Durham BA: Equity & Trusts Exam Paper

Alice, a wealthy businesswoman, executed a will in 2020 containing the following provisions: (i) '£500,000 to my trustees to distribute among my employees as they see fit'; (ii) '£200,000 to be held on trust for my daughter Beth until she reaches 25, but if she fails her university degree, the money should go to charity'; (iii) '£300,000 for the promotion of good relationships between people of different faiths in Durham'. Alice died in 2023. Beth is now 22 and has just been expelled from university for academic failure. The trustees are uncertain about their obligations. Advise the parties as to the validity and enforceability of these dispositions.

"The decision in Stack v Dowden represents a radical departure from traditional trust principles and has created more uncertainty than clarity in the law of constructive trusts." Critically evaluate this statement with reference to the subsequent development of the law.

David is a trustee of a family trust holding £2 million in shares and property. Without consulting his co-trustee Emma, David: (a) sold the trust's shares in TechCorp Ltd for £800,000 to his brother Frank (the shares were worth £1.2 million at the time); (b) lent £500,000 from the trust fund to his struggling business at 2% interest (current commercial rates are 5%); (c) used £300,000 of trust money to purchase a house, which he put in his own name but allows the beneficiaries to use rent-free. Frank knew David was a trustee but believed the sale was authorised. David's business has now failed and cannot repay the loan. The house has increased in value to £400,000. Advise Emma and the beneficiaries on what remedies may be available.

"The modern law of resulting trusts has lost coherence and certainty. The distinction between automatic and presumed resulting trusts serves no useful purpose and should be abandoned." Critically assess this statement in light of recent judicial and academic developments.