Equity and Trust in Executing the Will of a Deceased Person - Essay Example

Equity and Trust According to Hudson p. 36) “Equity is the means by which a system of law balances out the need for certainty in rule-making with the need to achieve fair results in individual circumstances.” Equity implies fairness, and it forms the basis of European laws of trust. Trust laws refer to rules that have been set up to control the state of affairs in a circumstance where one person has put trust on another person over his or her affairs (Hudson, 2012). Equity and trusts laws are essential for management of trust funds and resolving domestic conflicts as well as administering resources of the people who have departed. They assist the legal officers in executing the will by determining how properties are to be shared among the beneficiaries of the departed owners (Duddington, 2006). This study examines the implementation of Equity and Trusts in a case study involving execution of the will of a deceased person. The aim of equity is to the defendant does not gain any benefit by engaging in immoral conduct and offer compensation to the claimant for the harm sustained in the event of unacceptable conducts and ensures that both statutory and common laws are not manipulated with immoral intentions (Dixon & Griffiths, 2007). Therefore, equity rules provide moral guidance to the court in an application of its substantive and procedure principles. Equity has the moral basis thus it ensures firm application of common and statutory rules in order to avoid making injustices when applied in specific cases. Lord Ellesmere stated that the purpose of equity law was to “correct men’s consciences for frauds, breach of trusts, wrongs and oppressions” (Penner, 2012, p. 64). The concept of trust was developed by courts of chancery to safeguard the interests of legal interest of the property owned by one person on behalf of other beneficiaries or for another permissible purpose (Lacy, 2009). Therefore, equity recognizes the interests of the person owning the property and the recipient of that property. Equity provides a better remedy than common law because it is applied to specific cases in order to eliminate any injustices that could result from unjust practices (Virgo, 2012). According to Penner (2012), there are various approaches in which trust come into existence. For example, the absolute owner of the property can initiate a trust expressly having established it intentionally to achieve a particular purpose. They can also create trust impliedly by the virtue of their conducts that the court construes as sufficient to establish trust, but without the knowledge of the trustee (Mitchell, 2010). Also, trust can be established through operation of law intended to settle disputes involving the ownership of property following the failure of express trust or make out for the property rights of the of a party who made contributed to the purchase price of that property. Finally, the trust comes into existence following the operation of law to prohibit the legal owner of the property from acting immorally to deny other parties with equitable right in that property of their rights (Virgo, 2012). The establishment of trust deprives the settlor of his or her rights of the property in trust or any power over the trust in their capacity as settlors (Klinck, 2013). In this case, the trustee takes the legal claim to the trust property while the beneficiary owns the equitable interests in accordance to the terms of the trust. More than one beneficiary can have property rights in the same property simultaneously. The case of Westdeutsche Landesbank v. Islington [1996] 2 All E.R. 961, 988. [1996] AC 669, establishes basic principles of trust, the duties of trustees and beneficiaries rights. For example, morality of the owner of the legal interest influences an operation of the equity. However, the conscience of the legal owner of the property in trust influences the use of property for the purpose of which that property was vested in him or her. A trust can establish for distinguishable property only and the after it has been set up the beneficiary has "equitable proprietary interest in the trust property and is enforceable in equity against any successive proprietor of the property" (Berman, 2009, p. 46). Trust confers proprietary rights of trust property on the beneficiaries. Also, it offers preferential rights in insolvency and gives priorities for beneficiaries in the absence of the trustee or during trustee’s bankruptcy (Martin & Hanbury, 2012). In addition, trust offers the beneficiary wide range of equitable remedies enforceable against the Trustees and any other third party with a claim on the trust property. Trust imposes a duty of legal property owner or the trustee requiring them to implement a morality in all transactions involving the property in errand of the beneficiary of that property that has equitable interests in the property (Berman, 2009). In the case of Westdeutsche Landesbank v. Islington [1996] 1 AC 669, Lord Browne-Wilkinson issued that equity operated on the ethical principle of the legal property owner, while in the case of trust the owner is guided by ethical considerations to carry establish the purpose for which the property was conferred on him or her. In the case study of Lord Marchmain, he had been diagnosed with a deadly illness and went to spend his last moments in his ancestral home of Beechyhead castle. The occupants of his Beechyhead were his daughter Julia and her fiancée, Charles. Marchmain loaned Charles a sum of £100,000 to restore the Beechyhead castle interest-free, but later he asked Charles never to repay the amount he had loaned him. Before his death, Marchmain had appointed Charles as the executor of his will. The issue is what Charles should do about the amount of £100,000 lent to him. It is upon Charles to manage the property of the legal owner in accordance with the will he had drafted before his death. Although Charles had taken a loan to restore the castle, he is obliged to adhere to the deceased’s decision. In case the will does not recognize, Charles is a beneficiary of the trust property Charles should not keep the amount of £100,000 advanced to him since it was used for restoring the castle. In the case of Twinsectra Ltd v Yardley [2002] UKHL 12 at [71], [2002] 2 All ER 377 at [71], [2002] 2 AC 164, the settlor must have had the intended to establish trust in order for the law to recognize the existence of the trust that confers beneficiary rights to trust property. Therefore, when executing the will Charles is entitled to his share whether it is specified or not specified in the will. Charles had become a partner with Marchmain of the Beahyhead to the extent of the money he had invested in the beach. Although that amount had come from Marchmain as the legal owner, he had intended for Charles to keep the amount without repaying