Chat with AIExam 5: Trust Formation: The Three Certainties
It is vital to establish all three certainties in order to create a valid trust.
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VerifiedTrue
Which case set out the principle that settlors have to use words which show a clear intention to subject the recipient of the property to a binding obligation to hold that property on trust for a beneficiary?
(33) VerifiedB
Which two things are necessary before an express private trust is created?
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Answered by Examlex AI CopilotBefore an express private trust can be created, two essential elements must be established:
1. **Certainty of Intention**: There must be a clear and unequivocal intention by the settlor (the person who creates the trust) to create a trust. This intention can be demonstrated through the language used in the trust document or the deed of trust. The settlor must intend to impose enforceable duties on the trustee to manage the trust property for the benefit of the beneficiaries. The terms of the trust must be precise enough for the courts to enforce them. If the intention to create a trust is vague or ambiguous, the trust may fail for lack of certainty.
2. **Certainty of Subject Matter**: The trust property, also known as the trust corpus or trust res, must be clearly identified. There must be a clear definition of what assets are part of the trust and the extent of the beneficiaries' interest in those assets. This means that the assets must be described with enough precision that they can be identified and separated from the settlor's other assets. Additionally, the rights that the beneficiaries have in relation to the assets must be clear. If the subject matter is not certain, the trust may fail because there is nothing for the trustees to manage or for the beneficiaries to benefit from.
In addition to these two elements, there is often a third requirement:
3. **Certainty of Objects**: The beneficiaries of the trust, or the objects, must be clearly identified or at least be identifiable. The beneficiaries can be individuals, a class of people, or even organizations. If the beneficiaries cannot be determined, then the trust may fail because the trustees would not know to whom they should distribute the trust's assets.
These three "certainties" are fundamental for the creation of an express private trust under common law principles. Without these elements, a trust may not be considered valid, and the assets may revert to the settlor or their estate.
The three certainties help to ensure that a trustee can properly manage a trust.
(34) In which case was the need for the three certainties in order to establish a trust set out by Lord Langdale?
(34) What are the consequences if certainty of subject matter is absent?
(37) What was the test as set out by Lord Wilberforce in McPhail v Doulton (1971) AC 424.
(35) Certainty of object focuses on the actual property that the settlor wishes to leave on trust.
(38) Certainty of intention means that it must be clear that the settlor truly wanted to establish a trust.
(46) If the trust property forms part of a larger identical 'batch' of intangible property, then it does need to be precisely identified by the settlor when creating the trust.
(36) Trustees for discretionary trusts decide who will benefit from the trust.
(33) When creating the trust, the settlor must ensure that he correctly identifies the trust property, so that the trustee can be sure what property he is expected to hold on trust and administer for the benefit of the beneficiary.
(30) Trustees of fixed trusts must be able to draw up a complete list of beneficiaries so that they can effectively manage the trust.
(38) What was held in Sprange v Barnard (1789) 2 Bro CC 585; 29 ER 320?
(29) What was the principle set out in Paul v Constance (1977) 1 WLR 527?
(34) How can Hunter v Moss be distinguished from Re Goldcorp Exchange (1994) 3 WLR 199?
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