Three certainties

Question 1

What are the three certainties needed for the creation of an express trust?

Answer 1

• Certainty of Intention
• Certainty of Subject Matter
• Certainty of Objects

Question 2

What does Certainty of Intention refer to in the context of express trusts?

Answer 2

It refers to the requirement of intention to create the trust and to impose or assume the duty characteristic of a trust.

Question 3

How can intention to create a trust be ascertained?

Answer 3

From words and conduct.

There are no formalities required for most trusts.

Question 4

What approach do courts adopt to determine intention in trusts?

Answer 4

An objective approach.

This means that if a person manifests an intention to impose or assume a trust duty, it is considered as such.

Question 5

How is the intention of a written document determined?

Answer 5

By identifying the meaning of the words used in the document.

The use of the word ‘trust’ indicates intention but is not determinative.

Question 6

What is a good indicator of intention to create a trust?

Answer 6

The segregation or earmarking of assets in a separate bank account.

This practice often serves as evidence of the intention to create a trust.

Question 7

What can be inferred if the subject matter of a trust is vague or uncertain?

Answer 7

That there was no intention to create the trust at all.

This inference is supported by the case Mussoorie Bank Ltd v Raynor (1882).

Question 8

What is the Trust Property Requirement?

Answer 8

The requirement to locate the property which a trustee holds for beneficiaries and the property in which the beneficiary asserts an equitable property right.

Question 9

How is trust property identified when assets are transferred to a trustee?

Answer 9

It is simple in cases where trusts are created by transferring assets to a trustee.

Question 10

What happens if trust property cannot be ascertained from a description?

Answer 10

The trust will fail for uncertainty if it is not possible to ascertain the trust property from the description.

Question 11

What is required when creating a trust of specific items from a larger quantity?

Answer 11

It must be possible to identify which items are held on trust.

Question 12

Can a trust be created over a specific number of fungible, intangible assets?

Answer 12

Yes, a trust can be created over fungible, intangible assets, such as identical shares.

Question 13

What happens if a person attempts to identify the trust property by description?

Answer 13

The trust will fail for uncertainty if it is not possible to ascertain the trust property from the description.

Question 14

Can a trust be created over a specific number of similar non-fungible, tangible assets?

Answer 14

No, a trust cannot be created over non-fungible, tangible assets, nor over fungible, tangible assets.

Question 15

What is an example of items that cannot be trusted?

Answer 15

5 out of 10 diamonds, 20 out of 100 bottles of wine, 5 out of 10 gold bars.

Question 16

What is easier when creating a trust over a specific number of assets from a larger quantity of similar items?

Answer 16

It is easier to create a trust with percentages.

Question 17

What is the Beneficial Entitlement Requirement?

Answer 17

It must be possible to ascertain the nature and extent of the beneficiary’s interest in that trust property.

Question 18

What can cause a trust to fail for certainty regarding beneficial entitlement?

Answer 18

A trust can fail if the settlor fails to consider the possibility that the trustee might not be able to exercise their power to determine beneficial entitlement (e.g if they die)

Boyce v Boyce

Question 19

Can you have a trust that requires the trustee to pay ‘a reasonable income’ to a beneficiary?

Answer 19

Yes as there is an objective yardstick.

Question 20

What are the usual objects in a trust?

Answer 20

Usually will be people (beneficiaries).

Question 21

What degree of certainty is required for a fixed trust compared to a discretionary trust?

Answer 21

Greater degree of certainty is required for a fixed trust than for a discretionary trust.

Question 22

What must trustees know in a fixed trust regarding the objects?

Answer 22

The trustees must know exactly who is to benefit and how much they are to receive.

Question 23

What happens if there is uncertainty about some beneficial entitlements in a fixed trust?

Answer 23

Identifiable beneficiaries whose entitlement is not dependent on others will still be entitled to their interests.

Question 24

Who sets out the beneficial entitlement in a trust instrument?

Answer 24

The settlor sets out the beneficial entitlement in the trust instrument.

Question 25

What is required when distributing property equally between members of a class in a fixed trust?

Answer 25

It must be possible to draw up a complete list of all of the beneficiaries.

Question 26

What does conceptual certainty refer to?

Answer 26

It refers to the precision of language used by the settlor to define the class of persons whom they intend to benefit.

Question 27

What does evidential certainty refer to?

Answer 27

It refers to the extent to which the evidence in a particular case enables the trustees to identify the objects of the trust.

Question 28

What is required of trustees in a discretionary trust regarding identifying objects?

Answer 28

Trustees are not required to divide the property between all the objects and thus do not need to be able to identify them all.

Question 29

What must trustees carry out in a discretionary trust when determining certainty of objects?

Answer 29

Must carry out a survey of the class which is appropriate to the particular trust.

Question 30

What test is used to determine beneficiaries in a discretionary trust?

Answer 30

The is/is not test - this requires a trustee to be able to say with certainty whether 'any given individual is or is not a member of the class'. ## Footnote McPhail v Doulton

Question 31

Is conceptual certainty required in the is/is not test?

Answer 31

Yes, conceptual certainty is still required.

Question 32

What is the controversy surrounding evidential certainty?

Answer 32

It is controversial law; it is for the claimant to prove to the trustees' satisfaction that they are within the class. ## Footnote Re Baden No 2

Question 33

What is administrative unworkability in the context of trusts?

Answer 33

A trust failing because the class of objects was too wide – e.g. the inhabitants of Yorkshire.

Question 34

What must the donee of a power be abel to determine when identifying potential objects?

Answer 34

The donee of a power must be able to determine who falls within the class of objects - there is no need for them to exercise their power, so they do not need to be able to identify all potential objects