover in the case of transfer of shares,
the shares currently have been transferred in the name of trustees for further making a transfer in
the name of the beneficiaries. In accordance to the operation of law, on death of Lucy, the
trustees are under an obligation to make a transfer of the shares to both the sisters, May and June.
It is further important to note that in order to fulfil their duty of a trustee, David and Jones, are
under an obligation to transfer the shares in their name. However, in pursuance to the
instructions of Lucy they failed register the transfer of shares in their names and could take
possession of the transfer documents only. In such a state the the trustees are not under a legal
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capacity to make a transfer of shares to the entitled interest holders, in accordance to the
respective Will (Anderson and Amayuelas, 2011). Therefore, in light of these facts the shares
could not be transferred to the sisters, due to lack of legal capacity to do so on the part of the
trustees.
Hence, it can be inferred from the facts and laid down laws, that Lucy had created a Trust
Will in favour of some of the beneficiaries, and in furtherance the trustees were assigned the
responsibility to further direct the estate in the mentioned direction. However, due to change in
mind of Lucy, and some inadequate communication the trustees were did not destroy the Will
and Lucy died. Hence, in such circumstances on death of Lucy, the trustees are under an
obligation to exercise their duties of transferring the estate in favour of the concerned
beneficiaries. At this stage, the trustees were fully entitled to transfer the land in favour of the
beneficiary, but the shares could not be transferred due to lack of ownership in the name of the
concerned trustees.
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REFERENCES
Books and Journals
Anderson, M. and I Amayuelas, E. A., 2011. The law of succession: testamentary freedom:
European perspectives (Vol. 5). Editorial CSIC-CSIC Press.
Hinks, F., 2011. Trusts ineffective as testamentary dispositions: Q v Q [2010]. Trusts &
Trustees. 17 (3). pp.219-221.
Hough, M. and et. al., 2010. Procedural justice, trust, and institutional legitimacy. Policing,
p.paq027.
Lafuente Sánchez, R., 2015. Testamentary trusts in English Law: an introductory
approach. Cuadernos de derecho transnacional. 7 (1). pp.96-111.
Peisah, C.A.R.M.E.L.L.E. and Shulman, K. I., 2012. Testamentary capacity.Civil capacities in
clinical neuropsychology: Research findings and practical applications. pp.95-120.
Online
Law of Property Act 1925, 2016. [Online]. Available through:
<http://www.legislation.gov.uk/ukpga/Geo5/15-16/20>. [Accessed on 28th November
2016].
Revocable and Irrevocable Trusts, 2016. Available through:
<http://www.estatesortrusts.co.uk/differences-between-revocable-and-irrevocable-
trusts.html>. [Accessed on 28th November 2016].
Termination of trusts—overview, 2016. [Online]. Available through:
<https://www.lexisnexis.com/uk/lexispsl/privateclient/document/393819/55KG-G8K1-
F18D-H2XS-00000-00/Trust+termination%E2%80%94overview>. [Accessed on 28th
November 2016].
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BIBLIOGRAPHY
http://www.netlawman.co.uk/ia/revoking-will
http://www.estatesortrusts.co.uk/differences-between-revocable-and-irrevocable-trusts.html
http://uk.practicallaw.com/0-554-4567
https://www.lexisnexis.com/uk/lexispsl/privateclient/document/393819/55KG-G8K1-F18D-
H2XS-00000-00/Trust+termination%E2%80%94overview
http://www.legislation.gov.uk/ukpga/Geo5/15-16/20
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