Validity of trusts Flashcards
(33 cards)
What must a trust satisfy to be valid in equity?
The 3 certainties
What are the 3 certainties?
Certainty of intention, certainty of subject matter, and certainty of object
Who is the settlor?
The person creating the trust
What must the settlor clearly demonstrate?
Their intention to create a trust, the trust property must be clearly defined, and the beneficiaries must be clearly identified.
Knight v Knight
Lord Langdale MR identified three certainties: intention, subject matter, and object
Certainty of intention
It must be clear that the person disposing of the property intended to create a trust, rather than making a gift. There is no need to use the word ‘trust’, but the language should impose a clear obligation on the trustee
Case for certainty of intention
Re Adams and the Kensington Vestry
Re Adams and the Kensington Vestry facts
A testator gave all his real and personal estate unto and to the absolute use of his wife, and assigns, “in full confidence that she would do what was right as to the disposal thereof between his children, either in her lifetime or by will after her deceased. Questions whether a trust created with the wife as the trustee and the children as beneficiaries?
Re Adams and the Kensington Vestry judgement
Held there was no trust created. The court established a strong requirement for certainty of intention when creating a trust.
Certainty of subject matter
It must be clear exactly what property will form the ‘subject matter’ of the trust
Case for certainty of subject matter
Sprange v Barnard
Sprange v Barnard facts
Sprange v Barnard judgement
Certainty of subject matter for intangible property
For intangible property such as shares, the trust property is certain even if identified by words such as ‘5% of my shareholding’ or ‘50 out of my 250 shares’:
Certainty for subject matter for intangible property case
Hunter v Moss
Certainty of subject matter for chattels
For chattels, the trust property must be identifiable – if it is part of a larger holding of similar property, it should be segregated from the rest
Certainty of subject matter for chattels case
Re Goldcorp Exchange
Certainty of object
It must be certain who the beneficiaries are
Certainty of object in fixed trusts
The beneficial interests for each beneficiary is defined by the settlor or where each beneficiary receives fixed entitlement (e.g. ‘£100,000 to my trustee to be divided equally between my grandchildren’), the trustee must be able to draw up a complete list before disturbing the trust property
Certainty of object in fixed trusts case
IRC v Broadway Cottages
Hunter v Moss facts
Moss owned 950 shares in a company and was found to have declared himself trustee of 50 of those
shares for Hunter.
However, Moss sold all his shares and kept the proceeds for himself. When Hunter sought a share of the proceeds, Moss argued that the trust was void because he had not separated or
identified the specific shares to be held on trust for Hunter.
Hunter v Moss judgement
Dillon LJ distinguished that these shares were indistinguishable from one another. Therefore, no segregation was
required as holding any 50 of the 950 shares on trust would achieve the same thing.
Re Goldcorp Exchange facts
Re Goldcorp Exchange judgement
