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Paper Topic:

Equity and trust certainties

Title

Equity and Trust Certainties

Writer ID : 8446

Answer

The general principle is that a trust to be fully enforceable the settlor must have the capacity to create a trust , the three certainties must be satisfied , and the current formalities must be followed and the property must vest to the trustees . To work on experience placement in the legal department of a City firm , Rigby , Jolly and Pinnar '- a group of independent financial advisors , it is necessary to have a clear knowledge about three certainties of trust , formalities of

trust constitution of trust as well as fixed trust , and discretionary trust Before advising , it is necessary to consider the trustees powers and duties . He has to concern about the `dispositive , administrative `fiduciary , powers , and duties . However , a trust may fail for uncertain beneficiaries . Therefore , the trustees need to be able to identify who the beneficiaries should be , certainty of objects

In Knight v Knight Lord Langdale , 123a private express trust cannot be created unless three certainties are present , these are certainty of intention , certainty of subject matter and certainty of beneficiaries Settlors specify the number of beneficiaries to create fixed trust , for example a trust in favour of `my children . In Hunter v Moss2 , the CA held that a declaration of trust of 50 shares from a holding of 950 did not fail for uncertainty of subject matter

The `beneficiary Principle ' states that a valid trust must be for the benefit of ascertainable individuals- the trust must have beneficiaries The first objection may be seen in a celebrated dictum of Sir William Grant M .R . in Morice v Bishop of Durham3 . Every trust has an obligation Sir William Grant M .R . states

`There can be no trust , over the exercise of which this Court will not assume a control for an uncontrollable power of disposition would be ownership , and not trust . Every trust (other than a charitable one ) must have a definite object . There must be somebody in whose favour the court can decree performance

This rule similar to `privity ' rule of contract law only parties of the contract may enforce it even though some third party may benefit from the performance of a contract , that factual benefit alone gives him no interest under the contract , and thus no right to enforce it

When settlors create discretionary trust , the trustees are required to exercise their discretion to select the beneficiaries from among a class of objects and /or determine the quantum of interest that the beneficiaries may enjoy . The modern test for certainty of objects in respect of discretionary trusts is known as the `individual ascertain ability ' test , or the `is or is not ' test , or the `any given postulant test . This test was laid down by the House of Lords in McPhail v Doulton (sub nom Re Baden ) and Re Gulbenkian4

The test is very appropriate for fixed trusts , but creates unfair and unjust results for discretionary trusts . Although the trustee would be able to make a reasonable...

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