Formal Legal Advice - Opinion on Behalf of Leo - Essay Example

? Property Law- Formal Legal Advice IN THE MATTER OF: RE: LEO OPINION ON BEHALF OF LEO I am asked to advise Leo as to the relevant law how best to carry out his wishes as contained in his draft will, particularly in regard to the validity of his intentions. This scenario relates to trust law that regulates the relationship of one party’s property benefitting another; the property can either be transferred from one party to benefit a third party or the legal owner may create a trust of property without necessarily transferring to a third party. THE FACTS 2. The basic facts appear as outlined. 3. Leo has drafted a will that expresses his intentions. The draft will contain several clauses. 4. In the first clause he offers income from his building society shares to be for Ben as long as he lives. The main issue in this clause is the gifts that Leo gives to Ben. The income from Leo’s building shares will be given to Ben as long as he lives. An issue may arise in the transferability of such shares.1 5. He gives reasonable income to Kasim from the rent on his blue chip shares for as long as he shall live. The main issue in this clause is the ascertainment of “reasonable income”. As an executor and trustee, Kasim can also be a beneficiary as law does not prohibit executors and trustees from being beneficiaries. Also, it is important that Leo specifies the shares rather than simply saying blue chip shares.2 6. He gives one of his two dogs to Ben and the other to Toby. The main concern will arise if Ben dies before choosing because he is required to choose first, as this will result to uncertainty of subject matter. Ben is an executor and trustee, and he can be a beneficiary as well.3 7. Leo offers a bulk of his residuary estate to Sonya and Adaeze. The main issue here is lack of sufficient certainty. The actual size should be provided and the mode and ratio of splitting between Sonya and Adaeze determined in advance.4 8. He offers ?70,000 for the erection of a suitable monument to himself at the university. An issue may arise as to whether the monument is considered as part of the fabric of the university, as well as whether it involves maintenance of the university yard.5 9. He has offered ?50,000 to be invested by his trustees and the interest used to maintain the monument. The main issue in this clause is whether the erection of monument has been considered as part of the university fabric the first place. If it has the trust for the maintenance should not offend the rules against perpetuities. 10. Leo gives ?10,000 to the purposes of promoting the use of a new alphabet to simplify the English language. The main issue in this clause is whether this gift is considered a charitable purpose for education.6 11. He has offered ?100,000 to promote the freedom of small newspapers to compete with large media companies. The main issue is whether the beneficiaries are ascertainable. The intended beneficiaries (small newspapers) should be made more precise because such newspapers may be so many. 12. He has given ?19,000 for the welfare of his grey parrot and tortoise for as long as they shall live. Since this clause provides for the welfare of his animal, the only issue that can arise is that of execution of the wish in regards to the perpetuities period on animals. 13. He has offered ?5,000 for the purposes of anti-vivisection campaigns. The main issue is that the gift achieves the charitable trusts threshold. Such a gift is considered as other charitable purposes that seek to promote the welfare of animals.7 14. Leo has given ?500,000 for a sports field for the recreation of employees of Canterbury Christ Church University and any other people his trustees see fit to include. An issue might arise concerning the purpose of the gift rather than the beneficiary. The consideration of whether the gift is a charity or not will depend on the determination of whether it benefits the public or a significant section of the public.8 15. He has offered ?1,000,000 for any charitable, educational or benevolent causes that his trustees would choose at their absolute discretion. The main issue in this clause is to determine the specific causes that the gift should fund, as well as ascertainable beneficiaries.9 Leo should ascertain the beneficiaries because trusts given to unascertainable beneficiaries