Notes on the Creation of Express Trusts

Creation of Express Trusts

Overview of the Three Certainties

• Express trusts require three certainties for their creation: intention, subject matter, and objects.
• This was established in Chambers v. Fahy [1931] IR 17:
  • The subject matter must be certain.
  • The objects (beneficiaries) must be certain.
  • The words creating the trust must be imperative, indicating the testator's intention to create an obligation.

The Three Certainties

1. Intention

• It is crucial to determine the clear intention of the settlor (the person creating the trust).
• If intention is ambiguous, it may lead to different interpretations of the settlor's wishes.

Precatory Words

• Precatory words express a desire or wish but do not typically create a trust.
• Lambe v Eames (1871):
  • Property left to the testator's wife to be used as she thinks best for her family does not constitute a trust.
• Re Adams & the Kensington Vestry (1884):
  • Similar phrasing “in full confidence” does not create a binding trust due to lack of imperative language.

2. Subject-Matter

• The property subject to the trust must be clearly identifiable.
• Types of property that can constitute a trust include:
  • Chattels Rowe v. Prance [1999]
  • Choses in action (e.g., bank accounts) Paul v Constance [1977].
  • Portions of an estate or specific assets (e.g., Re Golay’s Will Trust [1965]).

Examples of Subject Matter:

• Trust can include:
  • Specific bank accounts or physical goods;
  • Shares of an estate as seen in the case of Comiskey v. Bowring-Hanbury (1905).

3. Objects

• Beneficiaries of the trust must be identifiable either as named individuals or by being part of a clearly defined group.
• Distinction between a trust and mere power:
  • Trust gives beneficiaries a right to enforce the trust; mere power does not convey any proprietary rights.

Certainty of Objects

• The concept can be addressed through:
  • Fixed trusts where beneficiaries are specifically listed.
  • Discretionary trusts, where the trustee has the discretion to choose among a class of beneficiaries (see McPhail v. Doulton [1971]).
• Examples include:
  • Re Gulbenkian’s Settlements validating that fiduciaries must identify objects distinctly.

Administrative Challenges

• The trust can be declared void or unworkable if the requirements of certainty are not met.
• Common issues include:
  • Conceptual or evidentiary uncertainty, where the meaning is unclear.
  • Unworkability or capriciousness in determining beneficiaries (as seen in several cases, including R. v. District Auditor, ex parte West Yorkshire Metropolitan County Council (1986)) that may invalidate a trust.

Additional Notes

• No specific wording like "trust" is needed to create a trust as established in Comiskey v. Bowring-Hanbury.
• Clarity in the drafting of testamentary gifts is essential in determining if a trust is created and how the assets will be managed upon the settlor’s death.