Three certainties and gifts
Hi all, I know this has already been asked but I couldn't really gather an answer from the replies. I'm doing a problem question in equity and trusts on a will and donatio mortis causa and have just wondered if the three certainties apply to gifts made in a will? I only realised before that some of the bequests aren't trusts.
So for example:
'£100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region'
That's a trust right, so the three certainties apply?
But this:
'Six bottles from the contents of my wine cellar to Hayley, the rest to Liam'
This is a gift right? So do the three certainties apply?
(Also if anyone can answer this that'd be great!:
'£50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle'
Is that a trust? It doesn't say it is, would it maybe be that he intended a trust but it would fail for no certainty of intention and so would become a gift to Carla and Michelle wouldn't get anything?)
Thank you all!
So for example:
'£100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region'
That's a trust right, so the three certainties apply?
But this:
'Six bottles from the contents of my wine cellar to Hayley, the rest to Liam'
This is a gift right? So do the three certainties apply?
(Also if anyone can answer this that'd be great!:
'£50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle'
Is that a trust? It doesn't say it is, would it maybe be that he intended a trust but it would fail for no certainty of intention and so would become a gift to Carla and Michelle wouldn't get anything?)
Thank you all!
Remember that the "three certainties" aren't arbitrary requirements. Certainty of intention is just looking at whether a trust is what the settlor actually intended, or whether it is a gift or something out, with gifts you are still going through the same exercise - i.e. consider whether it is a gift that was ACTULLY intended, don't assume this - even if its not necessarily called certainty of intention.
You do need certainty of subject matter for anything that involves a transfer of property rights, including a gift. You can't transfer property rights if you can't identify with certainty what those rights are, he can't gift bottles of wine if you don't know what bottles of wine the dude was talking about, no court could possibly enforce that. Its a general principle of property law so the same set of cases apply
No certainty of objects for gifts.
RE: the last question, yes the problem is certainty of intention. Don't jump to conclusions, consider it both ways. You don't need to use the word "trust" necessarily, it is a question of what the settlor intended. Also you have a administrative unworkability problem
You do need certainty of subject matter for anything that involves a transfer of property rights, including a gift. You can't transfer property rights if you can't identify with certainty what those rights are, he can't gift bottles of wine if you don't know what bottles of wine the dude was talking about, no court could possibly enforce that. Its a general principle of property law so the same set of cases apply
No certainty of objects for gifts.
RE: the last question, yes the problem is certainty of intention. Don't jump to conclusions, consider it both ways. You don't need to use the word "trust" necessarily, it is a question of what the settlor intended. Also you have a administrative unworkability problem
Original post by mellb
Hi all, I know this has already been asked but I couldn't really gather an answer from the replies. I'm doing a problem question in equity and trusts on a will and donatio mortis causa and have just wondered if the three certainties apply to gifts made in a will? I only realised before that some of the bequests aren't trusts.
So for example:
'£100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region'
That's a trust right, so the three certainties apply?
But this:
'Six bottles from the contents of my wine cellar to Hayley, the rest to Liam'
This is a gift right? So do the three certainties apply?
(Also if anyone can answer this that'd be great!:
'£50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle'
Is that a trust? It doesn't say it is, would it maybe be that he intended a trust but it would fail for no certainty of intention and so would become a gift to Carla and Michelle wouldn't get anything?)
Thank you all!
So for example:
'£100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region'
That's a trust right, so the three certainties apply?
But this:
'Six bottles from the contents of my wine cellar to Hayley, the rest to Liam'
This is a gift right? So do the three certainties apply?
(Also if anyone can answer this that'd be great!:
'£50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle'
Is that a trust? It doesn't say it is, would it maybe be that he intended a trust but it would fail for no certainty of intention and so would become a gift to Carla and Michelle wouldn't get anything?)
Thank you all!
The first one suggests a discretionary trust, because they are trustees. This is covered under Re Baden Deed Trusts No.2 (also known as McPhail v Doulton), read the case in order to find out why.
Anytime you do a trusts question(on trust and powers) try to conceptualize the three certainties and how they apply to intention, subject matter and object in each provision:
certainty of intent: create a trust of income or capital from 100000 gbp
certainty of subject matter: 100000 (capital or income)
certainty of objects: promising amateur golfers in Manchester Region.
