Trust Law: Essentials of a Trust - Chapters 11 & 12

• Chapter 11 discusses the essentials of a trust.
• Chapter 12 discusses vitiated trusts.

Essentials of a Trust

• Valid trust creation necessitates three conditions, according to Knight v. Knight
• Words must be imperative and certain.
• Subject matter must be certain.
• Objects or beneficiaries must be certain.
• These are described as the "three certainties" of a trust.
• A trustee is also necessary for the execution of a trust.
• Equity emphasizes intent over form, so no special wording is required for a valid trust.
• Intention to create a trust must be clear from the expressions used by the settlor.
• The court will give effect to the settlor's intention.
• Precatory words may not create a binding trust.
• Precatory words include desire, wish, request, full assurance, and confident hope.
• Courts have been inconsistent in determining if precatory words establish a binding trust.
• In Lambe v. Eames, a gift to a widow "to be at her disposal in any way for the benefit of herself and her family" did not create a binding trust.
• In Re Hamilton Lopes, the court will consider all words used to determine the testator's intention to create a trust.
• In Re Adams & Kensington Vestry, a gift "unto the absolute use of my dear wife... in full confidence that she will do what is right as to the disposal thereof between my children" was an absolute gift with no trust for the children.
• In Mussorie Bank Ltd. v. Raynor, a gift to a widow "feeling confident that she will act justly to our children in dividing the same" did not create a trust.
• Intention of the testator is key to inferring a trust from precatory words based on the language of the will.
• In Comiskey v. Bowring Hanbury, a gift to his wife "in full confidence that she will make such use of it as I should have made myself and that at her death she will devise it to such one of my nieces as she may think fit..." plus direction to divide estate equally among surviving nieces was a gift.
• In Re Williams, a gift to a husband knowing he would give it to All Souls Church created an equitable obligation because he knew of the will's contents and agreed by his silence.
• Whether a court infers a trust depends on clear indication of subject and objects.
• In Eade v. Eade, a request or recommendation will raise a trust if objects and property are certain enough for the court to execute.
• Three certainties are interrelated.
• In Re Steele's Will Trusts, a gift of a necklace "to go and be held as an heirloom" created a precatory trust requiring the son to make proper provisions in his will

Certainty of Subject Matter

• Subject matter can be land interests, chattels, money, etc.
• Uncertainty of subject matter will negatively affect trust creation.
• In Curtis v. Rippon, property left to a wife "trusting that she will...make such use of it as shall be for her own and their spiritual and temporal good" resulted in the wife taking it absolutely, as no specific part was for the children, church, or poor.
• In Bardswell v. Bardswell, no trust was valid with the direction: "to remember certain persons."
• In Knight v. Knight, "to reward...my old servants and tenants according to their deserts" was invalid.
• In Re Jones, a gift to a wife, absolutely followed by a direction pertaining to parts of estate not sold being held in trust was invalid.
• Subject matter can be decided by trustee discretion.
• In Re Golay's Will Trust, direction to allow beneficiary "to enjoy one of my flats...and to receive a reasonable income" created a valid trust.
• Trustees could select the flat and "reasonable income" provided sufficient determinant to enable the court to quantify the amount.
• Determining each beneficiary's share is key to establish a trust.
• This can take the form of provision in the trust instrument.
• It can also take the form of power given to trustees to make a selection among a class of beneficiaries
• Trustees can also take the form of a discretion by the court based on the maxim that equality is equity.
• This may also include proper division according to the circumstances.

Certainty of Objects

• Recipients or purposes of the gift should be identifiable with certainty.
• The interest they take should be discoverable.
• In Re Vandervell's Trusts, future interests must have beneficiaries ascertainable within the period of perpetuity.
• Test for certainty depends on the trust's nature. Void unless trust can ascertain each beneficiary.
• A fixed trust has the share or interest of beneficiaries specified in the instrument creating the trust.
• Test for certainty relies on whether any individual is a member of a certain class.
• A discretionary trust as we have seen is one where trustees hold for the benefit of for members of a class of beneficiaries as they determine.
• Beneficiary owns no trust fund part unless trustees exercise discretion in their favour.
• Illustrations of required certainty of objects can be gathered from cases.
• In Harland v. Trigg, leasehold lands were given with hope that X would continue them in the family.
• The objects of bequest were too uncertain for trust to be enforced.
• In Meredith v. Heaneage, real plus personal estate was given to X in full confidence she would devise the whole estate to "such of my father's heirs as she may think best deserves her preference".
• Trust could not to be enforced because the court could not determine between heirs or next of kin
• In Sale v. Moore X was recommended "to consider my near relations."
• The court found difficulty determining how the relations were to be ascertained, therefore trust was not binding.
• Furthermore in Re Wood there was provision of a sum for "The Week's Good Cause" of The BBC. The beneficiary was uncertain because seven good causes were advocated one week in each month from different stations.

Trusts of imperfect obligations

• Valid trust should have a beneficiary who can enforce.
• Except for charitable trusts, trusts will be unenforceable without a beneficiary.
• In Re Astor's Settlement Trusts, the trust failed due to lack of ascertainable beneficiary.
• This trust was for the purpose of improving good understanding between nations, the preservation of the independence and integrity of newspapers, etc.
• In Re Shaw the trust for research for a proposed British alphabet lacked someone to enforce it.
• Exceptionally, where trust is of imperfect obligation, it would be enforced by the court if trustees are willing to do so.
• In Pettingall v. Pettingal, a bequest for the upkeep of a "favourite blackmare" was valid because people interested in the residue could enforce trust terms.

Effect of Uncertainty

• Effect of uncertainty varies.
• No intention to create trust is present when words of a trust are uncertain.
• The donee of the gift takes beneficially.
• Donee takes beneficially when trust fails for property uncertainty.
• No property to which it can be attached since intention to create trust is present.
• Donee of gift would hold on trust for the settlor when other requirements have been fulfilled.
• A resulting trust arises in favor of the testator's estate.

Vitiated Trusts

• A trust conflicting with the law, public policy or morality is invalid.

Trusts in favour of Illegitimate Children

• Settlements of property on illegitimate children to be born are, generally, invalid.
• A trust in favour of illegitimate children who have been conceived but are not yet born is valid.
• Immorality is regarded as past.
• In the Ugandan/African context, the concept of illegitimacy is not stressed.

Other criteria for determining validity of trusts

• A trust which is aimed at separating a parent or child is void.
• Trusts releasing fathers duties as a parent are void.
• Trusts which subvert religion or morality are void.
• Trusts intended to be effective on the separation of husband and wife in the future are void
• A trust with immediate separation already decided upon as unavoidable is valid.
• The trust does not take place if separation does not take place.

Explore the essentials of trust law with a focus on Chapters 11 and 12. Learn about the three certainties required for valid trust creation: intention, subject matter, and beneficiaries. Understand the role of imperative words and how courts interpret intention versus form in establishing a trust.