Trust 4 - Three Certainties

Question 1

What are the 3 certainties?

Answer 1

• Intention
• Subject Matter
• Objects

Question 2

What is certainty to intention?

Answer 2

Intention to create a trust

• ‘desire’ that someone should do something not enough
• Segregation of assets = key indicator

Question 3

How is intention guaged?

Answer 3

• objectively
• irrelevant if they don’t know what a trust is
• irrelevant if they didn’t intend to create a trust

Question 4

What are the key cases on intention?

Answer 4

• collecting rent on behalf of beneficiary into separate bank account - trust
• Bingo winnings “as much yours as mine” & convo with bank manager & way account used - trust
• customers money paid into separate account to protect from insolvency - trust
• ownership of supplied materials was a charge rather than a trust

Question 5

What is certainty of subject matter?

Answer 5

Must identify

• trust property

AND

• nature/extent of beneficial entitlement

Question 6

When could certainty of subject matter fail from description?

Answer 6

Where property can’t be ascertained from description e.g. ‘bulk’ or ‘net assets’
NOT for shares though, you can just say a number but for everything else, must identify specific objects

Question 7

When can you give away a percentage or number of a ‘bulk’

Answer 7

Only if its intangible and fungible - basically shares

Anything else you’d need to identify the specific items within the fungible whole.

Question 8

Is ‘reasonable income’ sufficiently certain?

Answer 8

Yes

Question 9

What are the cases for certainty of subject matter?

Answer 9

• wine merchant held wine on trust but did not separate - failed
• trust over 50 of 950 shares - didn’t fail as shares are identical

Question 10

What is certainty of objects for fixed trusts?

Answer 10

if fails for some Bs won’t fail for all.
Looking for a complete list of Bs:
- conceptual (what the class is)
- evidential certainty (does x fall within that class) .

Question 11

What are the tests for discretionary trusts?

Answer 11

• is/is not test - is ‘this person’ in the list or not (even if can’t draw up a complete list)
• conceptual (what the class is)
• evidential certainty (does x fall within that class) .

Question 12

What if the class of beneficiaries of a discretionary trust is too wide?

Answer 12

It will fail e.g. occupant of England as trustees have to consider the range of beneficiaries even if they don’t consider them individually

Question 13

What if the class of beneficiaries of a power of appointment is too wide?

Answer 13

it won’t fail as there is no duty of the fiduciary to sample the whole of the population of beneficiaries.

Question 14

What happens if a gift to someone whilst the donor is alive fails?

Answer 14

The Donee holds the property on trust for the Donor

Question 15

What happens if a gift to someone whilst the donor is dead but its not clear that a trust was intended?

Answer 15

the donee gets the gift absolutely with only a moral obligation to distribute

Question 16

What happens if a gift to someone whilst the donor is dead and it clear a trust was intended?

Answer 16

Property won’t be transferred and instead form part of the residue