Express Private Trusts Flashcards
What do express private trusts rely on?
They rely on what the settlor/testator intended - thus, it must be tolerably clear what he/she wanted to achieve
What are the three certainties that an express private trust must meet to be valid?
Certainty of intention, subject matter and object
What did Moffat say about certainty of intention?
“The hallmark of an express trust is the existence of an intention to create a binding trust obligation”
What implies the intention to create a trust?
Both words and wider circumstances
What must the words/circumstances show?
The settlor’s intention that the trustee is to have an enforceable obligation to carry out their wishes or instructions
Does the word “trust” have to be used?
No, the settlor doesn’t even have to know what a trust is
Paul v Constance 1977
F: Man in a relationship had a bank account in his own name, used the words “money is as much yours as mine”
I: Did he hold the money for himself and his partner?
H: Yes, the words sufficient
Jones v Lock 1865
F: Father had a cheque that he said was for his baby, then died before he had a chance to cash it
I: Was that enough to create a trust?
H: No, loose conversations not sufficient
Lambe v Eames 1871
Signified the change of attitude of courts re precatory words, now reluctant to impose obligations of trusteeship where words not clear
Re Adams and the Kensington Vestry 1884
“In full confidence” not enough
Re Diggles 1888
“It is my desire that” not enough
Re Johnson 1939
“I request that” insufficient to create a trust
Re Steele’s WT 1948
F: Trust written specifically using old precedent, even though words used not sufficient
I: Was there a trust?
H: Yes, there was, as in the old case trust upheld
What happens where there is no certainty of intention?
Trust fails, and the person who was supposed to be a trustee takes absolutely if transferred, if not transferred owner remains absolute owner
What does certainty of subject matter mean?
That if the property that should be subjected to the trust cannot be identified, there cannot be a trust
Lack of certainty may be present in relation to what?
The property itself and the respective entitlement of different beneficiaries
Palmer v Simmonds 1854
“The bulk of my said residuary estate” not certain enough
Sprange v Barnard 1789
“The remaining part of what is left that he does not want” not certain enough
Boyce v Boyce 1849
“All my other houses” remaining after M had chosen one, where M predeceased the testator without making a choice not certain enough
Re Golay’s WT 1965
“Reasonable income” held to be able to be determined objectively by reference to B’s standard of living
Re London Wine 1986
F: Wine sold to customers held in warehouses with no allocation to specific customers, co went into receivership
I: Was wine held on trust for customers?
H: No, as bottles for each customer had not been segregated from the bulk
Re Goldcorp 1995
F: Gold bullion held for customers by a co which became insolvent before delivery
I: Was bullion held on trust for customers?
H: Only those customers where bullion had been segregated from bulk could establish trust, no trust where no segregation
Hunter v Moss 1994
F: S had 950 shares in company, made declaration of trust over 5% of shares
I: Was there a trust if not certain which shares?
H: Yes, as all belonged to same class
What happens if purported declaration of trust or transfer on trust, but the description is uncertain?
Settlor retains property
What happens if transfer of whole with attempt to create trust over the uncertain part?
Recipient takes absolutely, e.g. Palmer v Simmonds
What happens if transfer of whole on trust, but there is uncertainty as to the division?
Trustee holds on RT for the settlor, e.g. Boyce v Boyce
What is certainty of object?
Beneficiaries must be identifiable so that trustees can administer the trust/court can supervise or administer the trust
Fixed trust
A trust which defines amount/share of each beneficiary
Discretionary trust
A trust in which it is left to trustees who will benefit from class, and/or the amounts/proportions each should receive
Aspects of certainty
- conceptual certainty
- evidential certainty
- ascertainability
Also might be necessary to consider administrative workability and capriciousness
IRC v Broadway Cottages 1995
“There can be no division in equal shares amongst a class of persons unless all the members of the class are known”
Conceptual certainty
The definition of the class must be certain - contrast friends with daughters
Evidential certainty
It must be possible to show who falls within a class
Re Barlow’s WT 1979
In individual gift types of trust (i.e. £100 for each of my friends) one only need to be able to say of one person that he/she satisfies the definition, up to the individual to prove
McPhail v Doulton 1971
F: S settled fund for benefit of a large class (discretionary), would fail if the complete list test was applied
I: Was there certainty of object?
H: Yes, there was - test changed to that used in cases of powers
Current test for certainty of object in discretionary trust
Individual ascertainability test - whether it is possible to say for any potential object that he or she is not a member of the class
Are relatives certain?
Yes, Re Baden
Are dependents certain?
Yes, Re Baden
Are friends certain?
No, Re Barlow’s WT, but where trust with condition precedent defined as long-standing social relationship where parties meet frequently
Are inhabitants of West Yorkshire certain?
Conceptually certain, R v District Auditor
Are people under a moral obligation certain?
No, Re Baden
Is there a need to check all possible beneficiaries?
No, Re Baden
Can a trust provide for any uncertainty to be resolved by a third party?
Yes, see e.g. Re Tuck’s ST (here expert)
Can the conceptually uncertain group be severed, so saving the trust for the remaining members of the class?
No, Re Wright’s WT
Can a trust fail because it’s administratively unworkable?
Yes, McPhail obiter - a class so hopelessly wide as to not form anything like a class
Can a trust fail because of capriciousness?
Yes, where the terms “negative any sensible intention on the part of the settlor,” Re Manisty
What happens if declaration of trust with uncertain object?
No trust, settlor retains absolute ownership
What happens if transfer on trust with uncertain object?
Trustee holds on RT for the settlor
Re The Trusts of the Abbot Fund 1900
F: £500 for maintenance and support of two sisters, they died leaving a surplus
I: What to do with the surplus?
H: It should be held on a resulting trust for the donors to the fund in proportion to their contributions
Re Andrew’s Trust 1905
F: Fund set up to finance the education of certain children, when they grew up surplus left
I: What to do with the surplus?
H: The surplus should be divided equally between the children
Re Osoba 1979
F: Testator left money for widow and daughter for her training up to university, surplus claimed after by the testator’s son
I: What to do with the surplus?
H: Might be said that the words up to university grade nothing more than an attempt by the testator to give guidance to the trustees as to the timing of the final disposition of capital to mother and daughter, thus money held to be an absolute gift to mother and daughter
S1(3) of the Sale of Goods (Amendment) Act 1995
Unless the parties otherwise agree, a contract for the sale of a specified quantity of unascertained goods in an identified bulk transfers property in an undivided share of the bulk to the buyer; could apply to trusts
