TOPIC 3A: CERTAINTY OF OBJECT
Pursuant to the beneficiary principle, a trust must be for the benefit of identifiable persons or objects
(Morice). However, the test for certainty depends upon the type of trust created.
Summary
Obligation
to Distribute
Discretion to Select Objects
Test for Certainty
General
Hybrid
Special
Fixed Interest Trust
Yes
No discretion permitted
List Certainty
Discretionary Trust
Yes
No
No
Yes
Criterion Certainty
Mere Power
No
Yes
Yes
Yes
Criterion Certainty
1. Type of Trust
A. OBLIGATION TO DISTRIBUTE?
ASK: Does the wording of the clause indicate that trustee is obliged to distribute property?
If YES, then clause imposes a trust power
If NO, then clause imposes a mere power
I. TRUST POWER
Look at whether there is time limit e.g. T must appoint to B within X years this indicates obligation
Generally, will not have a gift over in default (although not conclusive) (Hays)
Clear and express language e.g. “must”, “on trust” – compare to other sections
To distribute to anyone except T also indicates that cannot keep it for themselves
II. MERE/BARE POWER
Weak language compared to other sections will likely indicate a mere power
A gift over in default clause is conclusive evidence of a mere power (Hays)
B. TYPES OF CLASS OF OBJECTS
Here [CLAUSE #] grants [D] a [GENERAL/HYBRID/SPECIAL] power of appointment, to select to whom
property is distribute from [CLASS OF OBJECTS].
1. General Power
Power to appoint anyone in the world including the donee
2. Hybrid Power
Power to appoint anybody in the world EXCEPT a specified class of individuals
3. Special Power
Power to appoint to anyone WITHIN a specified class of individuals
C. DISCRETION TO SELECT OBJECTS?
I. FIXED INTEREST TRUST
This is where the beneficiaries and their interests are specified (i.e. no POI)
This creates equitable property rights to [B] in [TRUST PROPERTY] as they can insist the trust is
distributed according to their proportionate interests
Where fixed interest beneficiaries are specified but no proportions stated – presume equal shares
The test for certainty of object is list certainty and [T] must be able to identify all beneficiaries at the
time of distribution (McPhail)
