Equity and Trusts Essay Example | Topics and Well Written Essays - 1250 words

Equity and Trusts - Essay Example These recent legal decisions have contributed a lot in refining the traditional stipulations surrounding. This been well illustrated in the amounts of emphasis currently attached to beneficiaries’’ loss as a result of a trustee’s actions. The law provides that a trustee should manage a trust property (in this case a fund) on behalf of beneficiaries. This is a discussion that surrounds misappropriation of trust funds by a trustee and focuses on the best legal advice to be given to the beneficiary. Introduction A trust is defined as an equitable duty that binds one person to handle property owned by him or her (but not his or her private property) on behalf of other persons in which any of these other persons my enforce the obligation; including the person himself or herself. This person is called a trustee while the others are beneficiaries and, as stated, the trustee could also be a beneficiary. The writer of the trust is called a settler. Hepburn insisted that o bligation is equitable1. Some scholars have clarified that the popular obligation of conscience is not necessarily the same as ‘equitable obligation The prime obligation of a trustee is to run, handle and manage the trust on behalf of the beneficiaries. Over time however, it has been established that trustees could misappropriate the trust property; which led to the development of rules of equities to act as checks and balances. For instances, rules of equity stipulate that trustees cannot invest trust funds in their own private businesses but only beneficiary-authorized ventures. The beneficiaries are said to own the equitable interest in the trust fund or property and are required to demand for good management of the trust. Beneficiaries can sue trustees for mismanagement or breach of trust. The beneficiaries are entitled to proprietary interest emanating proceeding from the trust property or fund; and are entitled to pass it to others2. The beneficiaries have a legal duty t o terminate the trustees’ legal titles to them. However, their age and absolute entitlement to the trust must be unquestionable. Jeremy Versus Kevin and Joint Trust In advising Kevin and the Joint Trust, there are a several features of a trust to be considered. It should be noted that the principle of equity is effected by the owner, trustee, in his or her own conscience. This is popularly known as implied or express trust. But if law comes in and forces the trustee to perform functions for which the property was conferred, that becomes a constructive. Using this power and the legal disposition discussed above, Kevin should go ahead and instruct his father to confer the legal title to him; otherwise seek court’s direction. The second advice to Kevin would probably rhyme with the second feature of trusts: conscience. For all intends and purposes, Jeremy, the trustee’s conscience is affected by at least some factors. This is illustrated by his decision to transfer the trust fund to his private account; which was of course not the original purpose of the trust. It means therefore that the trustee automatically rendered the trust from being implied or express. Establishment of a trust depends on a property that can be identified. In this case, Jeremy, by dishonestly transferring the trust fund, breached the trust and the ‘property is not identifiable’3; thus a trust cannot be established and if it was prior established, it should end. Alternatively, since the trustee is already under constructive trust terms, through a court process, then he should be made to refund the trust fund. After a trust is up and running, a proprietary interest on the part of the beneficiary starts to build up. Jeremy should be compelled by law to transfer legal title of the trust, refund the trust’