3 certainties

Question 1

What are the 3 certainties?

Answer 1

Certainty of intention
Certainty of objects
Certainty of subject matter

Question 2

Where can someone’s intention be ascertained from?

Answer 2

A person’s intention can be ascertained from their words (spoken or written) and conduct.

Question 3

Is the word trust necessary for finding intention?

Answer 3

No

Question 4

Is the word trust conclusive for finding intention?

Answer 4

No

Question 5

By his valid will, the testator made the following dispositions:

‘1. I give £10,000 to my solicitor to be applied for the benefit of my mother.

I give £10,000 to my wife absolutely, confident that she will do right by our children.’
The executors of the testator’s will have paid £10,000 to his widow and £10,000 to his solicitor.

Which one of the following statements is correct?

The widow holds the money on trust for the testator’s children. The solicitor is the full legal owner of the money.

The solicitor holds the money on trust for the testator’s mother. The widow holds the money on trust for the testator’s children.

The solicitor and the widow are the equitable owners of the money.

The solicitor holds the money on trust for the testator’s mother. The widow is the full legal owner of the money.

The solicitor and the widow are the full legal owners of the money.

Answer 5

The solicitor holds the money on trust for the testator’s mother. The widow is the full legal owner of the money.

The testator has imposed a duty on the solicitor: the money is ‘to be’ applied for the testator’s mother. But the testator has not imposed a duty on the widow: the words ‘confident that she will’ are not imperative.

Question 6

True or false: Certainty of intention requires the settlor to understand that they are creating a trust.

Answer 6

False

Revisit your materials on Paul v Constance. The settlor does not even need to know what a trust is as long as their intention is consistent with the intention to create a the relationship which is characteristic of a trust.

Question 7

What are the requirements for certainty of subject matter?

Answer 7

First, it must be possible to identify the trust property (‘the trust property requirement’)

· Secondly, it must be possible to ascertain the beneficiary’s interest in the trust property (‘the beneficial entitlement requirement’)

Question 8

True or false: Only land and chattels can be held on trust.

Answer 8

False

Question 9

By his valid will, the testator (deceased) made the following disposition:

‘I give to my trustees my favourite car on trust for my daughter, and the sum credited to my current bank account on trust to give most of it to my daughter and the balance to my son.’

There is no available evidence of which car was the testator’s favourite.

Which one of the following statements best describes the effect of the disposition?

The trustees are entitled to full legal ownership of a car and of the sum credited to the testator’s bank account.

The testator has created a valid trust of the sum credited to his bank account but has not created a valid trust of a car.

The testator has not created a valid trust.

The testator has created a valid trust of his favourite car and of the sum credited to his bank account.

The testator has created a valid trust of his favourite car but has not created a valid trust of the sum credited to his bank account.

Answer 9

The testator has not created a valid trust.

The intended trust of the car is void because it is not possible to identify which car was the testator’s favourite. The intended trust of the sum credited to the bank account is void because it is not possible to identify the beneficiaries’ beneficial entitlements – ‘most’ is too vague.

Question 10

The owner of 20 ordinary shares in a private company and 20 bars of gold bullion orally declares herself a trustee of 10 of the shares and 10 of the bars for a beneficiary. She does not segregate or otherwise identify the 10 shares or the 10 bars which are to form the subject matter of the trust.

Which one of the following statements best describes the effect of the declaration?

Neither the shares nor the bars are subject to a trust.

There is a valid trust of 10 shares and 10 bars.

There is a valid trust of 10 shares and 20 bars.

There is a valid trust of 10 bars but no trust in respect of the shares.

There is a valid trust of 10 shares but no trust in respect of the bars.

Answer 10

There is a valid trust of 10 shares but no trust in respect of the bars.

A person can declare a trust of x shares out of a larger number of such shares without identifying which x shares are to form the subject matter of the trust, provided that they are all shares of the same type and in the same company: Hunter v Moss [1994] 1 WLR 452. However, there is not a trust of any of the bullion because a person cannot declare a trust of x physical items out of a larger number of such items without identifying the particular x items which are to form the subject matter of the trust: In re Goldcorp [1995] 1 AC 74.

Question 11

What is the test for certainty of object for fixed trusts?

Answer 11

The test of certainty applying to fixed trusts is the complete list test (which requires conceptual and evidential certainty)

Under this test,
it must be possible to draw up a complete list of each and every beneficiary.

Question 12

What is the test for certainty of objects for discretionary trusts?

Answer 12

The test of certainty applying to discretionary trusts and fiduciary powers is the is/is not test

In order to satisfy the test,
we need conceptual certainty – is the description of the class (amongst whom the trustees will
exercise their discretion) clear and objective? If the language used to describe the class is
unclear and lacks precision (ie the trustees cannot say with certainty what sort of person they
are looking for), then the trust will fail.

Question 13

Could a discretionary trust fail for administrative unworkability?