it. According to the case of Sprange v. Barnard (1789) 2 Bro. C.C. 585, in order for the law to recognize the existence of the trust that trust property must be discretely identifiable in order to be able to determine with precision the interest of beneficiary and the exact property to which it is attached. The issue satisfies all requirements of the trust. It was related to identifiable amount, and the owner had intended to establish a trust by allowing Charles to keep the amount and never to repay it. Lord Marchmain handed over his savings book related to a building society enclosing £400,000 to his son Sebastian because he intended his son to establish himself in life. The question as to what Charles should do that mount during the execution of Marhmain’s will depends on Marchmain’s intention because the duty of a trustee is to execute the will of the legal owner of the property. The matter depends on what the will states that the amount. In a case the owner intended his son to have that amount he may have stated so in the will thus the trustee is obliged to obey the deceased intention. On the other hand, if the will entrusts the property to another beneficiary then Charles will have to relocate that property to the named owner. In case the property is not specified in the will the executor of the will has a duty to exercise his conscience by and obey the intention of the real owner. Since his intention was to help his son set himself in life Charles will have to execute that plan by allowing Sebastian to keep the property. Another issue concerns the art-restoration business which Marchmain intended to transfer to his daughter. He had appointed her as the managing director of that business and completed a share transfer form that he forwarded to his accountant to append the signature. However, the process was not completed since the accountant had not yet signed the documents to formalize the transfer of the shares. In this regard, Charles has to consider the plan of the owner of the property and the claims from other beneficiaries where they exist. Since the original owner of the property had meant to give the property to his daughter Charles should give the property to the intended beneficiary in the absence of any other written document providing otherwise. However, should there be a case presented in court against Cordelia’s ownership of the art-restoration business the court will be guided by equitable principle to determine the real beneficiary of the property. The court will have to consider the witnesses to the transfer form intended to direct the transfer of company’s shares from the actual owner to his daughter. Although Rex (the accountant) had not followed the legal requirements for authorization of a transfer of shares, there was no legal obligation that those processes should be completed during the existence of the real property owner. In the case of Paul v Constance [1976] EWCA Civ 2, Mr. Constance had moved to live with Ms. Paul. During their stay Constance was given workplace accident compensation and had accumulated some funds he won from bingo. He had stated to Ms. Paul on several occasions that his wealth equally belonged to her. After his death, his old wife presented a claim to the court demanding for her former husband’s wealth. However, the court issued that despite the absence of a formal declaration the intention of Mr. Constance was for the wealth to be shared between him and Ms. Paul. Therefore, in taking the same consideration in the case of Marchmain and Cordeli it is apparent that Cordeli is the new trustee of the art-restoration business in the absence of a written will specifying otherwise. Before his death Lord Marchmain opted to dispose of his remaining property by establishing a charitable foundation named the Society for the Restoration of Renaissance Art, SRRA. He appointed a number of trustees and invited them to Beechyhead castle where he executed a deed of trust and proclaimed before the witnesses of his intention to give 3 million from his remaining wealth to SRRA. However, there were other formalities involved in the issues, and that raised the question of what the executor intended to do with the amount allocated to the organization. In the case of T Choithram International SA v Pagarani [2000] UKPC 46, Pagaragani intended to start the Choithram International Foundation. Before his death, he announced to people gathered around him of his intention to transfer his money to Jersey trust by executing a deed in the presence of three trustees. However, when disputes arose the court declared that the trust failed because Pagarani did not follow the due process. They stated the requirements to be observed in order to effectively establish trust. For example, the donor should either transfer the property to the donee with an intention to make a gift or declare himself a trustee of the gifted property to the donee. In the case of Marchmain the transfer of a gift was completed including an intention to donate £3 million to SRRA. Therefore, Charles should execute the will by granting the wish of Lord Marchmain. In conclusion, equity guides the court in correcting the defects existing in common law in order to promote justice. Execution of will should be based on trust thus the trustee should implement the will of the legal property owner. However, in order to establish trust the actual intention of the property owner must be known with precision and must relate to the identifiable property. Therefore, Charles is obliged to execute Marchmain’s will according to his intention. Bibliography Berman, H. J. (2009). Law and Revolution, the Formation of the Western Legal Tradition. Harvard University Press. Pp. 1-672. Dixon, M. & Griffiths, G. (2007). Contemporary Perspectives on Property, Equity, and Trusts Law. Oxford University Press, Pp.1-225. Duddington, J. (2006). Essentials of Equity and Trusts Law. Pearson Education. PP. 1-356 Hudson, A., 2013. Equity and Trust. 7th Ed. Hudson A. (2012). Understanding Equity and Trusts. Routledge, Pp. 1-272 Klinck, D. R., (2013). Conscience, Equity and the Court of Chancery in Early Modern England. England & USA: Ashgate Publishing, Ltd. Pp. 1-328 Lacy, J. (2009). Personal Property Security Law Reform in the UK. Routledge. Pp. 1-568 Martin, J.E. & Hanbury, H.G. (2012). Modern Equity (19th Ed.). Sweet & Maxwell. Pp. 719-749 Mitchell, C. (2010). Trusts and Equitable Remedies. Pp. 601-618 Paul v Constance [1976] EWCA Civ 2 Penner J. (2012). The Law of Trusts UK: Oxford University Press, Pp. 1-512 Sprange v. Barnard (1789) 2 Bro. C.C. 585 T Choithram International SA v Pagarani [2000] UKPC 46 Twinsectra Ltd v Yardley [2002] UKHL 12 at [71], [2002] 2 All ER 377 at [71], [2002] 2 AC 164 Virgo, G. (2012). The Principles of Equity and Trusts. UK: Oxford University Press. Pp. 56-134 Westdeutsche Landesbank v. Islington [1996] 2 All E.R. 961, 988. [1996] AC 669, Read More