are unenforceable.10 THE LAW 16. In particular, I rely upon: Charitable Uses Act 1601 [1] Charities Act 2006 [2] Knight v Knight (1840) 3 Beav 148 per Lord Langdale [3] Re Adams & The Kensington Vestry (1884) 27 ChD 394 [4] Palmer v Simmonds (1854) 2 Drew 221 [5] Re Golays Trust [1965] 1 WLR 1969 [6] Charitable Trusts (Validation) Act 1954 [7] Re Eades [1920] 2 Ch 353 [8] Chichester Diocesan Fund v Simpson [1944] AC 341 [9] IRC v Pemsel [1891] AC 531) [10] Hoare v Osborne (1866) LR 1 Eq 585 [11] Re Eighmie [1935] Ch 524 [12] Re Elliot [1952] Ch 217 [13] Re Hooper [1932] 1 Ch 38 [14] Trimmer v Danby (1856) 25 LJ Ch 424 [15] Boyce v Boyce (1849) 16 Sim 476 [16] Re Vandervells Trusts (No2) [1974] 3 All ER 205 [17] Re Astor’s ST [1952] Ch 534 [18] Charities Act 1960 s38(1) [19] Oppenheim v Tobacco Securities Trust [20] Re Shaw [1957] 1 All ER 745 [21] Re Dean [1889] 4 Ch D 552 [22] Pettingall v Pettingall (1842) 11 LJ Ch 424 [23] Mortmain and Charitable Uses Act 1888 [24] Dingle v Turner [25] Salusbury v Denton (1857) 2 K&J 529 [26] Re Ward [1941] Ch 308 [27] Re Endacott [1960] Ch 232 [28] Re Shaw [1957] 1 WLR 579 [29] Re Astor [1952] Ch 534 [30] Re Diplock [1948] 1 Ch 465 [31] 17. Trust law regulates the relationship of one party’s property benefitting another; the property can either be transferred from one party to benefit a third party or the legal owner may create a trust of property without necessarily transferring to a third party. There are 3 different types of trusts. Each type of trust provides a framework within which the provisions issues relating to trust law can be executed, legally.11 The first type of trust is private express trusts; express trust is that which is created deliberately by the legal owner of the property. In this case, the right-holder “settles” the rights on trust by declaring that he will hold certain rights on trust for the beneficiaries, or through transferring the rights to third party who will hold the trust on behalf of the beneficiaries.12 The second type of trust is purpose trust. This type of trust does not benefit any beneficiaries because its main purpose is to advance certain non- charitable purposes. Under the English Law, this trust is not considered valid by courts because there are no beneficiaries involved, thus implying that no one can enforce it. However, it should be noted that it can be considered valid if it is fulfilling a particular purpose on request. Besides, it can be considered valid if in some way it is involving beneficiaries. Additionally, they can be valid if they for maintenance of animals, erection and/or maintenance of memorials and tombs. In such cases, the trusts should obey the rule against perpetuities.13 The final type of trust is charitable trust; this type of trust is for charitable purposes and is irrevocable. Charitable trusts are a kind of express trust that is intended to achieve certain charitable purposes/ objectives. In England and Wales, this type of trust enjoys some advantages like exception from certain types of tax. There are specific categories that have are considered under this type of trust such as education and poverty. 14 Since this scenario has numerous clauses, more than one type of trust is relevant. Actually, when all the clauses are put into legal perspective, all the three types of trust are relevant. Each type may be relevant to several clauses. Also, there are clauses that will demand more than one type of trust especially when future possibilities are considered. THE INSTANT CASE 18. In the first clause, Leo should facilitate the process of transferring the shares to Ben and also clarify what will happen to the shares if Ben dies. He should also specify the building society he is referring to in order to make the execution of his wish easy [10].15 THE INSTANT CASE: INCOME TO KASIM 19. In this clause, Leo should specify the percentage of income that should be given to Kasim even though the term reasonable is quite certain as noted in Re Golays Trust [6]. It will be important to ascertain reasonable income if Kasim disagrees with the amount allocated to him as reasonable by the executors and trustees. He also needs to specify the exact blue chips companies because blue chips companies are numerous. As an executor and trustee, Kasim can also be a beneficiary as law does not prohibit executors and trustees from being beneficiaries.16 THE