The three certainties

Question 1

What are the three certainties?

Answer 1

1. certainty of intention
2. certainty of subject matter
3. certainty of objects

Question 2

What is the certainty of intention?

Answer 2

It must be clear that the settlor, by their words or conduct, had the intention to create this trust

Question 3

Does the word ‘trust’ need to be used?

Answer 3

No

Question 4

What is certainty of subject matter?

Answer 4

The property subject to the trust must be described with sufficient certainty and also the beneficial entitlement of each beneficiary

Question 5

Will ‘I leave the bulk of my residuary estate to John’ be sufficient?

Answer 5

No - it would not be a valid trust

Question 6

The testator left two houses to his trustees to hold for his daughter Maria ‘whichever she may choose’ and the other to his daughter Charlotte. Maria died before making her choice. Will the trust be valid?

Answer 6

No, because Charlotte’s share was dependent on Maria’s choice so Charlotte’s interest was uncertain

Question 7

Can a settlor create a trust of only part of their assets, such as part of their wine collection?

Answer 7

Yes but the tangible assets need to be clearly identified or there is no certainty of subject matter and the trust will fail

Question 8

Do intangible assets need to be segregated to have certainty of subject matter?

Answer 8

No provided that the intangible assets are similar ie. shares

Question 9

What is certainty of objects?

Answer 9

The trusts beneficiaries

Question 10

What is a discretionary trust?

Answer 10

Trustees have the decision on whether or not to pay any member of a defined class of beneficiaries. The beneficiaries have no automatic right to payment, only the right to be considered by the trustees

Question 11

What is a fixed trust?

Answer 11

When each beneficiary is entitled to a specific share of the trust property

Question 12

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

Answer 12

It must be possible to compile a complete list of all beneficiaries - class ascertainability test

Question 13

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

Answer 13

The trustee must ask ‘can it be said with certainty that any given individual is or is not a member of the class’ - individual ascertainability test

Question 14

What are the four important issues to remember when looking at certainty of objects?

Answer 14

• conceptual uncertainty
• evidential uncertainty
• administrative unworkability
• gifts to individuals answering a particular description: the one-person test

Question 15

What is conceptual uncertainty?

Answer 15

Where the words used by the settlor to describe the beneficiaries are too vague for the courts to apply - such as ‘friends’. It renders the trust void

Question 16

When is there no conceptual uncertainty?

Answer 16

• When the settlor uses phrases so the trustees can identify the class such as ‘facebook friends’
• When the settlor leaves the discretion to someone else to decide who falls into the group

Question 17

What is evidential uncertainty?

Answer 17

If the trustees are unable to determine exactly who fits the description due to lack of evidence such as no records

Question 18

Can evidential uncertainty be remedied or does it leave the trust void?

Answer 18

It can be remedied with extrinsic evidence

Question 19

What is administrative unworkability?

Answer 19

A trust fails for administrative unworkability where the description used by the settlor is clear but the definition of the beneficiaries is too wide to form a class

Question 20

What is the one-person test?

Answer 20

If a testator includes a bequest in their will where each beneficiary is entitled to a similar gift and the number of beneficiaries does not effect the size of each gift. Conceptual certainty is not required so long as at least one person meets the criteria