Trusts: certainty of subject matter confusion.

OMG I hate equity! Wish I could help you but I'm forever stuck in this area

Luckily enough a nice graduate forwarded me his notes 😊

1) I can't really see how the term 'trust fund' in a communication to the trustees of that trust is unclear.

2) Where do the three certainties come into it? K isn't trying to create a trust.

1. The term trust fund connotes a mixture of assets - what i'm trying to establish is whether or not the term trust fund is sufficently clear to meet the subject-matter of the three certainties provided in Knight v Knight. The judgment of Palmer v Simmonds is what's confusing me. Is the subject-matter ascertainable? Likewise, a trust-fund may also include land which has to be in writing to be effectuated, as opposed to an oral declaration for personalty.

2. Karen informed the trustees to hold the trust fund on trust for her nephew - this imposes an obligation and thus differs from a gift (Re Krayfor). This is not in dispute. It is eminetly clear that she is attempting a trust. I'n not sure if the formalities of making such a trust are met.

1. Of course 'trust fund' is sufficiently clear. I'm confused about why you think it might not be. But that is irrelevant because:

2. You are wrong, she is quite obviously not trying to create a trust based on what you wrote in the OP. The trust already exists. She is trying to get the trustees to hold it for someone else. [You are also wrong that it is not a gift. It is a gift from Karen to James. But that is completely irrelevant to anything].

Thanks for your reply.

How is it wrong? Do you have any authority apart from your opinion? Citations etc. The vested interest was absolute and complete when her mother died. She was the lawful owner of the property - the beneficial interest was obtained, was it not? How does the trust subsist upon completion of the original trust? i.e. the remainder man (Karen) was given the trust from the original settlor. She was therefore the legal owner.

a) The question states: "Jean predeceased Karen. However, before she died, Karen informed the trustees to hold the trust fund on trust for her nephew, James". My reading of that is that Karen's direction to the trustee was before Jean's death, i.e. before Karen had any interest in possession. i.e. I assumed that the bolded 'she' meant Jean, and I think that is probably what the person writing the question meant, but I see now that it is phrased in a somewhat ambiguous way. 'she' meaning Karen seems to me fairly unlikely - as otherwise 'before she died' is tautologous - dead people being unable to give directions to trustees.

b) Even if that is incorrect, it doesn't make any difference. Why do you say that Karen is the legal owner of the property just because Jean has died? That makes Karen absolutely entitled to the trust property, it doesn't terminate the trust (unless and until Karen exercises her Saunders v Vautier power to compel the trustees to convey the property to her, or the trustees do so of their own volition). There appears to be nothing in the OP to suggest that this has happened, so the trustees are still the legal owners of the trust property and Karen still has a beneficial interest.

c) If Karen had declared a sub-trust of her beneficial interest, (which she didn't) then the subject matter of that declaration is certain (it's her rights against the trustee). It doesn't make any difference what is in the trust fund, or whether the trust fund contains land, etc, or even if Karen has the slightest idea what is in the trust fund. There are no formalities needed to create a sub-trust (even if the trust itself contains land).

d) Karen is not attempting to create a trust - unless for some reason you think the original trust has terminated. She is trying to get the trustee to hold the existing trust property for someone else instead of her, i.e. she is attempting to dispose of her existing equitable interest. She needs to comply with s 53(1)(c), which it does not appear that she has. If she doesn't, the disposition is void. This appears to me to be all the question is getting at.

@BrokenLife might be able to help you

I did this last year and absolutely hated trust law. However, if I find some notes from last year, I'll be willing to help.

I agree. Just can't seem to get interested in it. So monotonous. Thank you, though! No worries if you can't help.

Thank you very much for your indepth response. Please don't think I was trying to be rude or disrespectful - I have took in a lot of academic material and different students are suggesting different things. So, if I am correct, even though Karen was the remainder to the original trust i.e. in that the original property went on trust for life to her mother, remainder to Karen, upon her mother's death, she does not automatically become the legal owner and the trust is not fulfilled?

No, the trustees need to convey legal title to her for her to become legal owner. Consider how inconvenient the converse would be:

Example: Trust to J for life, remainder to K. The trustees have various investment powers in relation to the trust property. J dies, but the trustees do not find out about this until some time later. In the meantime, the trustees attempt to exercise their investment powers, and sell some of (what was) the trust property to X. If the effect of J's death was that K immediately became legal owner, then (i) the trustees would commit the tort of conversion because they were dealing with property they did not own; and (ii) X would acquire no title to the property, because of the nemo dat rule.

I'm not sure if you've posted the full question or not but the only reasonably plausible reading of it seems to me to be that the trustees have not conveyed legal title to Karen, so that they are still the legal owners. Karen's instruction to them is to hold the (existing) trust fund on trust for James, rather than to set up a (new) trust for James containing exactly the same assets as the previous trust. If that is correct then Karen has failed to comply with s 53(1)(c) LPA 1925 so her instruction does not give James any interest in the trust property*.

*I was going to say that her instruction had no effect at all, but I am not sure that is correct. If the trustees did give trust property to James, I suspect that Karen would be estopped from claiming that it was a breach of trust to do so. Whether that is right or not, it is irrelevant on these facts.

Thanks for your reply. That makes a lot of sense.

I'm not sure if it's relevant, but the settlor of the trust, Peter (the father), created the original trust by will. I don't believe this alters the point you made though?

Thanks again.

No difference between will trusts and inter vivos trusts for your purposes (there are tax differences).

Thanks. I'm aware that as s.53(1)(c) has not been met, the disposition is void. Finally, I also assume that the failed transfer cannot be completed in equity (i.e. under Re Rose)? and that the three certainties do not apply here?

I don't really see how there is room for the Re Rose principle to apply. If the disposor has done 'everything they could do', then they would have complied with the s 53(1)(c) formality anyway. Perhaps it is possible for the more expansive Pennington v Waine principle to apply, where it would be unconscionable not to complete the transfer? There doesn't seem to be anything on the facts to suggest that is the case, though.

You seem extremely well versed in this area. Would you mind helping me, or providing me with some guidance, regarding the following?

Karen informed her sister to hold her house on trust for her nephews (children). Karen created a transfer deed in respect of her house and sent it to her sister. As i'm aware, this compiles with s.53(1)(b) in that it is in writing. This is tantamount to an express trust; however, would it be a fixed trust? As I understand it, a fixed trust must specify shares for each benificaries (IRC v Broadway Cottages). She did not specifiy this to her sister at any point. Would the children, whom Karen has specified as the beneficiaries, get an equal share of the property? (if it helps, when Karen died, a note was found with Karen stating that she had informed her sister to hold it on trust for her nephews). Thanks.