Trust & Equity

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i) to my accountant and good friend, Eustace, the best part of my collection of antique coins, entreating him to divide the lions share between the curators of all museums in europe established before i was born

In order for a trust to be valid, the three certainties1 must be complied with2, namely certainty of intention, of subject matter and of object matter. In this instance the problem would appear to be with certainty of both intention and of subject matter.3 In addition, a number of other matters must be complied with such as constitution and sometimes, formalities, depending upon the subject matter of the trust. Here it is not certain whether Andrea wishes this gift to be an absolute gift to Eustace or whether she intends to create a trust for all the curators. It also remains uncertain who can be said to fall within the class of ‘curators of all museums established before I was born’.

In addition, in order for a trust to exist, it must be clear what exactly is intended to be distributed to each beneficiary. Here Andrea has indicated that she wishes Eustace to have the ‘best part’ of her collection of antique coins. This phrase is unlikely to pass the test of certainty as it is unclear exactly which coins are being referred to. For instance, in Palmer v Simmonds4 the phrase ‘bulk of my estate’ was held to be uncertain and the trust failed. In Re Jones5the words ‘such parts of my estate as she shall not have sold’ failed and in The estate of Last6 the words ‘anything that is left’ also failed. Moreover it remains uncertain what ‘the lion’s share’ specifically refers to.

However, it could nonetheless be argued that the subject matter could be determined on the authority of Re Golay’s Will Trusts in which it was held that an otherwise uncertain subject matter might be upheld if a sufficiently objective determinant could be found to enable the court to quantify the amount. In that case, it had been directed that the beneficiary was to receive ‘a reasonable income’ and the court held that they could quantify the amount she was to receive on the basis of her previous standard of living. Whether the same principle could be applied in this instance is arguable.

In any event, even if the subject matter could be held to be sufficiently certain it is still necessary to establish whether Andrea intended to place Eustace in a trustee position and therefore under a legal rather than a moral obligation. It is therefore likely that Eustace will take the coins absolutely.

ii) to my cousins Mitzi and Joella, six of my precious gemstone rings, Joella to have the three which Mitzi does not want

In Boyce v Boyce7 S left two houses to be conveyed one each to M and C with M to choose which one she wanted and the other one to go to C. However M died before S and the court held the trust invalid as it was not certain which house was to go to C. He also used the word ‘all my other houses’. This case also shows that a trust may fail even if the property is certain but the beneficial shares are not.

The same can be applied to the given facts as Mitzi died last year. Therefore this trust will fail. Whenever the trusts of a settlement fail, there is a resulting trust of the trust property for the settler or his estate (Re Ames Settlement)8. The same principle will apply where the beneficial interest has not been wholly disposed of.

iii) To sadia, all artefacts collected from my trips to Africa to be distributed amongst

those green-eyed adults who visit the museum on the first anniversary of my death. If she is unwilling to do this, the artifacts are to be auctioned to provide reasonable income for my disabled brother Zeb.

A fixed trust arises where the interest of each beneficiary is described in the instrument creating the trust. If a fixed trust is to be valid then, all of the beneficiaries must be ascertainable, ie. the trustee must be able to establish their number and identities i.e. there must be a ‘complete shopping list’. However, although the objects may be sufficiently certain to satisfy the above requirement, the trust may still fail for administrative unworkability. This will be so where the potential class of beneficiaries is so wide that it would be difficult for the trustees to know where to begin exercising their discretion. For example, in R v District Auditor, ex parte West Yorkshire Metropolitan County Council9a trust was set up ‘ for the benefit of any or all or some of the inhabitants of the county of West Yorkshire’. It was held that the class was simply too large. Moreover, a class comprising such beneficiaries as the ‘green-eyed visitors’ may be held to be invalid, not on the basis of numbers, but on the ground of capriciousness, namely that the terms negatived any sensible intention of the settlor and any sensible consideration by the trustee.

Thus, the difficulty is that even if the gift is construed as being for persons it may fail for lack of certainty of objects. “It is clear law that a trust …..must be for ascertainable beneficiaries” (Re Vandervell’s Trusts10). The validity of any such trust will depend on whether you can say of any individual that he or she is or is not a member of the class to be benefited by the gift (McPhail v Doulton11).

