Memorandum Law - Assignment Example

?Part I Memorandum Law Firm Re: Alfred Andrews Issues: Alfred Andrews established four separate trusts by transferring townhouses to his two children Brian and Colleen, his sister Patricia and his widow companion Mrs. Goodchild. On the facts of the brief, the transfers were made during Andrew’s lifetime with an expectation that the property would be held by the donees upon his death. Brian and Colleen would be entitled to absolute ownership of the townhouses upon Andrew’s death; Patricia’s ownership was intended to be conditional upon her using the townhouse pursuant to her commitment to the nuclear disarmament cause; Mrs. Goodchild would inherit a life interest with remainder over to the children of Brian and Colleen failing which Mrs. Goodchild would inherit the townhouse absolutely. Mr. Andrews has subsequently attempted to revoke these gifts. The main legal issues are therefore whether or not Mr. Andrews has established trusts or absolute gifts and if so, whether or not he is at liberty to revoke these trusts/gifts. In order to determine whether or not the gifts/trusts can be revoked it will be necessary to ascertain whether or not Andrews has the power to revoke the gifts as a settlor or otherwise. Rules/Authority It is a general principle of the law of equity and trust that once an express trust is created it cannot be reversed by the settlor.1 However, in the event a settlor reserves unto himself the power to revoke a trust, and he decides to exercise that power, the trust property will revert back to the settlor.2 In addition, the doctrine of donatio mortis causa may have a role to play in the settlor’s right to revoke a gift.3 By virtue of the doctrine of mortis causa, a settlor transfers property to a donee in contemplation of his death and with the understanding that the property will be held by the donee absolutely upon the settlor’s death.4 In other words, a gift made with the intention that the donee obtains absolute title upon the donor’s death is distinguished from an inter vivos absolute gift.5 Therefore the consequence of such a gift is that the donor may revoke the gift if he does not die. There is one caveat: the gift must be made in contemplation of pending death, not in contemplation of death at some future speculative time in the future.6 Where the death is speculative the gift is “inter vivos but conditional on death”.7 Thus the only method of revocation of the intervivos gift conditional upon the death of the donor is by an express provision of revocation in the trust instrument or transfer deed or by expressly resuming possession of the property transferred.8 At its heart, the main question for determining whether or not a trust can be revoked or trust property recalled is determining whether or not the settlor intended to divest himself completely and absolutely of the trust property.9 In this regard, the doctrine of resulting trust will be significant. In general it is the common intentions of the settlor and the trustee’s of the trust. A resulting trust arises to transfer property back to the settlor when both the trustee and the settlor are aware that the settlor did not intend to transfer the property absolutely to the trustee or that the trustee treats the property in a manner that is inconsistent with the donor’s intention.10 Thus resulting trusts operates on the conscience of the parties.11 Application to the Facts The gifts of the townhouses to Andrews’ children Colleen and Brian appear to be gifts only intended to take effect upon Andrews’ death. This was expressly noted in the attorney’s letter to the children and represents the terms upon which they accepted the gift of the townhouse. However, there is no evidence that Andrews made the gift in contemplation of death as he merely said that he was at a place financially where he wanted to pass his wealth along. As such the doctrine of donatio mortis causa will not be an available ground for Mr. Andrews to force the return of the gifts to him. There is no evidence that the transfer of any of the townhouses included an express provision for revocation of the transfers of the townhouses. It is therefore necessary to examine Andrews’ intentions and the shared knowledge of his tension to determine whether or not a resulting trust will arise to effectively revoke the inter vivos gifts. Mr. Andrews’ intention with respect to the gifts of the townhouses to his two children were that the townhouses would be owned absolutely only upon his death. Therefore during Mr. Andrews’ life Colleen and Brian are not entitled to treat the property as their own. Arguably, but refusing to transfer the title back to Mr. Andrews upon his request, Colleen and Brian are erroneously treating the property as their own. In this regard, they are acting in a manner inconsistent with Andrews’ intention which was communicated to them, and thus they can be compelled to transfer the townhouses back to Mr. Andrews. A resulting trust will also arise in the cases of Patricia and Mrs. Goodchild as both are aware that the townhouses were transferred to them for specific purposes and with a specific intention. At the time of conferring upon Mrs. Goodchild a life interest in the townhouse, Andrews clearly did so on the understanding that she would be his partner until after his death and that he did not want to leave her without care and accommodations. This can be inferred from the facts of the case, particularly the fact that Andrews intended that Mrs. Goodchild hold the property upon trust for his children and/or their children. Mrs. Goodchild subsequently took off with another man, rented the house without Andrews’ approval, did not share the rent income with him and thus treated the property as her own. Thus, the trust can be revoked on the basis of a resulting trust since Mrs. Goodchild is knowingly acting in a manner inconsistent with Andrews’ intention. As for Patricia, the townhouse was transferred to her for the stated intention of using it to further the cause of nuclear disarmament in the Pacific. Patricia was aware of Andrews’ intended use of the property as this was clearly stated in the letter setting out the conditions for the transfer of property. Contrary