What are the requirements for making an express trust?
- Capacity
- Are the three certainties present
- a. Intention
- b. Subject matter
- c. Objects - Compliance with legal formalities
- Constitution of the trust
- Finally an extra rule is to consider the perpetuity rule (125 years)
What is the perpetuity rule?
A trust cannot last indefinitely. The trust must have vested in the final successor within 125 years.
What happens if a trust purports to last forever?
It will be void for breach of the perpetuity rules.
What is the certainty of intention?
Otherwise known as certainty of words.
The settlor must have intended to fragment and dispose his title, and to impose a duty of the trustee, in order to create a trust.
What equitable maxim is relevant to the certainty of intent?
“Equity looks at the intent, not the form”
Intention is established by considering all the circumstances of a case.
Does the word trust need to be used to create a trust?
No! Paul v Constance
The settlor can use words of equivalent meaning. However their conduct and words must always align.
True or false, even if the word a trust is used, a trust might not exist?
True! Trust is an ordinary word and can work against proving the existence of a trust.
Signha v Heer [2016] EWCA Civ 424, [2017] 1 FLR 1192
Richard’s v Delbridge (1874) LR 18 Eq 11
The word trust is not required to prove COI, but words of equivalent meaning must be used.
Can conduct alone create a trust?
Yes!
In Re Kayford, the act of separating bank accounts was conduct deemd to be equivalent to declaring an intent of trust creation.
Lambe v Eames
In this case the courts created the distinction between precatory and imperative words.
Expressions of a hope, like, wish, desire are all what types of words?
Precatory!
They create a moral obligation, but not a legal one.
The following expressions are what type of words?
To be held for
To be given to
I want
Imperative words. There is a command, a duty or compulsion to do something.
What’s the difference between precatory and imperative words?
Imperative words are commanding, these words indicate the existence of and intention to create a trust.
Precatory words can still indicate intentions to create a trust, but more typically amount to gifts.
What is the certainty of subject matter?
It must be clear what property is held on trust.
It must be clear how much a person is entitled to and what beneficial shares each individual has.
Re London Wine
The property should be separated from other property in order to make it clear who is owed what, if it is not, then the trust will fail for lack of certainty of object.
Tangible objects must be segregated .
Hunter v Moss
Distinguished Re London Wine -
In this case, shares were not segregated but the court deemed this irrelevant as each share is of equal worth in the eyes of the law.
Intangible things do not need to be segregated.
Why is the ‘bulk of’ not a clear and ascertainable allocation share?
Bulk is not an objectively qualifiable amount. 51% is the bulk but so is 99%.
Is ‘reasonable income’ sufficiently certain as to the beneficial shares?
Surprisingly the court says yes, because reasonable has an objective yardstick.
What if the settlor is silent as to how much each beneficiary should get, it is clear on the amount to be shared?
“I give £100,000 to my trustees on behalf of my 4 grandchildren”
The law presumes the shares are to be equal.
Boyce v Boyce
House case where the settlor had two houses and gave one daughter a choice and the other could have whichever one wasn’t chosen.
The first daughter died before making her choice, so the remaining daughter got neither house, the gift failed for lack of certainty of subject matter, as it could never be certain which house she would’ve gotten.
What is certainty of subject matter?
For a trust to be valid, it must have ascertained or ascertainable beneficiaries.
Re Endacott
What are the conditions for certainty of objects?
- The beneficiary must be human (unless it is a purpose trust - charitable or an accepted private trust).
- The beneficiary must be individually identified or identified in terms of their class. (wife, children etc).
What is the test of certainty of objects for fixed trusts?
Fixed list test -
- Trustee must be able to draw up a complete list of exactly who the beneficiaries are, confident that everyone on the list is a beneficiary, and no one has been missed off. (IRC v Broadway Cottages)
Requires both conceptual and evidential certainty
What is the test for certainty of objects for discretionary trusts?
Can it be said that someone is or is not, a member of a specified class? (Re Baden (No 2))
The class of beneficiaries must be capable of legal definition. (I.e. a son has a legal definition, but short people or your favourite person does not)
Requires conceptual certainty only.