INSTANT CASE: GIFTS OF DOGS TO BEN AND TOBY 20. In this case, the subject matter is uncertain as noted in Boyce v Boyce [16]. Even though Ben is one of Leo’s executor and trustee, he can be a beneficiary because the law does not prohibit executors and trustees from being beneficiaries.17 However, a problem may arise if Ben dies before choosing. As noted in Boyce v Boyce [16], Toby’s gifts depend on Ben’s choice and therefore the gift will fail if Ben dies before choosing; the trust will fail because of uncertainty of subject matter.18 INSTANT CASE: GIFTS TO SONYA AND ADAEZE 21. In this case, Leo is offering a bulk of his residuary estate to Sonya and Adaeze. There is no certainty of subject matter because Leo has not described the subject matter with sufficient certainty; this statement is relative and may be difficult to ascertain the bulk of his residuary estate.19 As decided in Palmer v Simmonds [5], “the bulk of my residuary estate” is sufficiently uncertain. Therefore, Leo should make the subject matter more certain. He should do this by giving the actual size of his residuary estate that he wishes to give to Sonya and Adaeze, as well as giving the mode and ratio of splitting the property between them.20 Besides, since Sonya and Adaeze are witnesses, they cannot be beneficiaries.21 INSTANT CASE: ERECTION OF MONUMENT 1. Leo should ensure that erection of his monument is considered as part of the fabric of the university, as decided in Re Eighmie [12]. Besides, such an erection can be considered valid if it involves maintenance of the university yard.22 More importantly, such an erection should be within the perpetuity period. This is because it is only valid if it does not intend to run outside the perpetuity period.23 Therefore, as observed in Re Endacott [28], the monument can only be erected if the beneficiaries are ascertainable, if not it can be disregarded as being anomalous. INSTANT CASE: MAINTENANCE OF THE MONUMENT 2. In Re Elliot [13], it was decided that the trust for the maintenance of monuments should not offend the rules of perpetuities. Such maintenance can only be considered valid if they do not intend to run outside perpetuity period.24 INSTANT CASE: PROMOTING THE USE OF NEW ALPHABET 3. Leo should alter this clause as it is because it does not meet the criteria set under the Charities Act 2006 [2] for the description of charitable purposes for advancement of education.25 As noted in Re Shaw [29], developing new alphabet is not considered as being charitable, and neither can it be considered as non- charitable purpose trust.26 INSTANT CASE: PROMOTING FREEDOM OF SMALL NEWSPAPERS 4. In the case of Re Vandervells Trusts [17], it was decided that a trust must be for ascertainable beneficiaries. Since small newspapers are numerous, Leo should give the specific small newspapers companies that he intends to promote so as to compete with large media companies. As re-affirmed in Re Astor [30), purpose trusts should relate to detailed and specific matters, failure to which such trusts will not be enforceable.27 INSTANT CASE: GIFT TO WELFARE OF PARROT AND TORTOISE 5. Since trusts for the maintenance of particular animals is provided for under the Charities Act 2006 [2], Leo should ensure that he has provided details regarding the perpetuity of the trusts for his grey parrot and tortoise, as noted in Pettingall v Pettingall [23].28 INSTANT CASE: GIFT FOR ANTI-VIVISECTION CAMPAIGNS 6. As decided in Re Dean [22], such campaigns fall under the trusts for the maintenance of particular animals as it seeks to promote the welfare of animals. Leo should maintain this clause as it seeks to ensure that animals are protected from destruction and molestation by man.29 This gift intends to promote the welfare of animals through campaigning against the use animals in biomedical research, education, and product testing.30 INSTANT CASE: GIFT TO SPORTS FIELD 7. According to Charities Act 2006 [2], this gift qualifies as a charity as it benefits the public or a considerable section of the public.31 Since the trust intends to benefit the locality, Leo should specify the beneficiaries rather than letting his trustees to decide as this result to uncertainties of beneficiaries.32 INSTANT CASE: GIFT FOR CHARITABLE CAUSES 8. Leo has not stated the specific causes that his charity should cover, as well as ascertaining the beneficiaries. As it is now, this