APT·TRUST-LAW · Module 1: Trust Law and the Role of the Trustee·UnitTRUST-LAW · Unit 01Access: Free tier
Unit 1.1: The Trust and Its Creation
Unit 1.1 is where the APT syllabus starts, and it is the unit we make free to practise. Its four topics cover what a trust is and why pension benefits are held in one, how a trust is created and what has to be present for it to be valid, who the beneficiaries are and what they are entitled to, and how trustees operate under the trust deed and rules, including the way those rules are amended. Everything later in the syllabus rests on this material, because a trustee reads their powers and duties from the deed first and from pensions legislation second.
What’s in it.
4 topics- Topic 01
Basic Concepts of a Trust and Reasons for a Trust
45 questions - Topic 02
Creation of a Trust
45 questions - Topic 03
Beneficiaries of a Trust
45 questions - Topic 04
Operating Under Trust Deed and Rules, and Subsequent Amendments
Coming soon
Sample questions
3 of manyA few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.
A reviewer checking a newly drafted trust deed confirms the settlor's intention is clear and the trust property is clearly described, then asks what else must be checked before concluding the trust is validly created. What is the correct next check?
- Whether the scheme has been registered with HMRC
- Whether the employer has more than 50 employees
- Whether the beneficiaries, or a class of them, are identifiable, satisfying certainty of objectsCorrect answer
- Whether the trustees are professionally qualified
ExplanationHaving confirmed intention and subject matter, the remaining certainty to check is certainty of objects, whether the beneficiaries or class of beneficiaries can be identified or ascertained. All three certainties must be satisfied together for a valid express trust. Key takeaway: checking a trust's validity means confirming all three certainties, not stopping once two are satisfied.
What is the beneficiary classification of a person currently employed and accruing benefits under the scheme?
- Deferred member
- Settlor
- Dependant
- Active memberCorrect answer
ExplanationA current employee who is accruing benefits under the scheme is classified as an active member. Key takeaway: ongoing employment combined with ongoing benefit accrual is what defines an active member.
A member asks why they cannot instruct the scheme's custodian to sell a particular investment directly, despite holding an equitable interest in the fund. Which explanation is correct?
- The member has no equitable interest at all, only a contractual right against the employer
- The member's equitable interest is subordinate to the sponsoring employer's legal title
- An equitable interest entitles the member to benefit from the trust property and to hold trustees to account, but administrative and investment decisions remain with the trustees, who hold legal titleCorrect answer
- An equitable interest gives the member the same control over investments as a trustee
ExplanationHolding an equitable interest gives the member a right to benefit and to hold the trustees accountable for proper administration, but it is the trustees, holding legal title, who make day-to-day administrative and investment decisions within their powers; the member's equitable interest is not a right of direct control over specific trust assets. Key takeaway: an equitable interest confers rights to benefit and accountability, not a member's direct control over administration.