Answer 13

Yes

Question 14

By his valid will, the testator made the following disposition: ‘I give £10,000 to my trustees to be distributed between my children and my friends in such shares as my trustees shall determine.’ The executors of the testator’s will have paid £10,000 to the trustees.

Which one of the following describes the trustees’ position in relation to the £10,000?

The trustees may keep the money for their own benefit.

The trustees must distribute the money amongst the testator’s children.

The trustees must distribute the money amongst the testator’s friends.

The trustees hold the money on a resulting trust for the testator’s estate.

The trustees must distribute the money amongst the testator’s children and friends.

Answer 14

The trustees hold the money on a resulting trust for the testator’s estate.

The discretionary trust is void for uncertainty due to the inclusion of a conceptually uncertain term (‘friends’) in the description of the class of objects. As a result, the trustees hold the money on resulting trust for the testator’s estate.

Question 15

By his valid will, the testator made the following disposition: ‘I give £10,000 to my trustees. £5,000 is to be distributed to my children, and £5,000 is to be distributed to British men, in such shares as my trustees shall determine.’ The executors of the testator’s will have paid £10,000 to the trustees.

Which one of the following describes the trustees’ position in relation to the £10,000?

The trustees hold £5,000 on discretionary trust for the testator’s children and £5,000 on resulting trust for the testator’s estate.

The trustees hold £5,000 on discretionary trust for the testator’s children. They may keep the other £5,000 for their own benefit.

The trustees hold £5,000 on discretionary trust for British men and £5,000 on resulting trust for the testator’s estate.

The trustees hold £5,000 on discretionary trust for the testator’s children and £5,000 on discretionary trust for British men.

The trustees hold £10,000 on resulting trust for the testator’s estate.

Answer 15

The trustees hold £5,000 on discretionary trust for the testator’s children and £5,000 on resulting trust for the testator’s estate.

The discretionary trust for the children is valid but the discretionary trust for British men is void for administrative unworkability, because the class of objects is too large. As a result, the trustees hold £5,000 on resulting trust for the testator’s estate.

Question 16

True or false: Evidential uncertainty in connection with the objects of a trust is fatal to all types of trust.

Answer 16

False

Although evidential uncertainty is fatal to some trusts – e.g. fixed trusts involving equal distribution amongst the members of a class – it is not fatal to all trusts: Re Baden’s Deed Trusts (No 2) [1973] Ch 9.

Question 17

A woman declares a trust of three of her five paintings, and 100 of her 200 ordinary shares in a private company, in favour of a man. The woman does not segregate or otherwise identify the three paintings or the 100 shares to be held on trust.

Which statement best describes the effect of the woman’s declaration?

The woman holds three paintings on trust for the man. She remains the full legal owner of the other two paintings and all the shares.

The woman holds 100 shares and three paintings on trust for the man. She remains the full legal owner of the other 100 shares and two paintings.

The woman holds 100 shares on trust for the man. She remains the full legal owner of the other 100 shares and all the paintings.

The woman holds 100 shares on trust for the beneficiary. She remains the full legal owner of the other 100 shares. She holds the paintings on a resulting trust for herself.

The woman does not hold any shares or paintings on trust for the man. She remains the full legal owner of all the shares and paintings.

Answer 17

The woman holds 100 shares on trust for the man. She remains the full legal owner of the other 100 shares and all the paintings.

Certainty of subject matter comprises two requirements. The first requirement is the trust property requirement: it must be possible to identify the trust property. The woman has failed to identify the three paintings to be held on trust and, as a result, it is not possible to identify the trust property. By contrast, the woman’s failure to identify the 100 shares to be held on trust is not fatal because a person can declare a valid trust of x of their (x+y) shares of the same type in the same company without identifying the x shares to be held on trust.

Question 18

A testator’s validly executed will contains the following clause:

“My trustees shall hold my engagement ring and my wedding ring on trust until my daughter reaches the age of 21. She may then choose one of the rings for herself. After my daughter makes her choice, my trustees shall give the other ring to my niece.”

The testator’s daughter dies before reaching the age of 21. The niece is still alive.

Which one of the following statements is the best advice to the trustees as to the niece’s entitlement to a ring under the testator’s will?

The niece is not entitled to either ring.

The niece is entitled to a ring chosen by the trustees.

The niece is entitled to the ring of her choice.

The niece is entitled to both rings.

The niece is entitled to a ring chosen by the court.

Answer 18

The niece is not entitled to either ring.

The intended trust fails for uncertainty of subject matter, specifically beneficial entitlement as in the case of Boyce v Boyce. There was a mechanism for determining beneficial entitlement but that mechanism can no longer be used because the daughter died without making her choice.

Question 19

A woman recently died. Her valid will contains the following clauses:

‘1. I give £10,000 to my trustees to be distributed amongst my children in such shares as my trustees shall determine.

I give £10,000 to my trustees to pay an ample sum to my brother.’
Which statement best describes the status of the trusts in clauses 1 and 2?

