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FLK 2 TRUSTS > THE THREE CERTAINTIES > Flashcards

THE THREE CERTAINTIES Flashcards

1
Q

any declaration of trust must satisfy the three certainties - what are they

A

intention
subject matter
objects

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2
Q

intention is one of the three certainties required for the declaration of trust - what must this intention exist to create

A

imperative wording that demonstrated an intention to create a legally binding obligation, rather than precatory language that merely indicates moral or family obligations

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3
Q

examples of intention from case law

A

she knows what she has to do - too vague to demonstrate intention

‘knowing his wishes’ and ‘giving what is appropriate’ - vague

‘to be at her disposal, in any way she may think best for herself and her family’ - gift not trust

‘i direct that all my estate should be divided equally’ - sufficiently certain as language is imperative

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4
Q

can conduct be sufficient to demonstrate intention

A

yes for example depositing shared bingo winnings and sharing all withdrawals

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5
Q

certainty of subject matter - the property subject to the trust and the size of the beneficiaries shares in it must be certain

the property subject to the trust must be clearly defined

A

‘bulk of my estate’ - subjective and unclear

‘reasonable income’ - objectively definable so sufficiently certain

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6
Q

certainty of subject matter

the trust property must be identifiable (varies for tangible or intangible property)

if the trust property is selected from property that’s tangible but not interchangeable (ie each of the items is unique like five out of ten individual paintings) - it must be possible to … the specific property intended

A

must be possible to identify and segregate

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7
Q

the trust property must be identifiable - intangible property

A

if the property involved is intangible, eg 20 out of 100 shares of the same type - the subject matter will be sufficiently certain without the specific shares having to be segregated

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8
Q

the beneficial entitlement must be capable of …

A

determination

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9
Q

what is meant by certainty of objects

A

the beneficiaries
ie the persons for whom the trust is intended must be certainly known

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10
Q

what is meant by fixed trusts

A

where the proportions of property for each beneficiary are set

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11
Q

what are the two certainties that fixed trusts require

A

conceptual and evidential certainty

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12
Q

what is meant by discretionary trusts

A

where the proportions are decide at the discretion of the trustees

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13
Q

what type of certainty do discretionary trusts require

A

conceptual certainty

ie it must be ascertainable whether any given person is or is not a member of the class of objects

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14
Q

the courts have clarified the is/is not test and considered the issue of evidential certainty..

A

relatives - evidentially uncertain, unless limited to next of kin, which can be evidenced. relatives could mean all descendants of a common ancestor - too wide for evidential certainty

  • person claiming to be in the class of objects has BOP to provide evidence they’re in the class - the position is unclear where a person can’t prove they’re a member of a class. either thy must be held not to be a member of the class, or they will not be ruled out of the trust but will remain unproven

conceptual difficulties can be overcome by evidential requirements, but even a conceptually and evidentially certain trust could still fail for administrative unworkability
eg a class of 2.5m people was too large for a trust to work

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15
Q

what is meant by powers

A

an authority for a trustee to deal with the property in a particular way, but no legal obligation to do so

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16
Q

does the is/is not test apply for powers

A

yes

this means ‘a power is valid if it can be said with certainty whether any given individual is or is not a member of a class and doesn’t fail simply because it’s impossible to ascertain every member of the class’

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17
Q

conditional gifts are subject to…

A

subject to a condition precedent

eg each of my friends can have a piece of my furniture

these are gifts only when the condition is fulfilled - here it’s necessary to become a friend before being entitled to benefit

such gifts are subject to the least strict test - even friends is sufficiently certain because only reasonable evidence is required

17
Q

deserving persons was held to be too uncertain a term to define a class of persons - true or false

A

true

18
Q

do charitable trusts need to satisfy the requirement for certainty of objects

A

no but they must still satisfy the other two certainties

19
Q

what happens if the trust fails on one of the certainties - more than one certainty missing

A

the trust is void (has failed)

20
Q

what happens if there is uncertain intention but subject matter is certan

A

a gift to the trustee

21
Q

what happens if there is uncertain subject matter but intention is certain

A

trust is void

22
Q

what if the objects are uncertain

A

a resulting trust back to the settlor

23
Q

what are unincorporated associations

A

two or more persons bound together for a common, non business purpose by identifiable rules regarding rights, duties, funding and membership