to Andrews’ intention, Patricia is using the property for illicit purposes and has made no effort to further the cause of nuclear disarmament. Thus Patricia too is treating the property as her own and not acting according to Andrews’ intention. Thus a resulting trust arises and Andrews is entitled to have the property returned to him. Conclusion On the basis of the authorities and that facts of the brief, it appears that a resulting trust will arise in order to force the return of each of the townhouses to Mr. Andrews. Each of the townhouses were transferred on certain conditions and with specific intentions. Since the recipients not only knew of those intentions and conditions, but also consented to those conditions and intentions, it would be unconscionable to allow them to keep the property now that they have acted in a manner inconsistent with the conditions and intentions of the settlor. Thus by virtue of the operation of the doctrine of resulting trusts, Andrews is very likely to succeed in his efforts to have the townhouses returned to him. Part II Memorandum From: To: Law Firm Re: Foina McKenchie/Thomas Hilditch Hilditch does not want to challenge McKenchie’s inter vivos disposition of property to Madeliene and Marisa. He wishes to challenge all other dispositions of property contained in the testamentary trust created by McKenchie on the basis that the recently discovered Will that predates the trust deed prevails over the trust deed. Failing that, Hilditch would have to prove that each and every disposition is not a valid and enforceable trust and should therefore fail. Only once he is able to prove that the individual dispositions fails, the property will pass to McKenchie’s estate as if she had died without a will: intestate. The applicable intestacy states laws of Australia typically provide for the residuary estate of an individual to fall to the next-of-kin in a particular order. For example the Succession Act 1981 (Queensland) provides for brothers and sisters to qualify as next-of-kin only if the deceased is not survived by any children.12 Therefore only if Hilditch is the statutory next-of-kin can he claim his sister’s estate. However, since there is a surviving sister, Hilditch will have to share the estate with her as he is not the sole next-of-kin and therefore not the sole beneficiary. The main issue for Hilditch at this point is proving that the Will prevails over the subsequent trust deed. To this end, the relevant facts are the circumstances existing at the time the will and the trust deed were executed. These circumstances will be important for determining and giving effect to McKenchie’s intentions. In this regard, at the time of executing the Will, McKenchie had a good relationship with her brother and her assets were not as large as they currently are. However, after a quarrel with Hilditch, the siblings became estranged and had no contact for the 10 years immediately preceding the execution of the trust deed. In the interim, McKenchie had forgotten about the Will and thus it can be inferred from these circumstances that had she recalled the Will, she would have had it revoked. Regardless of the mistake, McKenchie made a transfer of the property designed for charitable trusts in contemplation of pending death under the doctrine of donatio mortis causa. The transfer of that property was conducted during McKenchie’s lifetime, albeit, moments before her death. When a “personal chattel” is gifted by virtue of donatio mortis causa, it “becomes the absolute property of the done upon the donors’ death”.13 As a result, the property in question cannot become a part of McKenchie’s estate, “either at law or in equity”.14 It therefore follows that if the disposition of the trust property by virtue of donatio mortis causa is valid, then Hadiltch has no claim to the will. The disposition of property by donatio mortis causa is valid if it is made in contemplation of impending death, the gift was conditional upon the donor’s death and can be revoked at any time prior to death and the property or the means of access was delivered to the trustees.15 The property itself was not delivered to the trustee, however the trust deed itself provided the means by which the trust property would be delivered to the trustees. It has been held that where delivery is not possible, the delivery of methods by which possession is facilitated is enough to satisfy the requirement of delivery.16 Presumably, the funds allocated to the trusts are held in bank accounts and are funds that are invested with ongoing rates of returns. Thus, it is impossible for the funds to be delivered to the trustees. The trust deed itself entitles the trustees to possession of the various funds and investments and thus are sufficient to constitute delivery of the trust property. In all the circumstances, Hadiltch does not have a valid claim to the trust property as it is the subject of a valid donatio mortis causa. Hadiltch’s only recourse is to challenge the individual gifts and ascertain whether or not each of these gifts are valid and enforceable trusts. Should any of the trust fail, they will fall to McKenchie’s estate and will either devolve pursuant to the 1993 will or under the laws of intestacy. If the will is rendered unenforcible, Hadiltch may succeed as a next-of-kin and will share the residue estate with his sister. Bibliography Text Books Hudson, A. Equity and Trusts, (Oxon, UK: Cavendish, 2010). Ong, D. Trusts Law in Australia. (Annandale, NSW: The Federation Press 2008). Ramjohn, M. Cases and Materials on Equity and Trusts. (London, UK: Cavendish Publishing, 2008). Articles/Journals Thornely, J.W. A. ‘Laying Lord Eldon’s Ghost: Donatio Mortis Causa of Land.’ (Nov. 1991) 50(3) The Cambridge Law Journal, 404-407. Table of Cases Birch v Treasure Solicitor [1951] Ch. 298. Carreras Rothmans Ltd. v. Freeman Matthews Treasure Ltd. [1985] Ch. 207. Elder’s Trustee and Executor Company Limited v Symon [1934] SASR 435. Paul v Paul [1882] 20 Ch D 742. Public Trustee v Bussell [1993] 30 NSWLR 111. Re Beaumont [1902] 1 Ch 889. Re Craven’s Estate (No. 1) [1937] 1 Ch. 423. Re Manifold Settlements [1965] VR 197. Table of Statues Succession Act 1981 (Queensland). Read More