Then ask yourself was the certainty of objects conceptually certain, if yes why or if no why. Try reading McPhail v Doulton as well as IBC v Broadway Cottages for background information.
Re the wine, I would construe it as a gift, but then using the three certainties again, which of the 3 seems more uncertain? For me it would be the certainty of subject matter.
Read the cases of Re London Wines and Hunter v Moss for clues as to why, and contrast the differences in the two cases to complete your answer.
The last one: '£50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle'
Look up the term precatory words and see how it fits into your scenario... especially with the phrases 'in the hope and in full confidence'. This phrase will cause a problem with one of the three certainties of intention... as jacketpotato mentioned with those words, perhaps the gift/trust (you decide) would be administratively unworkable... for precedent or authority check out the case of Lambe v Eames or Re Adams
Hope this provides a little more clarity for you...
Original post by mellb
One last thing, when a discretionary trust fails does the property fall into residue? Can't find anything online and all the equity and trusts books in the library have disappeared!
Yes, usually it does assuming it is failing because of uncertainty of objects. If it's not a discretionary trust but a power, then obv the gift over kicks in.
Hope that helps!
(edited 13 years ago)
Original post by Festina lente
Yes, usually it does assuming it is failing because of uncertainty of objects. If it's not a discretionary trust but a power, then obv the gift over kicks in.
Hope that helps!
Hope that helps!
Yayy thank you!
Original post by manpride
If shares are being held by a trustee do you still need to transfer those shares in the same way as a gift of shares? So basically do the shares get transferred to the trustee and then later transferred to the beneficiary?
I'm a little confused what you mean
Legal owner is the person the share register (trustee)
Beneficial owner has equitable rights to the shares
There are different situations here. 1) The beneficial owner might ask the trustee to transfer both legal and equitable title to a third party who would then become absolute owner (e.g. a broker holds shares for me, I ask them to produce a share certificate and hand that share certificate to my brother), 2) The beneficial owner might want to transfer his beneficial interest (e.g. I am an investor in a fund which holds lots of different shares, I want to sell my share in the fund to a third party), 3) The beneficial owner wants legal title but not beneficial title to transfer (e.g. I own shares through a broker, my broker sucks and I want to use a different broker). Or maybe 4) The beneficial owner wants a third party to become owner of the shares but for whatever reason he transfers legal title to a trustee to hold for the new beneficial owner and then wants the trustee to pass legal title to the beneficial owner as well afterwards.
I've taken some liberties with the above examples shares don't quite work like that these days but I hope the examples clarify the situation conceptually. You need to clarify precisely what interest is going to who.
thanks
An example would be: i hold 50 shares in an ltd company and in my will i bequest that my executors hold the shares in trust for my friend Alfred
Questions
1) Do I need to transfer the shares to the truste as per the companies Act 1985 s.183 and this states that in order to transfer shares, a share transfer form must be executed and lodged? If yes ... on my death they register the shares in Alfreds name?
2) or my will is sufficient to hold a trust with no transfer and upon my death the trustee transfers the shares to Alfred?
Thanks for the help
An example would be: i hold 50 shares in an ltd company and in my will i bequest that my executors hold the shares in trust for my friend Alfred
Questions
1) Do I need to transfer the shares to the truste as per the companies Act 1985 s.183 and this states that in order to transfer shares, a share transfer form must be executed and lodged? If yes ... on my death they register the shares in Alfreds name?
2) or my will is sufficient to hold a trust with no transfer and upon my death the trustee transfers the shares to Alfred?
Thanks for the help
Right, I'm doing this question too... this is the full question:
Paul, a wealthy business man and co-owner of Pantsworld Ltd with his brother Liam, made the following bequests in his will dated 2009.