24
Q

what is a re denley purpose trust

A

a purpose trust for ascertained or ascertainable individuals, where those individuals are members of a UA

25
Q

in the case of UA’s, is the purpose of the trust enforceable by the court

A

no

26
Q

what happened in the re denley case

A

land was held on trust for use as a sports ground for the use of employees of a certain company. it was stated the court would be willing to enforce the trust negatively (by preventing an improper use of the land) and positively (by allowing the employees access)

employees were only beneficiaries in the sense of benefitting from the trust - they didn’t have an equitable interest in the land

such a trust must comply with the rules against perpetuities - re denley also had a gift-ver to charity at the end of the perpetuity period though this doesn’t seem to be necessary in order for the disposition to be valid

27
Q

mandate theory - where the UA’s treasurer is given a mandate to spend the money in a particular way, thus a quasi-agency relationship exists between the treasurer and the members - is this a mandate over the funds

A

no it is a personal obligation on the treasurer to deal with the funds as requested by the donor - this is only possible for lifetime gifts

28
Q

when deciding which of analyses above is most applicable - consider…

A
  • wording of disposition is it stated to be on trust or not
    -nature of property is it land, money or other divisible assets
  • intentions of donor
  • specified purpose if any
  • nature of beneficiaries .. are they members of a UA
  • any specified club rules
29
Q

what does the rule against remoteness of vesting apply to and what is it

A

UAs and Re Denley purpose trusts

the rule is that a future interest is void unless it’s certain that the interest will not vest (ie go to a beneficiary) after 125 years

30
Q

why can this rule be problematic for UA’s
unincorporated associations

A

because new members could join and thus acquire an interest after 125 years - the trust instrument would have to expressly close the trust to new members or a wait and see approach could be taken - if the UA still exists in 125 years, new members will be cut off from benefitting

31
Q

do unincorporated associations have any legal personality

A

no they have no legal personality, so have no beneficiaries who can enforce the trust. since the beneficiary principle (that trusts can only be valid if they have a beneficiary) is offended, the trust or gift to the UA will fail, unless the disposition can be affected by utilising one of the following
- immediate outright gift for present members
- immediate gift to members subject to contract
- trust for present and future members
- ordinary purpose trust

32
Q

an immediate outright gift for present members

A

members each take a share individually with no obligation to the UA - this will only work if it accords with what the court thinks the donors intentions were

outright gifts for present members can be problematic where the UA has a changing membership. an immediate outright gift is most likely to be found where the UA name is simply used as a convenient label, to save writing out all the members names in full

33
Q

an immediate gift to members subject to contract aka contract holding theory

A

each member holds their share of the gift according to the rules of the UA - it’s an accretion to club funds and members lose their shares on death or resignation

members may only use the gift in accordance with the UA’s rules but don’t have to follow the purpose for which the disposition was made by the donor

34
Q

note

A

this analysis is most applicable where the UA still exists, has clear rules and where a gift rather than a trust was intended - the contractual analysis is the prevailing view when it comes to construing gifts to UA’s

35
Q

REMEMBER

A

assets must be freely available - so the gift will be void unless the members have control over spending the assets or can dissolve the UA and divide the funds - external control over property dealings and the UAs rules would cause the disposition to fail

eg a gift to the local labour party failed because it as controlled by the party hq

36
Q

a degree of minor external control may not cause the disposition to fail - true or false

A

true - eg allowing other clubs players to be social members allowing them to use the grounds and cast a vote each at the AGM didn’t defeat the gift

37
Q

a trust for present and future members

A

members must be ascertained or ascertainable and trust must comply with the rule against remoteness of vesting

38
Q

an ordinary purpose trust

A

purpose trusts are generally likely to fail as they will offend the beneficiary principle

39
Q

original donation was a trust - what happens if the UA is dissolved

A

surplus funds will be returned to past and present members in proportion to their contributions under the resulting trust

40
Q

gift subject to contract - what happens if the UA is dissolved

A

contributions will be split equally between present members unless UA rules specify otherwise

41
Q

no members left - what happens if the UA is dissolved

A

the funds go bona vacantia to the crown

FLK 2 TRUSTS (4 decks)

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