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Equity and Trust, Contractual Right - Essay Example

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The paper "Equity and Trust, Contractual Right" discusses that generally, Marie Brown was a sensible lady. She was aware that that age was creeping on her and that it was high time to do something about her assets so that they would not go astray…
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Equity and Trust, Contractual Right
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Trust formalities “There are two ‘categories’ of ‘trust’. The first one is that created by ‘privilege’. Some responsible agency describes a trust as charitable trust or family trust and so on, which has based its rulings as per the conclusions provided in ‘case law’. The form of the trust depends upon the prior case law and the ‘authority of law’ based upon opinion. When we think of law, we consider only those passed in the legislature and not the opinions of the legal committees as per the prior case history. The legislature does not directly involve in the trust. But it has the power to delegate powers to government organizations, which are empowered to make their own ‘administrative law’ or the ‘rule of law.’ which is a formidable combination of rules and case laws. A trust of this nature can avoid probating with the help of a good lawyer. The other common trust is that created by ‘contractual right’. The rights, unlike privileges, can not be modified, revised or withdrawn. A trust in simple term means an arrangement by which the property of an individual is managed by a trustworthy person for the benefit of somebody else of the individual’s choice. The trustee has the right to hold the title of the property, but he must entrust the property to the beneficiary when the time comes. The trust is governed by the federal law and the local laws. The trustee has the obligation to follow the rules and act as per the original owner of the property. The trust has been a successful body so far, widely accepted by all everywhere. A trust can be created by any of the following: 1. A written document by the landlord (otherwise known as Settler) and signed by himself and the trustee. 2. The will executed by the landlord. 3. A legal order issued by the court. Normally there are three ‘Certainties’ necessary for the trust. 1. Intention: This is the clear valid purpose of creating a trust. 2. Subject Matter: The trust property can be in the form of real estate, share or any such legal thing. But it must be specific and clear. In other words, the document must clearly define the property. 3. Objects: The names of the beneficiaries must be clearly stated so that there is no chance of any tussle latter on. Beneficiaries can also include the unborn grand children or the like. The objective of the trust can even be for charitable purpose, not necessarily for any beneficiary. A trusty can be any individual of responsibility. Generally he is from the legal profession. Obviously he is appointed by the landlord. In certain cases the court can also appoint the trusty. Once the trust is formed, trusty becomes the legal owner of the property. The trusty must be capable of handling any problem of any sort arising latter on. He must ensure the safety of the property, until it is handed over to the beneficiary. He must report to the beneficiaries periodically. He is expected to invest the assets such that there is useful return. He has to deal with tax and other matters and related paper works. The fees for the trustee for his services are generally fixed by the landlord, as he will not be interested in doing his work for free. The ‘beneficiaries’ are the future owners of the property. The particulars of the property that each beneficiary must get will be stated in the document. This includes the monthly earnings out of the property. The age at which the beneficiary can take charge of the property depends upon the law of the place. The main ‘purpose’ of the trust is for privacy, unlike a will which is normally made known to all. Naturally people prefer trust. Another advantage of the trust is that it will prevent the beneficiaries from becoming spendthrifts. The other ‘types’ of trust include Charity trust, Unity trust, Pension plan trust, Tax planning trust, Tax evasion trust etc.” In this specific case, Marie Brown was particular about forming a trust to take care of her belongings. She had neither husband nor children. She had a lot of wealth. Her only sister was Jane, who had two minor daughters – Olivia and Sarah. She had a pet dog also whom she named Pickle. Her assets included a posh flat in London, a Roll Royce car, a grand Piano and good lot of earnings through the trust formed by her father. Marie Brown was a sensible lady. She was aware that that age was creeping on her and that it was high time to do something about her assets so that they would not go astray. She decided that her two nieces were the right persons to enjoy the same. She was also very particular that the girls should get the possession with out any difficulty, as per the law, when they attain the age of 25. So she decided to form a Trust, 1with Mr. Simon, her close friend as the trustee to settle the matter. She wrote a letter to her sister Jane highlighting her views, signed and posted it. Marie Brown had the presence of mind not to write a Will 2accordingly because she knew that it would involve legal procedures, taxes and so on and the nieces would have nightmare until the matters were settled. On the other hand, with trust, the trusty would be able to hand over the