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Summary WS3 Certainty of Objects and the Beneficiary Principle

Course
- Equity and Trusts
- 2021 - 2021
59 Flashcards & Notes
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A snapshot of the summary - WS3 Certainty of Objects and the Beneficiary Principle

  • 2 Certainty of Objects

  • Once you have identified whether you are dealing with a fixed, discretionary trust, or a power of appointment, what must you test these issues against?
    Use relevant certainty of object test to that particular type of trust or power.
  • 2.1 Different Types of Trusts: Fixed Trust

  • Does the trustee have discretion as to how the trust property is allocated between the beneficiaries?
    The trustee has no discretion over how the trust property is to be distributed between the beneficiaries as the settlor has already stipulated the beneficiaries and share proportions. Equal distribution is presumed.
  • Explain the test for certainty of objects in a fixed trust. What is the main case authority for this?
    The complete list test is a comprehensive list of all the beneficiaries (IRC v Broadway Cottages).
  • Explain how the first element of the 'complete list test', 'evidential uncertainty, is important in ensuring a fixed trust is valid?
    Evidential certainty is when the trustee can identify each member of the class of beneficiaries. If there is no evidence to show an individual qualifies as a beneficiary, the fixed trust is void.
  • Explain how the above principles of 'conceptual certainty' and 'evidential certainty' apply in commercial trusts? What is the case authority for this?
    In OT Computers Ltd v First National Tricity Finance Ltd, a trust for 'urgent suppliers' failed because it was unclear what objects came under the classification 'urgent'.
  • Explain how the second element of the 'complete list test', 'conceptual certainty', is important in ensuring a fixed trust is valid?
    The description of the beneficiaries must be conceptually certain so that the trustees know what sort of people qualify. E.g., a 'trust to divide £ between old friends' is conceptually uncertain because there are insufficient criteria for the trustees to determine what is 'old' and a 'friend'.
  • 3 Discretionary Trusts

  • 3.1 What is a discretionary trust?

  • How does Warner J in (Mettoy Pension Trustees Ltd v Evans) describe a discretionary trust?
    A person is under a duty to select among a class of beneficiaries those who are to receive the trust property and in what proportions.
  • 3.2.1 What is a power of appointment?

  • Is the authority under a legal obligation to exercise their power in dealing with the property in some way?
    An authority to deal with the property in some way, but does not have to exercise the power.
  • 3.2.2 How does PoA differ from a discretionary trust?

  • Are the donee of a power (an authority chosen through PoA) obliged to distrubte the trust property?
    A donee of power is not obliged to distribute the trust property.
  • What happens when the trustee under a discretionary trust does not carry out their duty within a certain time?
    If the trustee fails to carry out their duty within a specified or reasonable time, the court can intervene.
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