1. £50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle
2. My 50% shareholding in Pantsworld Ltd to my executors, Dev and Steve, to hold on trust for my friend Leanne
3. Six bottles from the contents of my wine cellar to Hayley, the rest to Liam
4. £100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region
5. The residue of my estate to Ryan.
Paul, after crossing some Manchester gangsters, has found out that there is a contract out on his life. Fearing imminent death, Paul gathers his family and friends at his golf course clubhouse. He says to Leanne ‘It was a mistake to leave you the shares in trust. I want you to have the shares absolutely now’. He handed her the share certificates and a share transfer form, saying ‘I’m just going to play one last round of golf. I’ll meet you at the factory in three hours and I will see that you are registered as a shareholder’. He turns to Michelle and says ‘If the gangsters get me, you shall have this’, and hands her the keys to his Mercedes car. Finally, he writes Carla a cheque for £50,000 saying ‘I want you to be provided for on my death’.
Paul then went out to play a round of golf. He was struck dead by lightning on the 14th Tee.
Liam is refusing to allow Leanne to be registered as a shareholder in Pantsworld Ltd. Michelle has looked inside the glove compartment of Paul’s car and found the Land Certificate to a holiday cottage in the Peak District, but has been unable to find the car’s log book. Paul’s bank have rung Dev and Steve to inform them that Carla presented Paul’s bank with the cheque sometime on the afternoon of his death. Meanwhile Hayley has emigrated to Africa without choosing her six bottles of wine.
Advise the executors Dev and Steve.
How do you go about laying out the question? Is it a case of whether his actions on that day override the will?
Paul, a wealthy business man and co-owner of Pantsworld Ltd with his brother Liam, made the following bequests in his will dated 2009.
1. £50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle
2. My 50% shareholding in Pantsworld Ltd to my executors, Dev and Steve, to hold on trust for my friend Leanne
3. Six bottles from the contents of my wine cellar to Hayley, the rest to Liam
4. £100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region
5. The residue of my estate to Ryan.
Paul, after crossing some Manchester gangsters, has found out that there is a contract out on his life. Fearing imminent death, Paul gathers his family and friends at his golf course clubhouse. He says to Leanne ‘It was a mistake to leave you the shares in trust. I want you to have the shares absolutely now’. He handed her the share certificates and a share transfer form, saying ‘I’m just going to play one last round of golf. I’ll meet you at the factory in three hours and I will see that you are registered as a shareholder’. He turns to Michelle and says ‘If the gangsters get me, you shall have this’, and hands her the keys to his Mercedes car. Finally, he writes Carla a cheque for £50,000 saying ‘I want you to be provided for on my death’.
Paul then went out to play a round of golf. He was struck dead by lightning on the 14th Tee.
Liam is refusing to allow Leanne to be registered as a shareholder in Pantsworld Ltd. Michelle has looked inside the glove compartment of Paul’s car and found the Land Certificate to a holiday cottage in the Peak District, but has been unable to find the car’s log book. Paul’s bank have rung Dev and Steve to inform them that Carla presented Paul’s bank with the cheque sometime on the afternoon of his death. Meanwhile Hayley has emigrated to Africa without choosing her six bottles of wine.
Advise the executors Dev and Steve.
How do you go about laying out the question? Is it a case of whether his actions on that day override the will?
Original post by mellb
.
Original post by jacketpotato
.
Original post by vnupe
.
Original post by Festina lente
.
(edited 13 years ago)
Original post by manpride
thanks
An example would be: i hold 50 shares in an ltd company and in my will i bequest that my executors hold the shares in trust for my friend Alfred
Questions
1) Do I need to transfer the shares to the truste as per the companies Act 1985 s.183 and this states that in order to transfer shares, a share transfer form must be executed and lodged? If yes ... on my death they register the shares in Alfreds name?
2) or my will is sufficient to hold a trust with no transfer and upon my death the trustee transfers the shares to Alfred?
Thanks for the help
An example would be: i hold 50 shares in an ltd company and in my will i bequest that my executors hold the shares in trust for my friend Alfred
Questions
1) Do I need to transfer the shares to the truste as per the companies Act 1985 s.183 and this states that in order to transfer shares, a share transfer form must be executed and lodged? If yes ... on my death they register the shares in Alfreds name?
2) or my will is sufficient to hold a trust with no transfer and upon my death the trustee transfers the shares to Alfred?
Thanks for the help
When you die your exeuctors represent your estate, legally you and your estate are the same thing. On your death the executors will ask the company to register the shares in Alfred's names.