property to the girls at the right time without any problem. And there will not be much monetary expenditure. This clearly shows that she was interested in the nieces enjoying rights over her property after her death. After forming the trust, Marie Brown handed over the garage key, receipt of the piano, deed of her house to the trusty a few days before her death. That means she wanted the trust to look after her property till the children come of age. She had good faith in Simon and was sure that he would do a clean, good job in the settlement. When she died, her will was read out by Simon, who became the executor of her Estate3. Surprisingly, it was made known that her entire property would go to her pet dog. Obviously the will was written much before the trust was being thought of by her. Probably she would have forgotten about the will. In any case, assuming that the trust was made just two months before her death it can be considered that the trust supersedes the will. That means the will would have no validity. If by any chance she made the will after the trust was made, then again it has no validity at all because she cannot do anything about the property as then Mr. Simon, as the authorized trusty, was the correct person to deal with it. The dog was her pet. She was fond of it. Naturally she wanted that the dog should be able to live peacefully after her death. But what she would have done is to advise or set apart a fixed some of money and then entrust her nieces to look after the dog. She should have understood that the law is for the human beings. Though the dog is her pet, and even assuming that it gets all the assets, how can it deal with it? It can not handle it or preserve it. A dog cannot be compared with humans. The dog may be lovable. It may be faithful. But it is an animal. It has its limitations. It cannot read the documents. It cannot put its signature. The poor thing cannot do anything even on any social matters, leave alone legal matters. The dog does not want money. As Marie Brown loved the dog very much it is only natural that the dog should be taken care as if it is the child of the lady. Somebody should come forward and take charge of the dog such that it leads its normal life in the absence of the lady. Naturally the nieces of Marie Brown are the proper persons to do so. In fact they have a duty towards the dog as it is the pet of their aunt. Now let us think about the steps the nieces have to take to get the property. Let us consider that the will is without validity. Then the trust can do its part and the property can be handed over to the nieces at the appropriate time. Assume that the trust was not formed. Even then the property can be acquired by the nieces as per Inheritance4 because they are the only relatives of Marie apart from their mother. Then there is what is known is as Next of Kin’ 5.Even as per this the property should go to the nieces. Only they have to prove that their mother is the sister of Marie Brown and that Jane is their mother. That should not be a problem because they must be having the documents in their possession for that. As far as the trust is concerned it comes into existence even when the landlord is alive. It will continue after his death as well, until the instructions of the landlord is carried out amicably. Once the trust is formed the landlord ceases to be the owner of the property. From then onwards the trust has right over the property. But the person has still control over it and enjoys the fruits of it. He can instruct the trust as to who can be the beneficiary6 to the assets after his death. As already mentioned, a trusty can be appointed to deal in the matters. He need not be person from the legal discipline, but if so, it will be ideal. The trustee cannot do anything on his own, but follow the instruction of the owner of the property. The main advantage with the trust is that the transaction of the asset can be passed on to the beneficiary with little hitch. The main reasons for forming a trust is to pass on the property to a minor, to avoid court proceedings, avoid government taxes, avoid paying unnecessary fees to the lawyers and so on. When the land lord is living, the trust is known as living trust. When he dies the trust becomes a Testamentary trust, which simply does as required by the land lord. In case of Will, transfer of property can be done only through the court. This is what is known as Probating7. It has its own formalities and procedures and it involves much expense unlike in trust. That is why trust is preferred. ‘Next of Kin’ means the closest living blood relation of the person. There is an order of preference for it. If the person has no living spouse, the order will be child, parent, sibling, nephew, niece, uncle, aunt and so on in that order. There is not much difference between Inheritance and ‘next of kin’. Both are applicable when a person dies without writing a will. Then the property will have to be settled as per the order of relationship. Otherwise the property will be taken of over by the government administration. It is necessary for every individual to ensure that the family members and their future are well protected in his absence. Here comes the importance of writing a Will. Briefly, will is a document with written instructions as to how the distribution of the property should be done after the demise of the person concerned. It has to constitute the names of the persons who should be enjoying the property, who are called beneficiaries. The will is probably the only way by which the property division will take place exactly as desired by the person. It must be