The Three Certainties Flashcards
What are the requirements for a valid trust?
The three certainties, statutory formalities and constitution
Knight v knight
Intention: words showing an intention to create an obligation
Subject matter: identification of the precise property to be held on trust
Objects (i.e. beneficiaries): identification of the persons or class who will benefit
What is certainty of intention?
No need for technical or formal words, but words should show an intention to impose an obligation: ‘I give this to baby’ Jones v Locke
What is the difference between imperative and precatory words?
precatory words: ‘hoping that’, ‘in confidence that’, ‘requesting that’, desire’ etc… Re Diggles
imperative words: ‘shall hold’, ‘on trust for’, for the benefit of’, etc
What is certainty of subject matter?
need to ascertain the property, or have the means of ascertaining the property at the time of the creation of the trust, as well as the beneficial interest: ‘the bulk of my estate’ Palmer v Simmonds
What is certainty of subject matter?
need to ascertain the property, or have the means of ascertaining the property at the time of the creation of the trust, as well as the beneficial interest: ‘the bulk of my estate’ Palmer v Simmonds
What is certainty of objects?
Conceptual certainty: identification of the class or beneficiaries (family)
Evidential certainty: identification of the persons within that class (mum and dad)
Ascertainability: the whereabouts of a persons within the class
Administrative workability: practicality of distributing the property under that trust
Case for certainty of objects?
OT Computers: trust for customers, ‘urgent suppliers’, beneficiaries are customers and urgent suppliers, conceptually certain because you can look at records of customers, however ‘urgent’ is too vague
Fixed trust and evidential certainty?
Trustees must draw up the complete list
Evidence that each beneficiary belongs to the complete list is necessary - test only applies to fixed trust
Example - fixed trust set up for law students graduating from Brunel in 1985
→ Burden of proof lies with the trustees to do the work to find the records and compile a list; if the records are lost or destroyed, the trust will fail
Fixed trusts and ascertainability?
Re Benjamin: a fixed trust (complete list needed) will not fail if a beneficiary cannot be located (or may be dead) can be given once found at a later date
Discretionary trust and conceptual certainty?
McPhail v Doulton: the trustees shall apply the net income… at their absolute discretion… for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants..’
held:
- the ‘is or is not’ test devised in the Gulbenkian case (re: powers) is extended to discretionary trusts
