Trust Exam 2018 Sem 2 PDF

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Semester Two 2018 Examination Period Faculty of Law EXAM CODES:

LAW4170

TITLE OF PAPER:

TRUSTS - PAPER 1

EXAM DURATION:

2 hours and 30 minutes

THIS PAPER IS FOR STUDENTS STUDYING AT: (tick where applicable)  Berwick  Clayton  Malaysia  Off Campus Learning  Caulfield  Gippsland  Peninsula  Monash Extension  Parkville  Other (specify)

 Open Learning  Sth Africa

During an exam, you must not have in your possession any item/material that has not been authorised for your exam. This includes books, notes, paper, electronic device/s, mobile phone, smart watch/device, calculator, pencil case, or writing on any part of your body. Any authorised items are listed below. Items/materials on your desk, chair, in your clothing or otherwise on your person will be deemed to be in your possession. No examination materials are to be removed from the room. This includes retaining, copying, memorising or noting down content of exam material for personal use or to share with any other person by any means following your exam. Failure to comply with the above instructions, or attempting to cheat or cheating in an exam is a discipline offence under Part 7 of the Monash University (Council) Regulations, or a breach of instructions under Part 3 of the Monash University (Academic Board) Regulations.

AUTHORISED MATERIALS OPEN BOOK

 YES

 NO

CALCULATORS

 YES

 NO

SPECIFICALLY PERMITTED ITEMS if yes, items permitted are:

 YES

 NO

Candidates must complete this section if required to write answers within this paper

STUDENT ID:

__ __ __ __ __ __ __ __

DESK NUMBER:

__ __ __ __ __

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EXAM INSTRUCTIONS 1. The duration of the exam allows time for you to plan your answers, and you are strongly encouraged to do so. 2. Students must write their ID number on the front of their answer books. 3. The examination represents 60% of the total assessment in this subject and is worth 60 marks. 4. There are TWO questions. All parts of all questions must be answered. 5. Question 1 is worth 30 marks and comprises three sub-questions, Question 1(a) is worth 12 marks, Question 1(b) is worth 8 marks and Question 1(c) is worth 10 marks. 6. Question 2 is worth 30 marks. 7. You are NOT permitted to remove this examination paper from the examination room.

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QUESTION 1

(30 marks)

Anita is a wealthy, elderly person. She wants to share some of her wealth before her death, but still guide its use. She decides to appoint her younger cousin, Brett, as trustee. Anita transfers her house to Brett as trustee and the transfer is registered. She tells him that he is to hold the house as trustee, but doesn’t say who the beneficiaries will be. She also tells him that she has cash she wants to put on trust to help her children and grandchildren with their financial needs. She later sends an email to Brett with the following details: 1. You are to hold $100,000 on trust, with a power to make such distributions to such of my children as you decide in your absolute discretion; 2. Any money remaining at the end of the term of the trust (20 years) is to be gifted to the Arts Centre Melbourne. She immediately transfers $100,000 into Brett’s account. One day, one of Anita’s daughters, Sefi, comes to Brett and says: “give some money to my brother, Kwame – he’s struggling at the moment”. Brett thought about making a distribution of $50,000 to Kwame. In the course of making some inquiries Brett discovered that while Kwame appeared to be (relatively) poor by the way he chose to live, he was in fact quite well-off. But, having put most of the steps for the distribution in place, Brett decided to go ahead with it anyway. Recently, Brett decided to move house. He sold his house and decided to go and live with Anita while he looked for a new one. Anita was, initially, happy to have the company, but two weeks ago decided she had had enough of Brett being around. Keen to avoid confrontation, she left a note on the kitchen bench: “Dear Brett, I have enjoyed your company, but it’s time for you to leave. To be clear, the house is mine for life and then you are to hold it on trust for the Arts Centre Melbourne. Yours sincerely, Anita” Sefi has just learned that Kwame is wealthier than he appears, and now thinks that it was wrong for him to receive a distribution. She also learns that Brett has not yet moved out of Anita’s house. Advise Sefi on: Question 1(a) the validity of the trust (12 marks); Question 1(b) whether there have been any breaches of trust (8 marks); and Question 1(c) what remedies she or Anita could seek against Brett and whether these would be affected by any defences Brett may have (10 marks).

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QUESTION 2

(30 marks)

Joseph is a farmer in the Mallee district. His 1,000 hectare farm is owned by a family trust, the Paradise trust. He is the trustee of the Paradise trust, and the beneficiaries are himself and his wife Eloise. His parents, Tim and Margaret, lived on a neighbouring farm, “Longview’ held in Tim’s name. Longview is approximately 3,000 hectares. Tim died in 2002. Tim’s will left Longview to Joseph on trust to hold for Margaret for life, and on her death for Joseph and his two sisters, Angela and Bethany in equal shares. Angela and Bethany both live in Melbourne. Margaret lived at Longview until 2004, when she moved into a dementia facility in Melbourne. From his father’s death in 2002 until today, Joseph has effectively run both farms as a single economic unit. Last year, Margaret needed some special therapy, which was unfortunately quite expensive. Bethany asked Joseph to pay this out of the Longview trust funds, but was told they ‘were quite low’. As a result, she started investigating. She has discovered the following facts: 

Three of the bulls on Longview were purchased from the Paradise trust for the sum of $200,000, which appears to have been full market price.



For the past 10 years, Joseph has personally received a $10,000 ‘loyalty payment’ from a stock agent, for running the Paradise and Longview accounts through its agency. He has used the money to buy shares in his name, which are now worth $200,000.



The stock agent’s fees (over and above the cost of the animals purchased) during this period amount to $40,000. Invoices for these fees have invariably come at times when the cash position of the two trust accounts has been low, and Joseph has paid these amounts out of his own funds.



Joseph has been investigating whether it is possible to subdivide Longview into three separate allotments. He has told a local real estate agent he wants to wind up the trust or split the land with his sisters within the next year.

Bethany is highly concerned that Joseph is breaching trust, and does not think it appropriate for Joseph to be running the Longview trust any more. Bethany admits neither she nor Angela wish to act as trustee. Bethany seeks your advice as to her rights and potential remedies, and any rights Joseph may have (30 marks).

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