SQE1 FLK2: Trusts Law for SQE2 about:srcdoc
SQE1 FLK2: Trusts Law for SQE2
Any trust that is not charitable.
What is a private trust? The trust is said to be express when the settlor
intentionally created it.
What is an express trust? Intentionally created by the settlor
1. In writing, either formally be executing a
In what ways can a settlor create a trust? trust instrument/will
2. By words or conduct
Can a settlor act as a trustee? Yes
Yes
• become beneficiary of property
originally held as full legal owner
Can a settlor be a beneficiary of the trust they
• may transfer on trust to a TP trustee to
create?
hold on trust for them
• where the subject matter of the trust is
the settlor’s future interest
As a matter of law
How does an implied trust come into existence? • resulting trust
• constructive trust
Can a charitable trust ever be private? No
Inter vivos → express trust taking effect/made
What is the difference between an inter vivos during settlor’s lifetime
and testamentary trust? Testamentary → made in the testator’s will,
taking effect on death
1. Trust property
2. Trustees
What are the principle characteristics of a trust? 3. Duty
4. Objects
5. Equitable proprietary interest
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1. Three Certainties
What are the four requirements needed to mkae 2. Beneficiary Principles
a valid trust? 3. Perpetuity Rules
4. Formalities & Registration
1. Certainty of Intention
What are the Three Certainties? 2. Certainty of Subject Matter
3. Certainty of Objects
It must be clear that the settlor by their words/
conduct had the intention to create this trust.
• Requisite intention → impose/assume
What is certainty of intention?
duty
• Ascertaining intention → words or
conduct
How can certainty of intention be shown? In writing, orally or by conduct
When must a settlor’s intention to create a trust
When they own the property
be expressly manifested?
Whilst certainty of intention must exist at the
Subsequent conduct consistent with earlier
time the property is owned, what can arise later
intent
as evidence of this?
When must the trust be intended to be created
Immediately
for certainty of intention?
Whilst the settlor must intend the trust to take
Where the subject matter of the trust is the
effect immediately, what should this not be
settlor’s future interest
confused with which is actually allowed?
Words expressing confidence, wish, belief,
What are precatory words? desire, hope or commendations
They indicate a gift was intended and not a trust
• It is my wish
• I sincerely hope
Examples of precatory words
• I have no doubt
• In full confidence
When might precatory expressions still satisfy If the trust deed is professionally drafted, the
certainty of intention? court may look at the court as a whole to
determine the settlor’s meaning OR
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,SQE1 FLK2: Trusts Law for SQE2 about:srcdoc
It includes a gift over in default of appointment
→ “Absolutely in full confidence… and in default
to my nieces”
Where a settlor has created a trust which gives
the trustee a discretion on distribution of the
What is a gift over in default of appointment? trust property, the settlor may sometimes
include an alternative gift in the event of a
failure to distribute the property
They do not create a trust as they do not show
What is the effect of a precatory word on the
an intention to impose a binding obligation on
certainty of intention?
the trustee.
Express a command and indicate a trust or
power is intended.
What are imperative words?
They impose a duty on someone to act as a
trustee.
If the settlor includes the word “trust” is this Not necessarily
enough for certainty of intention? • I trust my daughter to → precatory
Not necessarily → the court will look beyond the
Does a declaration of trust automatically result
words used by the settlor to determine true
in the creation of a valid trust?
intention
Yes
Can certainty of intention be satisfied through Constance told Paul the money in the account
informal words and actions? was “as much yours as mine” which created a
trust, joint bank account of winnings (borderline
case)
When has intention through informal words and “I am going to put it away for him” showed
actions been insufficient for certainty of intention to put on trust but there was no valid
intention? declaration of this so insufficient
Can setting up a separate bank account satisfy
Yes
certainty of intention through conduct?
Can a settlor’s conduct alone show intention? Maybe
Do “loose conversations” satisfy certainty of
No
intention?
What quality of language will normally defeat
Ambiguous language
intention to create a trust?
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,SQE1 FLK2: Trusts Law for SQE2 about:srcdoc
Does the settlor need to understand that they
No
are creating a trust for certainty of intention?
Trust is void for uncertainty
What happens if certainty of intention cannot be
found? Recipient of the property will take it as an
outright gift
• Objectively
• Irrelevant if they don’t know what a trust
How is intention gauged? is
• Irrelevant if they didn’t intend to create
a trust
1. Identifiable trust property and
What are the requirements for a trust to have
2. Identifiable nature/extent of beneficial
certainty of subject matter?
entitlement
Everything left in a deceased’s estate after all
What is the residuary estate? debts and taxes have been paid and all specific
and non-specific gifts have been distributed
Yes as the court can make an objective
Is “reasonable income” certain enough for assessment of the amount the beneficiary
subject matter of a trust? should receive based on the circumstances of
the case
Trust ceases to exist if, without any fault on the
part of the trustee, the trust property is
What happens if the trust property changes? destroyed or consumed.
If trustee at fault = personally liable to restore
the trust property
Tangible → physical property or chattels
What is the difference between tangible and
intangible assets? Intangible → non-physical property like shares,
patents etc.
How can certainty of subject matter be achieved If they are clearly identified, usually be
where the trust is tangible assets? segregating them from the larger stock
What happens if tangible assets are not
Beneficiary is an unsecured creditor
segregated?
When might apparently uncertain descriptions
When it is capable of objective definition
be valid for certainty of subject matter?
4 of 68
01/09/2025, 10:07
SQE1 FLK2: Trusts Law for SQE2
Any trust that is not charitable.
