1
EQUITY AND TRUSTS
ACTUAL FINAL EXAM
Question One
A
Every trust must satisfy the three certainties of intention, subject matter and
objects1. There is a certainty of subject matter in this clause as the property
being subjected is clearly stated as £100,000. But this clause doesn't entirely
fulfil the remaining two certainties.
The first issue in this clause is the certainty of intention. Since equity looks to
intent rather than form, there's no need to use technical vocabulary to create
a trust. Arthur trusts £100,000 to Beatrice 'in full confidence’ that she will give
part of that sum to his nephews. This exact precatory phrase was present in Re
Adams and Kensington Vestry 1884, the court interpreted this statement as
only providing moral obligation (not legal trustee obligation) on the wife to use
the money in a manner that would benefit the children. This can be applied to
Beatrice as there is only a moral obligation on Beatrice to use part of the
money to benefit the children's needs - there is no legal obligation to hold
some of that money for the children. There is uncertainty with the wording,
namely 'in full confidence’; it is clear that this would be a gift rather than a
,2
trust. Due to the precatory words 'in full confidence’, I will subsequently advise
Arthur that imperative command words should be used in this clause to ensure
that it is a discretionary trust.
In terms of certainty of objects, Arthur names Beatrice as the beneficiary and
groups his nephews. Still, as we've established, Beatrice is not legally
compelled to 'give part of the sum due to the boys' lack of intention'. The
issue, therefore, lies with the conceptual uncertainty of the phrases 'part of'
and 'needs arise'. It is unclear as to what this means and can be interpreted to
mean many different things. Arthur clearly states that this money is for his
sister and nephews, which would succeed in the 'is or is not' test which Stamp
LJ's strict approach of 'next of kin' for deceased and nearest blood relations
can be successfully applied. I would advise Arthur that a successive interest
discretionary trust must be set up.
B
There is an apparent certainty for intention in this clause, and there is also a
clear distinction with the certainty of subject matter - £100,000. The issue,
therefore, lies with the certainty of object. As this is a discretionary trust, the
trustees, are given the discretion to select the beneficiaries and the amount
given. It is important to
, 3
1 Knight v Knight 1840
EQUITY AND TRUSTS
ACTUAL FINAL EXAM
Question One
A
Every trust must satisfy the three certainties of intention, subject matter and
objects1. There is a certainty of subject matter in this clause as the property
being subjected is clearly stated as £100,000. But this clause doesn't entirely
fulfil the remaining two certainties.
The first issue in this clause is the certainty of intention. Since equity looks to
intent rather than form, there's no need to use technical vocabulary to create
a trust. Arthur trusts £100,000 to Beatrice 'in full confidence’ that she will give
part of that sum to his nephews. This exact precatory phrase was present in Re
Adams and Kensington Vestry 1884, the court interpreted this statement as
only providing moral obligation (not legal trustee obligation) on the wife to use
the money in a manner that would benefit the children. This can be applied to
Beatrice as there is only a moral obligation on Beatrice to use part of the
money to benefit the children's needs - there is no legal obligation to hold
some of that money for the children. There is uncertainty with the wording,
namely 'in full confidence’; it is clear that this would be a gift rather than a
,2
trust. Due to the precatory words 'in full confidence’, I will subsequently advise
Arthur that imperative command words should be used in this clause to ensure
that it is a discretionary trust.
In terms of certainty of objects, Arthur names Beatrice as the beneficiary and
groups his nephews. Still, as we've established, Beatrice is not legally
compelled to 'give part of the sum due to the boys' lack of intention'. The
issue, therefore, lies with the conceptual uncertainty of the phrases 'part of'
and 'needs arise'. It is unclear as to what this means and can be interpreted to
mean many different things. Arthur clearly states that this money is for his
sister and nephews, which would succeed in the 'is or is not' test which Stamp
LJ's strict approach of 'next of kin' for deceased and nearest blood relations
can be successfully applied. I would advise Arthur that a successive interest
discretionary trust must be set up.
B
There is an apparent certainty for intention in this clause, and there is also a
clear distinction with the certainty of subject matter - £100,000. The issue,
therefore, lies with the certainty of object. As this is a discretionary trust, the
trustees, are given the discretion to select the beneficiaries and the amount
given. It is important to
, 3
1 Knight v Knight 1840
