Validity 3 Flashcards
Q1: Why does a private trust need at least one beneficiary?
A1: Because a private trust (unlike a charitable or approved purpose trust) must have someone with enforceable rights. If no beneficiary exists, the trust fails unless it’s recognized as a charitable or statutory purpose trust.
Q2: What does “certainty of beneficiaries” mean under Jersey law?
A2: You must be able to clearly identify who is (and is not) a beneficiary. If it is impossible to say with certainty, the trust fails under Article 11(2)(b)(iii).
Q3: What happened in Re the Double Happiness Trust regarding certainty of beneficiaries?
A3: The drafting was so confused (who was actually a beneficiary?) that the court declared the trust void. There was no coherent identification of who benefited or how.
Q4: How does Article 10 of the Trusts (Jersey) Law define permissible beneficiaries?
A4: A beneficiary must be:
Identifiable by name, or
Ascertainable by reference to a class or a relationship to someone (whether or not that person is alive).
Q5: Could “the first person born in Jersey in 2100” be a valid Jersey trust beneficiary?
A5: Likely no, because that person isn’t identified by name or via a recognized class/relationship. The identity is too uncertain until it actually happens.
Q6: If a trust omits naming any beneficiary but includes a “power to add beneficiaries,” is that enough?
A6: According to Re Exeter Settlement, the Jersey court said no. If no beneficiary exists at the start, the trust may fail immediately, and the power to add cannot revive an already invalid trust.
Q7: Why do some commentators disagree with Re Exeter Settlement’s approach?
A7: They argue that a power to add beneficiaries might be enough to satisfy certainty in principle (like having an “unborn class” of possible beneficiaries), but the Jersey courts have not followed this view so far.
Q8: Does Jersey law allow honorary trusts (e.g., trusts for pets or other non-beneficiary purposes)?
A8: Generally, no. English law recognizes a few “anomalous” honorary trusts, but in Jersey, a private trust must have actual beneficiaries (or be a charitable/statutory purpose trust).
Q9: Is a trust for “the children of X” valid even if X has no children at creation?
A9: Yes, because each new child is automatically identifiable as a beneficiary when born. That’s a valid “class” under Article 10.
Q10: Is a trust for “young and intelligent men” valid?
A10: Likely invalid due to the subjective definitions of “young” and “intelligent.” You cannot say with certainty whether someone is or isn’t in that group.
Q11: What does Article 11(2)(a)(iv) say about trusts “created for a purpose in relation to which there is no beneficiary?”
A11: Such a trust is automatically invalid unless it meets the special rules for charitable or non-charitable purpose trusts.
Q12: Besides lacking beneficiaries, name other reasons a trust might be invalid under Article 11.
A12:
It tries to do something contrary to Jersey law,
It directly applies to Jersey immovable property,
It’s established by duress, fraud, mistake, or
It’s immoral or against public policy.
Q13: Must a beneficiary be in existence “at all times” for the trust to remain valid?
A13: No. A trust can wait for a future beneficiary to be born or added. What’s crucial is that eventually someone can be a valid beneficiary (unlike a trust with nobody ever possible).
Q14: If no beneficiary is initially named, does the property just revert to the settlor?
A14: Under Re Exeter Settlement, yes—there’s a resulting trust back to the settlor, and the trust itself is void. Critics note that other jurisdictions sometimes allow a “power to add” to fix the situation, but not Jersey (so far).
Q15: Summarize the key points about beneficiaries in a Jersey private trust.
A15:
There must be at least one identifiable (or ascertainable) beneficiary, or the trust fails.
The beneficiary must meet Article 10 criteria: named, or part of a class/relationship.
If the identity is too uncertain, the trust may be declared invalid under Article 11(2)(b)(iii).
A “power to add” alone might not save a trust if there is no initial beneficiary (Re Exeter Settlement).