It is uncertain whether the words “green-eyes adults” and ‘those who visit the museum on the first anniversary’ of Andrea’s death will lead to difficulties. The trustee may not find great difficulty in deciding who visits the museum on a particular day but determining who has green eyes may be more difficult, although practically possible. If both are possible then it is submitted that the gift will be upheld.

Should the trust fail then the artifacts are to be auctioned to provide reasonable income for Zeb. In Sprange v Barnard12 S left property to her husband ‘for his sole use’ but at his death, ‘the remaining part of what is left’ was to go to someone else. The court held that there was no certainty as to what would be left and therefore there was no trust and the husband would take absolutely. But in Re Golay’s Will Trusts13 a trust concerning ‘a reasonable income’ was upheld as the court felt that an uncertainty did not arise because they could work out what was reasonable in the circumstances. Mere use of the word ‘reasonable’ will probably not be sufficient and in order for such words to be upheld there must be an adequate objective determinant to enable the court to make calculations. For instance in the given scenario the court will need to find the correct determinant to be able to assess Zeb’s standard of living as a purely subjective standard will not suffice

iv) To Don, the remainder of my estate to be held on the following trusts:

a) one half to be divided as he sees fit amongst all those members of the local historical society who relished their monthly trips to the museum and bought items from the museum shop

This prima facie appears to be a trust for a purpose. A trust for a purpose is generally void and if Andrea’s gift to the society is interpreted as such a gift then it is likely that this gift will fail.

However, the application of different interpretations could save the gift. It is unlikely that the gift could be described as charitable because of the necessity for the matter to come within one of Lord Macnaghten’s classifications as laid down in Commissioners for Special Purposes of Income Tax v Pemsel although it could be construed as a gift to an unincorporated association provided that the historical society can meet the definition laid down in Conservative and Unionist Central Office v Burrell. The purpose would then be seen as incidental and the gift would take effect as one to the members in a number of different ways as suggested by Cross J in Neville Estates v Madden .

If, however, the society cannot satisfy the description of an unincorporated association, the only other way in which the gift might be upheld would be based on the authority of Re Denley’s Trust Deed in that there could be a trust for the benefit of the members of the society, who would then be able to enforce the gift.

Here there is an intention to create a trust, although it is submitted that there may be problems with certainty of object matter. The trust is discretionary in nature with the effect that the trustee must choose who is to receive a share of the funds. The trust is therefore subject to the same test14 as applied to powers as laid down in Re Gulbenkian’s Settlements described in McPhail v Doulton to be ‘whether it can be said with certainty that any given individual is or is not a member of the class’. In this instance, the class would not appear to be too wide.

It would appear then that this trust will be upheld as valid and that the trustee will therefore be under a duty to distribute the funds in accordance with Andrea’s directions.

b) the balance to be divided equally between my relatives

Here there is an intention to create a trust, although prima facie it appears that there may be problems with certainty of object matter. The trust is a discretionary one and is therefore subject to the same test as applied to powers as laid down in Re Gulbenkian’s Settlements described in McPhail v Doulton to be ‘whether it can be said with certainty that any given individual is or is not a member of the class’. In this instance, the class would appear to be too wide i.e. ‘relatives’. But it may well be that ‘relatives’ could be determined. In Re Baden’s Deed Trusts (No.2) the Court of Appeal held the relevant test was concerned with conceptual rather than evidential certainty and therefore it was considered that the word ‘relative’ was capable of being conceptually certain.

In the given scenario, although Phillip, who is a relative has not been heard of, the trust could still be held to be conceptually certain and the proceeds divided between the other relatives. His share could be held on trust for him should he ever return.

Thus this trust will be upheld as valid

The will also states: ‘All old staff who worked in the Museum office may each select a pen from my collection of rare writing implements. This is to take effect before any other disposition. Any writing implements left at the end of one year are to go to Don, as above.’

It needs to be shown that the beneficiaries are described with sufficient certainty to allow the trustee to carry out the trust. ‘All old staff’ appears to be conceptually certain enough to uphold the trust. However it would also depend on the amount of ‘old staff’ and whether there are sufficient rare writing implements to be distributed to such staff. Should this not be the case then the gift will fail and the implements will be held on a resulting trust.

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