The trusts in clauses 1 and 2 are void.

The trustees can determine whether the trusts are valid or void.

The trust in clause 1 is valid but the trust in clause 2 is void.

The trusts in clauses 1 and 2 are valid.

The trust in clause 2 is valid but the trust in clause 1 is void.

Answer 19

The trust in clause 1 is valid but the trust in clause 2 is void.

Certainty of subject matter comprises two requirements. The second requirement is the beneficial entitlement requirement: it must be possible to ascertain the nature and extent of the beneficiary’s interest in the trust property. In relation to clause 1, it is possible to ascertain the extent of each beneficiary’s interest by reference to the trustees’ determination. However, in relation to clause 2, it is not possible to ascertain the extent of each beneficiary’s interest because ‘ample sum’ is an uncertain measure. (How much is an ‘ample sum’?) As a result, the trust in clause 2 is void for uncertainty of subject matter.

Question 20

A woman recently died. Her valid will contains the following clause:

‘I give £10,000 to my husband absolutely. I trust him to use it fairly vis-à-vis our children.’

The executor of the woman’s will has paid £10,000 to her husband.

Which statement best describes the husband’s position in relation to the £10,000?

The husband is the full legal owner of the money.

The husband holds the money on a discretionary trust for the children.

The clause is void and the husband receives nothing.

The husband holds the money on a fixed trust for the children.

The husband holds the money on a fixed trust for himself and the children.

Answer 20

The husband is the full legal owner of the money.

The £10,000 is given to the husband ‘absolutely,’ which is consistent with a gift. The words ‘I trust him to’ are not sufficiently imperative to impose a duty (a trust) in relation to the money. This is supported by the fact that the content of any supposed duty – the ‘fair’ use of the money – is entirely vague

Question 21

Can the phrase “to distribute” create a trust?

Answer 21

Yes

Question 22

What types of words are needed to create a trust?

Answer 22

Precatory words express a wish, hope or expectation. Such words do not create a trust. Instead it is likely that that person will be deemed to have made a gift.

Obligatory or mandatory wording must be used if the settlor is looking to create a trust.

(a) Iesha says to Janet, ‘I am giving you my wedding ring in the hope that you will look after
it for Katherine’. This does not impose a trust on Janet. There is no duty to look after the
ring for someone else, merely an expectation that Janet will do so. As a result, all that
Iesha is doing is gifting the ring to Janet, who becomes the absolute owner of the ring.
(b) Lionel says to Mark, ‘I give you my collection of Grayson Perry vases trusting that you
will give a vase to each of my children’. Notwithstanding that Lionel uses the word
‘trusting’, this imposes no trust on Mark. All that Lionel is doing is expressing a hope orexpectation that Mark will distribute vases to his children. This is precatory wording. As a
result, Lionel is taken to have gifted the vases to Mark, who takes those vases absolutely.

Question 23

What is administrative unworkability?

Answer 23

A discretionary trust will be
administratively unworkable, and therefore invalid, if the class is so hopelessly wide as ‘not to
form anything like a class’

Question 24

Question 1
Under the terms of a valid will, a woman appointed her son to hold her residuary estate
on trust ‘for such promising young tennis players living in Wales and in such shares as [my
son] thinks fit’. The woman was a past Chair of a tennis club and grew up in Cardiff. Her
residuary estate was made up of money held in various UK bank accounts.
The woman’s son asks a solicitor whether this trust is valid. The son wants to carry out the
woman’s wishes as much as possible and has already put together a list of people who he
thinks should benefit from the trust.
Is the trust valid?
A Yes, because the son has identified people he thinks would benefit from it.
B Yes, because it is not capricious.
C Yes, because it is contained in a valid will.
D No, because there is insufficient certainty of subject- matter.
E No, because there is insufficient certainty of objects.

Answer 24

Answer
Option E is correct. The trust is not valid because it lacks certainty of objects. The trust is
discretionary and therefore must comply with the given postulant test. This requires that the
description of the class of objects be conceptually certain. That is not the case here. For
instance, it is unclear what is meant by ‘promising’ and ‘young’ (eg does the latter mean
people under the age of 16, 18, 21 years or some other age?) The trust therefore fails.
Option A is wrong. Just because the son thinks he knows who might benefit under a trust does
not mean that the trust is valid. If the son chooses incorrectly, he will be in breach of trust.
Option B is wrong. Whilst it correctly identifies that the trust is not capricious (there is a
discernible link between the woman and the class she wants to benefit), this does not make
the trust valid. If the trust is uncertain (as here), the fact that it is not capricious will not save it.
Option C is wrong. Whilst it correctly identifies that the trust is contained in a valid will, this
does not make the trust valid. The declaration of trust must satisfy the three certainties (which
it does not).
Option D is wrong because a trust over a residuary estate has certain subject- matter. The
residuary estate can be calculated with certainty – it is whatever is left over once all debts,
taxes and specific legacies have been met. This is not why the trust fails.