No trust is needed, this isn't a trust it is just a gift. No additional formalities are needed because the executors aren't trustees, they act through your estate and are treated as if they were you
Original post by insignificant
Right, I'm doing this question too... this is the full question:
Paul, a wealthy business man and co-owner of Pantsworld Ltd with his brother Liam, made the following bequests in his will dated 2009.
1. £50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle
2. My 50% shareholding in Pantsworld Ltd to my executors, Dev and Steve, to hold on trust for my friend Leanne
3. Six bottles from the contents of my wine cellar to Hayley, the rest to Liam
4. £100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region
5. The residue of my estate to Ryan.
Paul, after crossing some Manchester gangsters, has found out that there is a contract out on his life. Fearing imminent death, Paul gathers his family and friends at his golf course clubhouse. He says to Leanne ‘It was a mistake to leave you the shares in trust. I want you to have the shares absolutely now’. He handed her the share certificates and a share transfer form, saying ‘I’m just going to play one last round of golf. I’ll meet you at the factory in three hours and I will see that you are registered as a shareholder’. He turns to Michelle and says ‘If the gangsters get me, you shall have this’, and hands her the keys to his Mercedes car. Finally, he writes Carla a cheque for £50,000 saying ‘I want you to be provided for on my death’.
Paul then went out to play a round of golf. He was struck dead by lightning on the 14th Tee.
Liam is refusing to allow Leanne to be registered as a shareholder in Pantsworld Ltd. Michelle has looked inside the glove compartment of Paul’s car and found the Land Certificate to a holiday cottage in the Peak District, but has been unable to find the car’s log book. Paul’s bank have rung Dev and Steve to inform them that Carla presented Paul’s bank with the cheque sometime on the afternoon of his death. Meanwhile Hayley has emigrated to Africa without choosing her six bottles of wine.
Advise the executors Dev and Steve.
How do you go about laying out the question? Is it a case of whether his actions on that day override the will?
Paul, a wealthy business man and co-owner of Pantsworld Ltd with his brother Liam, made the following bequests in his will dated 2009.
1. £50,000 to my wife Carla in the hope and full confidence that she will look after the financial well being of my sister Michelle
2. My 50% shareholding in Pantsworld Ltd to my executors, Dev and Steve, to hold on trust for my friend Leanne
3. Six bottles from the contents of my wine cellar to Hayley, the rest to Liam
4. £100,000 to my Dev and Steve as trustees with absolute discretion to make payments of capital or income to highly promising amateur golfers from the Manchester region
5. The residue of my estate to Ryan.
Paul, after crossing some Manchester gangsters, has found out that there is a contract out on his life. Fearing imminent death, Paul gathers his family and friends at his golf course clubhouse. He says to Leanne ‘It was a mistake to leave you the shares in trust. I want you to have the shares absolutely now’. He handed her the share certificates and a share transfer form, saying ‘I’m just going to play one last round of golf. I’ll meet you at the factory in three hours and I will see that you are registered as a shareholder’. He turns to Michelle and says ‘If the gangsters get me, you shall have this’, and hands her the keys to his Mercedes car. Finally, he writes Carla a cheque for £50,000 saying ‘I want you to be provided for on my death’.
Paul then went out to play a round of golf. He was struck dead by lightning on the 14th Tee.
Liam is refusing to allow Leanne to be registered as a shareholder in Pantsworld Ltd. Michelle has looked inside the glove compartment of Paul’s car and found the Land Certificate to a holiday cottage in the Peak District, but has been unable to find the car’s log book. Paul’s bank have rung Dev and Steve to inform them that Carla presented Paul’s bank with the cheque sometime on the afternoon of his death. Meanwhile Hayley has emigrated to Africa without choosing her six bottles of wine.
Advise the executors Dev and Steve.
How do you go about laying out the question? Is it a case of whether his actions on that day override the will?
Yes. If a trust has taken effect, there has been a transfer of property rights and the property does not fall within Paul's estate so he can't gift it in his will.
You need to go through each purported trust, one at a time, and go through the certainties, constitution and formalities to see whether you have a valid trust
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