The Three Certainties
The Three Certainties
* Knight v. Knight (1840); + Lord Langdale - To be valid as a trust there must be:
a) Certainty of intention to create a trust – Is a trust intended as a q. of fact?
b) Certainty of subject-matter – What property is to be subject to the trust and what are the beneficial interests?
c) Certainty of objects – Who are the beneficiaries of the trust? (charitable trusts do not need to satisfy this requirement)
* Why are these requirements necessary?
* The essential elements of the trust relationship must be defined with sufficient certainty to enable the T or donee of the power, or by default the court, to carry out his/her duties. Ts must know what their obligations are under the trust. The settlor cannot put the T under a duty to do something that is too vague to be legally enforceable or that is practically unworkable, given the nature of the trustee’s duties and their liability for breach. Certainties provide T with a degree of protection.
* The certainty rules have to strike a balance: the settlor’s freedom to express his or her intentions about how the trust is to work must be set against the need for the trust to be workable as a trust.
NB. A trust still has to comply with the extra formality requirements to be valid.
______________________________________________________________________________________________
1. Certainty of Intention to Create a Trust
Test: In all cases, it is a question of proving that the settlor intended to impose a legally binding obligation on the trustee to hold and manage the property on behalf of the B.
Equity looks to intent, rather than form. This is a question of construction of the relevant documents or of gathering inferences from the words or conduct of the alleged settlor, considering all the circumstances of the case.
Administration of Justice Act 1982, s.21: Extrinsic evidence, including evidence of the T’s intention, may be admitted to
* Knight v. Knight (1840); + Lord Langdale - To be valid as a trust there must be:
a) Certainty of intention to create a trust – Is a trust intended as a q. of fact?
b) Certainty of subject-matter – What property is to be subject to the trust and what are the beneficial interests?
c) Certainty of objects – Who are the beneficiaries of the trust? (charitable trusts do not need to satisfy this requirement)
* Why are these requirements necessary?
* The essential elements of the trust relationship must be defined with sufficient certainty to enable the T or donee of the power, or by default the court, to carry out his/her duties. Ts must know what their obligations are under the trust. The settlor cannot put the T under a duty to do something that is too vague to be legally enforceable or that is practically unworkable, given the nature of the trustee’s duties and their liability for breach. Certainties provide T with a degree of protection.
* The certainty rules have to strike a balance: the settlor’s freedom to express his or her intentions about how the trust is to work must be set against the need for the trust to be workable as a trust.
NB. A trust still has to comply with the extra formality requirements to be valid.
______________________________________________________________________________________________
1. Certainty of Intention to Create a Trust
Test: In all cases, it is a question of proving that the settlor intended to impose a legally binding obligation on the trustee to hold and manage the property on behalf of the B.
Equity looks to intent, rather than form. This is a question of construction of the relevant documents or of gathering inferences from the words or conduct of the alleged settlor, considering all the circumstances of the case.
Administration of Justice Act 1982, s.21: Extrinsic evidence, including evidence of the T’s intention, may be admitted to