Wills, Probate and Trusts

Introduction to Requirements for establishing a Trust

Introduction

This chapter explains the necessary conditions required for the formation of a trust and impact it may have on a declaration of trust where a settlor fails to meet these conditions. The requirements of formation or declaration of trust are as follows

  1. Certainty of intention
  2. Certainty of object
  3. Certainty of subject
  4. Impact of lack of Certainties

To declare a trust the settlor ( the person who is setting up the trust) must satisfy these conditions often known and referred to as three certainties.

Certainty of Intention

The words used orally or in writing within a Trust Instrument for a declaration of trust must clearly state or dictate to the trustees what exactly they must do with the property.

Example

Simon, my BMW car to my son Mike, all my Shares in Tesco to my daughter Elisa, My only house to my wife.

Simon, My shares in Tesco, 50% to my son Mike and 50% to my daughter Elisa

Simon, My house in London to my son Mike and my house in Glasgow to my daughter Elisa

Important

The words used must be” imperative”. Just asking trustees to do something with the property is not sufficient to establish a trust. The settlor must not use precatory words (requesting words) such as, “desire”, “hope”, “believe “or “discretion”.

Example 1

Simon, my shares in Tesco to be at the “discretion” or disposal of the trustee to distribute these shares among my son Mike, my daughter Elisa, my friend John and my wife Nicole, in any way or proportion trustee may think is right. This will not give rise to trust as the words used in setting up a trust are not certain and leaves it up to the discretion of trustees

Example 2

Simon, I leave all my shares in Tesco to my wife in full confidence that she will do what is right as to the disposal thereof between my children (No Trust due to lack of certainty of intention)

The certainty of Subject Matter

The property both land and other personal property “Must Be Specific or Ascertained” for a trust.

The settlor must define the trust property and identify clearly which property belongs to each beneficiary

Example

Simon, my BMW car to my son Mike, all my Shares in Tesco to my daughter Elisa, my only house to my wife, etc

Simon, the bulk of my property to the trustee to hold on for my son Mike and daughter Elisa (No trust as the property, subject matter is not identified which must go to Mike and Elisa, whether it is a house, a car or shares, etc. What is a bulk? is also a difficult question?)

Certainty of Objects

 The beneficiaries of a trust must be identified. The number and identity of the beneficiaries must be known. It must be possible to make a list of all beneficiaries.

Example 1

Simon, my BMW car to my son Mike, all my Shares in Tesco to my daughter Elisa, My only house to my wife and my music collection to my friend Paul. (Valid Trust as objects are identified)

Example 2

Simon, my bank balance at HSBC to be distributed equally among my old friends (Not a Valid Trust as objects are not identified, who are old friends, how many are there? Whether it includes acquaintances? etc)

Example 3

Simon, all my real and personal estate to Bishop of Canterbury to such objects of benevolence as the Bishop of Canterbury in his discretion shall approve of… (Not a valid trust as the objects are unidentified)

Impact of lack of Certainties

Lack of Intention

No trust can be formed in the absence of intention. The lack of intention may be interpreted as an outright gift and the donee (receiver of the gift) can keep the property for themselves as they are not trustees in the absence of a trust

Example

Simon, I leave my all shares in Tesco to my wife Nicole in full confidence that she will do what is right as to the disposal thereof between my children (Nicole will be treated as donee instead of trustee and can keep the shares absolutely)

Lack of Certainty of Subject

A trust will completely fail where the trust property is not identified. Where trust fails any property will be held on resulting trust by trustees for the settlor/testator (the person who has declared/established a trust) and goes to his/her estate.

Example

Simon, the bulk of my property to trustees to hold on for my son Mike and daughter Elisa (No trust as the property, subject matter is not certain. Trustees will hold to the property for the time being on a resulting trust and the property will eventually go to the estate of Simon)

Lack of Certainty of Object

 The lack of certainty of the object will result in no trust and Trustees will hold the property on resulting trust for the settlor or his estate.

Example

Simon, all my real and personal estate to Bishop of Canterbury to such objects of benevolence as the Bishop of Canterbury in his own discretion shall approve of… (Trustees will hold the property on resulting trust for Simon or if Simon is deceased trustees will hold on resulting trust for his estate)

want more Blogs ? Subscribe Now

Our blogs can keep up you updated on major changes in the law, procedure and case law.


Requirements for establishing a Trust

Ask A Lawyer

|Expert legal Advice from Experinced Solicitors | Video Consultations |

Syed Aamir Requirements for establishing a Trust
Bitmap Copy 1 Requirements for establishing a Trust
Brian Lewis Requirements for establishing a Trust

Documents

Easy to Use, and Amend Documents on Family, Employment..

Documnets

Easy to Use, and Amend Documents on Commercial, Business and IP Law
Download

Legal Guides

Practical Guides on Family, Immigration, Employment...

Legal Guides

Practical Guides on Commercial, Business and Intellectual Property Law
Download

Disclaimer​

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legallex does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

Scroll to Top