What is a private trust? The trust is said to be express when the settlor
intentionally created it.
What is an express trust? Intentionally created by the settlor
1. In writing, either formally be executing a
In what ways can a settlor create a trust? trust instrument/will
2. By words or conduct
Can a settlor act as a trustee? Yes
Yes
• become beneficiary of property
originally held as full legal owner
Can a settlor be a beneficiary of the trust they
• may transfer on trust to a TP trustee to
create?
hold on trust for them
• where the subject matter of the trust is
the settlor’s future interest
As a matter of law
How does an implied trust come into existence? • resulting trust
• constructive trust
Can a charitable trust ever be private? No
Inter vivos → express trust taking effect/made
What is the difference between an inter vivos during settlor’s lifetime
and testamentary trust? Testamentary → made in the testator’s will,
taking effect on death
1. Trust property
2. Trustees
What are the principle characteristics of a trust? 3. Duty
4. Objects
5. Equitable proprietary interest
1 of 68 01/09/2025, 10:07
,SQE1 FLK2: Trusts Law for SQE2 about:srcdoc
1. Three Certainties
What are the four requirements needed to mkae 2. Beneficiary Principles
a valid trust? 3. Perpetuity Rules
4. Formalities & Registration
1. Certainty of Intention
What are the Three Certainties? 2. Certainty of Subject Matter
3. Certainty of Objects
It must be clear that the settlor by their words/
conduct had the intention to create this trust.
• Requisite intention → impose/assume
What is certainty of intention?
duty
• Ascertaining intention → words or
conduct
How can certainty of intention be shown? In writing, orally or by conduct
When must a settlor’s intention to create a trust
When they own the property
be expressly manifested?
Whilst certainty of intention must exist at the
Subsequent conduct consistent with earlier
time the property is owned, what can arise later
intent
as evidence of this?
When must the trust be intended to be created
Immediately
for certainty of intention?
Whilst the settlor must intend the trust to take
Where the subject matter of the trust is the
effect immediately, what should this not be
settlor’s future interest
confused with which is actually allowed?
Words expressing confidence, wish, belief,
What are precatory words? desire, hope or commendations
They indicate a gift was intended and not a trust
• It is my wish
• I sincerely hope
Examples of precatory words
• I have no doubt
• In full confidence
When might precatory expressions still satisfy If the trust deed is professionally drafted, the
certainty of intention? court may look at the court as a whole to
determine the settlor’s meaning OR
2 of 68 01/09/2025, 10:07
,SQE1 FLK2: Trusts Law for SQE2 about:srcdoc
It includes a gift over in default of appointment
→ “Absolutely in full confidence… and in default
to my nieces”
Where a settlor has created a trust which gives
the trustee a discretion on distribution of the
What is a gift over in default of appointment? trust property, the settlor may sometimes
include an alternative gift in the event of a
failure to distribute the property
They do not create a trust as they do not show
What is the effect of a precatory word on the
an intention to impose a binding obligation on
certainty of intention?
the trustee.
Express a command and indicate a trust or
power is intended.
What are imperative words?
They impose a duty on someone to act as a
trustee.
If the settlor includes the word “trust” is this Not necessarily
enough for certainty of intention? • I trust my daughter to → precatory
Not necessarily → the court will look beyond the
Does a declaration of trust automatically result
words used by the settlor to determine true
in the creation of a valid trust?
intention
Yes
Can certainty of intention be satisfied through Constance told Paul the money in the account
informal words and actions? was “as much yours as mine” which created a
trust, joint bank account of winnings (borderline
case)
When has intention through informal words and “I am going to put it away for him” showed
actions been insufficient for certainty of intention to put on trust but there was no valid
intention? declaration of this so insufficient
Can setting up a separate bank account satisfy
Yes
certainty of intention through conduct?
Can a settlor’s conduct alone show intention? Maybe
Do “loose conversations” satisfy certainty of
No
intention?
What quality of language will normally defeat
Ambiguous language
intention to create a trust?
3 of 68 01/09/2025, 10:07
,SQE1 FLK2: Trusts Law for SQE2 about:srcdoc
Does the settlor need to understand that they
No
are creating a trust for certainty of intention?
Trust is void for uncertainty
What happens if certainty of intention cannot be
found? Recipient of the property will take it as an
outright gift
• Objectively
• Irrelevant if they don’t know what a trust
How is intention gauged? is
• Irrelevant if they didn’t intend to create
a trust
1. Identifiable trust property and
What are the requirements for a trust to have
2. Identifiable nature/extent of beneficial
certainty of subject matter?
entitlement
Everything left in a deceased’s estate after all
What is the residuary estate? debts and taxes have been paid and all specific
and non-specific gifts have been distributed
Yes as the court can make an objective
Is “reasonable income” certain enough for assessment of the amount the beneficiary
subject matter of a trust? should receive based on the circumstances of
the case
Trust ceases to exist if, without any fault on the
part of the trustee, the trust property is
What happens if the trust property changes? destroyed or consumed.
If trustee at fault = personally liable to restore
the trust property
Tangible → physical property or chattels
What is the difference between tangible and
intangible assets? Intangible → non-physical property like shares,
patents etc.
How can certainty of subject matter be achieved If they are clearly identified, usually be
where the trust is tangible assets? segregating them from the larger stock
What happens if tangible assets are not
Beneficiary is an unsecured creditor
segregated?
When might apparently uncertain descriptions
When it is capable of objective definition
be valid for certainty of subject matter?
4 of 68
01/09/2025, 10:07
