Grade: A+ Course Prize Winner
Maximum accumulation periods
Download 0.79 Mb.
|
- Navigate this page:
- Idem
Maximum accumulation periods1. (1) No disposition of any real or personal property shall direct the income thereof to be wholly or partially accumulated for any longer than one of the following terms: 1. The life of the grantor. 2. Twenty-one years from the date of making aninter vivos disposition. 3. The duration of the minority or respective minorities of any person or persons living or conceived but not born at the date of making an inter vivos disposition. 4. Twenty-one years from the death of the grantor, settlor or testator. 5. The duration of the minority or respective minorities of any person or persons living or conceived but not born at the death of the grantor, settlor or testator. 6. The duration of the minority or respective minorities of any person or persons who, under the instrument directing the accumulations, would, for the time being, if of full age, be entitled to the income directed to be accumulated. R.S.O. 1990, c. A.5, s. 1 (1)
Idem(3) The restrictions imposed by subsection (1) apply to every disposition of real or personal property, whether made before or after its enactment. R.S.O. 1990, c. A.5, s. 1 (3). Application of invalid accumulations(6) Where an accumulation is directed contrary to this Act, such direction is null and void, and the rents, issues, profits and produce of the property so directed to be accumulated shall, so long as they are directed to be accumulated contrary to this Act, go to and be received by such person as would have been entitled thereto if such accumulation had not been so directed. R.S.O. 1990, c. A.5, s. 1 (6). National Trust Co v McIntyre Facts: The testator set out a trust which guaranteed his sister $150 bucks a year with the residue to be divided on her death to other people. The will also allowed for discretionary encroachment on the capital in the event of illness, incapacity etc. The estate value increased from 160k to 300k due to good management (as the excess income was reinvested in the capital). The Ontario Accumulations Act prevented dispositions of property 21 years after the making of an inter vivos disposition or 21 years after the death of the testator. The sister wanted the extra funds to be cashed out while the remainder wanted the capital locked in. It was never contemplated what might happen after the 21 years was up. Issue: Who is entitled to the excess income of the estate? Ratio: After the statutory limitation date, the excess funds form part of the residue of the estate. Analysis: Here, any funds that are necessary for the provision of the sister were held to be hers while the remainder would be left over for the next of kin. There was a resulting trust over the funds for both parties by virtue of the intestacy. Holding: It will work itself out eventually Restraints on Alienation and Spendthrift Trusts Re Leach Facts: A will left property on trust under which a nephew of the testator had a right to income “until he shall assign, charge or otherwise dispose of the same part thereof or become bankrupt”. The income would accumulate and be paid to his son with the capital going to his son if he did so charge or dispose of the property. Issue: did the clause restraining alienation create a valid determinable interest? Ratio: Sure they did Analysis: Although it is fairly paternalistic, there was no public policy reason with which to overturn the interest as it was clearly laid out what would happen and to whom the funds would go to should there be any issue. Perhaps if it was a restraint on capital it would be more problematic. Holding: No worries Re Williams Facts: Harriet Williams will provided that payments of income to her daughter would come to an end if she became bankrupt, charged or encumbered her income or in the event that the trustees in their sold discretion were of the opinion that the daughter was being reckless with the scrilla. If she was bad they could pay the maintenance or add the income to the capital of the trust. Issue: Is the trust valid? Ratio: Where the clause is sufficiently clear to give direction to the trustees and is not void for public policy reasons, it may be enforceable. Analysis: The court here didn’t focus on whether the clause overly restrained alienation and instead decided to discuss whether the clause was void for uncertainty viz the scope of discretion given to the trustees. It was clear from the testators will that she wanted to guard against waste and dissipation and the court was reticent in the face of such a clear and benevolent wish to overturn the document. There was a restoration clause where she could get her rights back as well. Rationale: The courts seemingly take a benevolent approach to spendthrift clauses, especially in the instance of a trust based on a parents love or a childs maintenance. It goes without saying that the rule in the document is there or a reason. Note: One way to prevent spendthrifts from terminating under Saunders is to give discretion to the trustee to determine payments amongst beneficiaries. In this way, any potential charge gives the trustees the right to exercise their discretion against the spendthrift. Holding: Valid trust Termination and Variation Termination Saunders v Vautier Facts: East India Company stock was held in trust for Vautier by his uncle. Dividends were accumulating until Vautier reached age 25. When he turned 21, he got engaged and wanted to run a business, so he sought to terminate the trust to allow the funds to reach him immediately. In the event that he died prior to his 25th birthday, the estate was the beneficiary of his stock regardless. Issue: can you terminate the trust against the wishes of the testator? Ratio: Where all of the beneficiaries in full legal capacity decide to terminate the trust, the trust can be terminated against the wishes of the testator or trust instrument Analysis: As Vautier was an adult with all of the legal and beneficial interest in the trust property coming his way, along with being the sole beneficiary, the lord chancellor had no trouble wrapping up his trust. Consideration: This rule can directly defeat settlor intention both with regard to timing of the trust instrument as well as purpose of the trust instrument. In some areas of the US, a trust can only be defeated if the trust purpose has been served; this kind of provision helps to guard against spendthrifts trying to destroy a trust Holding: Allowed to quash trust Variation Trust and Settlement Variation Act Directory: wp-content -> uploads -> gravity forms -> 1-7d6c8355b7f07846e8789d85deabdb60 -> 2016 gravity forms -> Earl E. Klein Jr gravity forms -> Narrative of how the entry meets the award criteria – July 28, 2016 gravity forms -> Revonda M. Baldwin gravity forms -> Air Atlanta Icelandic November 2006 – Current 2016 -> Ip master Guide 1-7d6c8355b7f07846e8789d85deabdb60 -> Insurance Law can Download 0.79 Mb. Share with your friends:
|