4 Creating a Trust the Three Certainties - Equity and Trusts - UoL

Summary

This educational deep dive into English trust law focuses on the three certainties required for creating a valid trust: certainty of intention, certainty of subject matter, and certainty of objects. The video covers essential case law, explains how these certainties impact trust validity, and highlights key concepts like the distinction between legal and moral obligations, the importance of clear property identification, and the need for identifiable beneficiaries. With practical tips for law students, the session offers a thorough understanding of how to approach trust law, including common exam pitfalls and controversial case rulings.

Takeaways

• 😀 Certainty of intention is the first essential element for a valid express trust. The settlor must clearly express their intention to create a legal obligation, not just a moral one.
• 😀 A trust can be invalid if the settlor's intention is unclear or ambiguous. Courts look for objective manifestations of intention, typically through words or written expressions.
• 😀 The distinction between legal obligation and moral expectation is crucial. For example, in the case of *Re Adams & Kensington Vestry*, a moral wish was not enough to create a legal trust.
• 😀 The key case for failed gifts being treated as trusts is *Milroy v. Lord*. The court won’t fix an imperfect gift by transforming it into a trust.
• 😀 Certainty of subject matter requires that the trust property is clearly identifiable. For tangible assets, it must be segregated or marked; for intangible assets like shares, all items are presumed identical unless otherwise specified.
• 😀 *Hunter v. Moss* is a key case where intangible assets (shares) were treated differently, allowing for a trust over a percentage of shares without specifying individual shares.
• 😀 Vague descriptions like 'the bulk of my estate' can cause a trust to fail due to conceptual uncertainty, as seen in *Palmer v. Simmons*. However, vague terms may work if there is an objective standard, as in *Regal v. WT* for reasonable income.
• 😀 Certainty of objects relates to clearly identifying the beneficiaries. Non-charitable trusts require ascertainable beneficiaries, or the trust will fail, as in *Reendicott*.
• 😀 The test for certainty of objects differs depending on the trust type: 'complete list' for fixed trusts, 'is or is not' for discretionary trusts, and 'one person' for gifts subject to a condition.
• 😀 Administrative workability and capriciousness are related hurdles in trust law. Even if objects are certain, a trust may fail if it's too large to administer effectively or if it appears arbitrary and lacking a rational basis.
• 😀 Understanding the debates and nuances, such as the criticisms of *Hunter v. Moss* and the differences between conceptual and evidential uncertainty, enhances your understanding of trust law.

Q & A

What are the three certainties required to create a valid trust in English law?

The three certainties required to create a valid trust are: certainty of intention, certainty of subject matter, and certainty of objects.

Why is certainty of intention essential for creating a trust?

Certainty of intention ensures that the settlor has the clear intention to create a legal obligation, not just a moral wish. This intention must be manifested outwardly, through words or actions, not just thought.

What is the significance of the case *McCormick v. Grogan* in relation to certainty of intention?

The case of *McCormick v. Grogan* highlights the difference between a legal obligation and a moral expectation. It illustrates that a statement expressing a moral hope (like 'I hope you will do the right thing') does not create a legally binding trust.

Can a failed gift be considered a trust by the courts?

No, a failed attempt to make a gift cannot be rescued by the courts as a trust. In cases like *Milroy v. Lord* and *Richards v. Delbridge*, the courts have emphasized that if a gift is not legally valid, it cannot automatically be treated as a trust.

How does *Paul v. Constance* illustrate that the word 'trust' is not necessary to create one?

*Paul v. Constance* shows that a trust can be created even without explicitly using the word 'trust.' In this case, the court interpreted the settlor's words and actions as demonstrating an intention to create a trust, even though the word 'trust' was not mentioned.

What is the difference between certainty of intention and certainty of subject matter in trust law?

Certainty of intention focuses on whether the settlor clearly intended to create a trust. Certainty of subject matter concerns whether the trust property is clearly identifiable so the trustees can properly manage it. Without this, the trust could fail due to vagueness about what property is meant to be included.

What is the significance of *Hunter v. Moss* in relation to intangible property like shares?

*Hunter v. Moss* is a controversial case where the court upheld a trust over shares without specifying which shares, citing that shares are identical and interchangeable. This contrasts with tangible property, like wine or gold, which requires specific identification to be valid.

How does conceptual uncertainty affect the validity of a trust?

Conceptual uncertainty occurs when the terms used to describe the trust property or beneficiaries are too vague to clearly identify them. For example, terms like 'the bulk of my estate' or 'my friends' are too subjective, and a trust based on such concepts would fail due to conceptual uncertainty.

What is the 'is or is not' test, and how does it apply to discretionary trusts?

The 'is or is not' test is used to assess whether a person falls within the class of beneficiaries in discretionary trusts. Trustees must be able to say with certainty whether a person is or is not part of the class. It was established in *McFale v. Daltton* and is applied to discretionary trusts where the trustee has the discretion to select beneficiaries.

What role does administrative workability play in trust validity?

Administrative workability refers to the practicality of managing a trust. Even if a trust is conceptually valid, it may still fail if it is administratively unworkable, such as when the class of beneficiaries is too large or constantly changing, making it impossible for the trustees to manage the trust effectively.