clause is invalid and cannot be enforced. For the clause to be enforceable, he should ascertain the beneficiaries and ensure that the specific causes fall within the charitable causes. In Chichester Diocesan Fund v Simpson [9], it was declared that money paid by the executors to charitable institutions was void because of uncertainty.33 This clause may not achieve the certainty rule because of the problem with wording. The words “charitable or benevolent” are considered to be used disjunctively, hence not to be charitable.34 Besides, since Leo has stated that the funds may be used for any other causes that his trustees would choose at their absolute discretion, misappropriated funds may be given to the recipients of the charities as noted in Re Diplock [31]. CONCLUSION 9. Most of Leo’s wishes as contained in the clauses of the draft of his will are enforceable. However, as has been noted, he has to rectify some clauses to ensure that they are valid, hence enforceable.35 He should ensure that all trusts that he wishes to be charity should be within the legal provisions especially under the Charities Act 2006 and Charitable Uses Act 1601. Whereas the other trusts should be within the legal provisions governing the private express trust and purpose trust. BIBLIOGRAPHY BOOKS: Bays W. A., The Law of Property: Including Estates and Wills, with Questions, Problems and Forms (Lightning Source UK Ltd, 2011). Chase, Chase E. E., Forrester P. J., Property Law: Cases, Materials, and Questions (LexisNexis, 2010). Cooke E. (ed), Modern Studies in Property Law (Volume 2, Hart Publishing Co, Portland 2003) 41. Duddington, J, 2010, Law Express: Equity and Trusts, Longman. Edwards R., Nigel S., Trusts and Equity (Pearson Longman, 2007). Fafinski, S and Finch, E, 2010, Law Express: English Legal System, Longman. Goldstein P., Thompson H. B., Property Law: Ownership, Use, and Conservation: Cases and Materials (Foundation Press, 2006). Hayton, D et al, 2005, Commentary and Cases on the Law of Trusts and Equitable Remedies, Sweet & Maxwell. Holdsworth W. S., Vickers C. W., The Law of Succession: Testamentary and Intestate (The Lawbook Exchange Ltd, New Jersey 2004) Mitchell, C and Hayton, D, 2005, Hayton and Marshall's Commentary and Cases on the Law of Trusts and Equitable Remedies. Sweet & Maxwell. Mitchell, C and Hayton, D, 2006, Underhill and Hayton's Law Relating to Trusts and Trustees. Butterworths. Moffat, G et al, 2005, Trusts Law: Text and Materials, Cambridge University Press. Oakley, A., Parker and Mellows: The Modern Law of Trusts. (Sweet & Maxwell, 2008). Penner, J, 2006, The Law of Trusts, Oxford: Oxford University Press. Pettit, P, 2005, Equity and the Law of Trusts, Oxford: Oxford University Press. Singer W. J., Property Law: Rules, and Practices (5th edn., Aspen Publishers, 2010). JOURNAL ARTICLES Mattei, H, 1998, “The Functions of Trust Law: A Comparative Legal and Economic Analysis”, NYUL Review. Mee, J 2011, 'Resulting Trusts and Voluntary Conveyances of Land, 1674-1925', Journal Of Legal History, 32, 2, pp. 215-238 Parkinson, P, 2002, Reconceptualising the Express Trust, Cambridge Law Journal, 61, 3, pp. 657-683 WEB PAGES: Legislative Bijuralism, 'The Concept of a Gift' [Canadian Jurisdiction] (Department of Justice Canada, 2011) accessed 29th January 2012 Siam Legal International, 'Legal Effect of a Blank Share Transfer Instrument ' (SilomJournal, 21st December 2011) accessed 28th January 2012 CASE LAW AND LEGISLATION: Charitable Uses Act 1601 Charities Act 2006 Knight v Knight (1840) 3 Beav 148 per Lord Langdale Re Adams & The Kensington Vestry (1884) 27 ChD 394 Palmer v Simmonds (1854) 2 Drew 221 Re Golays Trust [1965] 1 WLR 1969 Charitable Trusts (Validation) Act 1954 Re Eades [1920] 2 Ch 353 Chichester Diocesan Fund v Simpson [1944] AC 341 IRC v Pemsel Hoare v Osborne (1866) LR 1 Eq 585 Re Eighmie [1935] Ch 524 Re Elliot [1952] Ch 217 Re Hooper [1932] 1 Ch 38 Trimmer v Danby (1856) 25 LJ Ch 424 Boyce v Boyce (1849) 16 Sim 476 Re Vandervells Trusts (No2) [1974] 3 All ER 205 Re Astor’s ST [1952] Ch 534 Charities Act 1960 s38(1) Oppenheim v Tobacco Securities Trust Re Shaw [1957] 1 All ER 745 Re Dean [1889] 4 Ch D 552 Pettingall v Pettingall (1842) 11 LJ Ch 424 Mortmain and Charitable Uses Act 1888 Dingle v Turner Salusbury v Denton (1857) 2 K&J 529 Re Ward [1941] Ch 308 Re Astor [1952] Ch 534 Re Diplock [1948] 1 Ch 465 Read More