Certainty of Objects Flashcards
what is the Beneficiary Principle?
A private trust MUST be for Beneficiaries, NOT abstract Purposes
- PT only for Charitable Trusts
what is the Anomaly regarding the Beneficiary Principle?
Anomaly ONLY applies to Testamentary Trusts (can have Purpose Trusts here)
how can the Beneficiary Principle Rule be circumvented?
If someone tries to set up a purpose trust, but seems like this purpose will benefit some specific people = we could say that this is a trust for beneficiaries that’s just been phrased in a way that masks that
- see Saunters v Vautier –> recognises Settlor drops out of picture, Ben. ownership with B, when B adult + sound mind can collapse Trust
what’s a Fixed Trust
- shares each B has = fixed (equal OR unequal)
- Ts hold property on fixed shares + obligation to distribute to Bs in those shares –> NO DISCRETION
- Court can do this for T if they don’t do it, as we know the shares
what’s a Discretionary Trust?
- T has DISCRETION as to how much each B gets
- does Not have to be written into TI in advance
- B’s do NOT have their specific share (own value in the Trust collectively), Only Right = to require Ts to consider whether to make the distribution for their benefit –> Gartside v IRC
- *Saunders v Vautier rule still applies
- can be Exhaustive OR Non-Exhaustive
what’s a (mere) Power?
- can be used on its own OR to modify core terms of a Trust
- Donee has DISCRETION as to how to use their Power, NO Obligation
- No B’s of a power, but Objects of a Power (who CANNOT enforce its exercise)
what happens if the Donee decides Not to use their Power?
- Resulting Trust happens
- or property goes to someone else
what’s a Resulting Trust?
Equitable Interest jumps back to Person who tried to create the Trust
what are the rules for a Fiduciary Power?
- holder MUST consider exercising it
- MUST act only in Best Interest of Donor
- giving power to a Fiduciary = assumption it’s a FP
(Trusts = ALWAYS Fiduciary)
what are the rules for a Personal Power?
- holder has No Obligation to exercise it
- giving power to a Non-Fiduciary = assumption it’s a PP
for a FT, what happens if T acts in default of it?
court steps in ONLY if clear who B’s are
IRC v Broadway Cottages Trust [1955] –> CoO + Beneficiaries
- if you can’t draw up complete list of Beneficiaries = Trust Fails
- BUT just need their Names
Re Gulbenkian [1970] –> Power of Appointment, Individual Ascertainability Test est.
- power was given
- complete List of Objects NOT Required for Powers
- enough that we can say of any given individual that they definitely fall inside or outside the class of objects
- Individual Ascertainability test/Is or Is Not Test
E.g. –> the power to appoint £10,000 to anyone over 6 feet tall
**Gulbenkian test Established
McPhail v Doulton [1971] –> CoO for Discretionary Trusts
- complete list No Longer required
- Gulbenkian Test applies to DT also: any given individual that they definitely fall inside or outside the class of objects
Re Baden’s Deed Trusts (No. 2) [1973] –> CoA for McPhail + DT
- Megaw LJ’s Majority view = it’s enough for a substantial number definitely to fall within the class
- *this = today’s Benchmark
advs + disadvs of the decision in Re Baden’s Deed Trusts?
advs:
- more Trusts will be valid via Megaw’s approach
- won’t be denied the validity of a Trust when there are many people who fall within the class so that Trustees can distribute the property
disadvs:
- phrase “substantial number” = conceptually uncertain + Megaw provides No Guidance here
- will have to second guess what the Courts will consider as substantial
what’s a Gift Subject to a Condition Precedent?
Giving someone a gift in property, where you say they can get it when they satisfy a particular condition
e.g. If you get married
- weaker test for conceptual certainty
- can benefit people in a class, if that class won’t satisfy Megaw’s approach to is or Is Not Test
E.g. –> you wanted to give £50 each to aspiring musicians –> subject to them proving they’re part of the class
- Quite uncertain
Re Barlow’s WT [1979] –> Gifts Condition Precedent
- Testator of will gave executor duty to let family + friends purchase 1 Painting from her estate each at significant discount of market value
- If they can prove they’re within the class of family + friends
- *As long as 1 person will fall within the class, we can give effect to these gifts
- That’s all the certainty needed
Cases: Can an Uncertain Class be made Certain?
Re Raven [1915]
- Will said if there’s uncertainties Trustee can decide which organisations are given something
- Court said NO
Re Wright’s WT [1981]
Trustee can use property in interest of those who had helped her and her husband
Re Tuck’s ST [1978] –> Expert Opinion + Uncertain Classes
- Testator decided money should go to a beneficiary if they remained in Jewish faith + married approved Jewish wife
- Court said if it was taken in isolation would be ambiguous
- BUT evidence was that if there was to be any uncertainty, chief Rabbi could decide if potential beneficiary was Jewish
*Held = if you appoint an Expert = It’s fine
McPhail v Doulton [1971] –> DT + Class
DT will fail if not administratively workable to distribute to the class
Mettoy Pension Trustees v Evans [1990] –> Fiduciary Duty + Courts
- Pension fund
- Company went bust before being able to use its fiduciary power to distribute to beneficiaries
- Court stepped in do to this
Brown v Burdett [1882] –> power with No Reason behind it
- Trust to manage property so that no one could enjoy the property for 20 years + had to be locked up
- Court said there was no point of this + it Failed
