Equity and Trusts

Reasons for certainty requirements property is correctly identified and is dealt with in accordance with the wishes of the settlor. The shift from property and monies has changed over the 200 years when the first trusts were introduced exchanging family arrangements. Trusts have to be investigated because some trusts maybe fraudulent. A vested interest in property is needed for the trustee to carry out the trust. This had lead to the certainty requirements.

The essentials of a valid private express trust are certainty of intention or words, certainty of property or subject matter and certainty of the person or object. If any of these certainties are missing then no valid express trust is created. Hancock v Watson 1902 if trust is rendered a gift absolute and is imposed the trust fails.  Not held on resulting trusts for settlor but will vest absolutely in person to whom property was given Palmer v Simmonds 1854.

Certainty of intention most express trusts are created by means of written document, arising from a will or other formal settlement. Since equity looks at intention rather then form of transaction, there is no need for the word ‘trust’ all that is needed is a clear intention to create a trust.

A precatory word is expressing a wish hope or request a precatory word is an intention; this intention must be written in a document to be execued. Hamilton 1895 ‘look at will see what it intended and if no trust intended, you say so’ Lindley LJ. Cominsky v Bowring-Hanbury 1905 trust on basis of words ‘absolutely in full confidence’. Re: Steele there is a stronger inference of intention to create a trust than would be if the case were both gift and precatory words to appear in the same instrument. Re: Burley testator not intending to create a trust may have subjected the property to a power of appointment instead of an absolute gift, down to testator intention.

Certainty of subject matter is to identify property intending to be the subject matter in a trust. Words must be clear ‘bulk of my estate’ Palmer v Simmonds didn’t identify the subject matter clearly enough since it may mean different things to different people.

Final element of certainty is settlor identifying persons who benefits from trust. Discretionary trust applies with several tests depending on nature of trustee’s powers and duties. Certainty of beneficiaries relates to fixed trusts, were trustees under an obligation to distribute to named persons, or specific groups. Beneficiaries are named in trusts Re: Endcott 1959 ‘in order to be effective must have ascertained or ascertainable beneficiaries’. The crucial word is ascertainable; injustices may arise in cases of fixed trusts if principles are too strictly adhered too.

Firstly you have to find the certainty of intention of Monty. Who did he intended the property or in this case the shares to go to.

Certainty of subject matter there must be an interest in some land or chattel or sum of money in this case shares can also be used. A trust exists only when there has been a separation of power i.e. Monty passing on property or shares happens in this case shares being delegated to Lisa. The subject matter must be certain and identifiable. A trust on prevails if the subject matter is certain otherwise there is no trust in existence. There is no trust if the property cannot be identified. Palmer V Simmonds 1854 the trust failed because the wording said the bulk of my estate which cannot be identified. If a gift has been given and the trust fails makes it an absolute gift and the donee takes the property absolute Hancock V Watson 1902.

Uncertainty to a beneficial interest if a trust property is certain but the beneficial interests is not the property will result back to the settlor. Boyce V Boyce 1849. It was impossible to determine which house was held on trust for the daughter therefore not a gift so it resulted back to the residuary estate. Acception to this rule is if the subject matter is intangible property. In this case the subject matter does not have to be identified e.g. shares Hunter V Moss 1994. Held 50 shares on trust out of 950. Court of Appeal held it was trust was certain all shares intangible and all are identical.