made sure that the will is made in the proper fashion as required legally. The court must be satisfied in all respects with the will so that the wishes of the person can be carried out by the court suitably. If anyone neglects to write a clear will, after the death of the person, the court will adopt its own way of distribution, which may not be a as wanted by the person. So it is necessary to be serious about making the will. The will must be clearly written or typed or printed and at the end the signature of the person making the will is essential. It must also be signed by two witnesses. The Testator8 that is, the individual making the will can make changes to the will as and when he wants. He can keep it with him always. The will becomes effective only after the death of the testator. Distribution of property is not the only purpose of the will. The will is made use of in creation of trusts, disposal of property, selecting the executors, appointing executors and testamentary guardians of minor children etc. Making a will is a very small process and if the person takes a little pain for that it will avoid waste of time, tension, inconvenience, nightmare etc for the successors of the person. There are varieties of will and the most common is ‘Testamentary will’ which is also known as self proving will. Intestate9 is the condition when a person dies without making a will. In that situation the government comes into picture and distributes the assets at its discretion. Normally it sells the property and divides the money among the spouse and children in a certain ratio. If there are minor children, somebody will be appointed to take care of them. All such expenses, court expenses and any other expense, every thing will be met out of the money received from the sale of the property. This may amount to big sum. This could be avoided by writing a will. It is ideal to discuss with somebody familiar with the procedures before making a will. Or consult a lawyer. Make a list of all the items, the assets, debts, liabilities etc. Do not leave anything. Allocate the items to the persons. That will facilitate distribution more easy when the time comes. Probate means certification of the will by the court. When the testator dies, the beneficiary has to request the court for granting the probate. Probate can be granted only to the beneficiary or executor appointed by the testate. Probate gives legal effect to the will. A probate amounts to giving recognition to the authority of the executor 10or beneficiary over the will or contents of the will. In other words, Probating is the confirmation of acceptance of the will by the court. Conclusion: Marie Brown, a rich lady with plenty of wealth, but without spouse or issues decided that her wealth would be passed on to her, after her demise. She wanted that the property should go to them smoothly. She did not want to write a will because she knew that it will involve legal formalities, court fees, taxes etc. She did not want the poor girls to suffer such ordeals. Her desire was that the girls should be able to acquire the assets without any hitch. She came to know that the solution is through forming a trust. She formed a trust with Mr. Simon as the trustee. And she felt relieved. But it so happened that soon she had a heart attack and she collapsed and died. Everyone praised her for her prudence to form the trust at the appropriate time. But all were surprised that she had written a will in which she wanted her pet dog to be the sole heir to her property. It was not known whether the will was written before or after the formation of the trust. It is surprising that she did not involve Mr. Simon, who was very close to her, as a witness while writing the will. Another confusion is that the title deed was not signed. At least Mr. Simon could have pointed out this while collecting it from her. Why was not the piano handed over to Simon? Why only the receipts? The garage key was handed over but not the car keys. Once the trust is formed it means the trust has the full right over the entire assets. Being the trusty, Mr. Simon should have taken care that everything is in order before the formation of the trust. All these are a bit confusing. Of course her intention is clear. Her actions were in the interest was of her nieces and the dog. The ‘interim conclusion’ should be that the trust should take care of the assets for the time being. The ‘final conclusion’ should be as follows: 1. The entire property must go to the nieces of Marie Brown, namely, Olivia and Sarah when they attain the age of 25. 2. Olivia and Sarah must take full charge of the dog as if it is their own sibling. 3. The court must fix the amount set apart for the purpose. Bibliography Garber, Julie, “What is a Last Will and Testament?” http://wills.about.com/od/fiveessentialdocuments/a/lastwillandtest.htm Hill ,Gerald N. , Hill ,Kathleen T. “Probate” http://legal-dictionary.thefreedictionary.com/probate, , 1981 Myers, J, Robert, Esquire,” What are the Responsibilities of a Successor Trustee?” http://estatelawyerstpetersburg.com/cat-estate-articles/what-are-the-responsibilities-of-a-successor-trustee/#skip-menu#skip-menu ,2008 “Next of Kin”, http://www.answers.com/topic/next-of-kin peter, viliamu “What is a will and why do we need one”http://ezinearticles.com/?What-is-a-Will-and-Why-Do-We-Need-One?&id=54691, 2005 “Probate of will”.http://www.tax4india.com/indian-laws/inheritance-law/probate-of-will/probate-of-will.html “What is a Will” http://www.vakilno1.com/wills/What-is-a-Will.php, 2000 Word Count : 2703 Read More
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