EQUITY & TRUSTS REVISION
CREATION OF GIFTS AND TRUSTS
IDENTIFICATION OF ISSUE
*Start by explaining that the question is concerned with the validity of gifts and trusts
MENTAL CAPACITY
To give a gift the donor must be able to understand the nature of the transaction and its consequences.
There is a presumption and on evidence that is has not been rebutted
Re Beaney (In relation to Gifts) - Higher degree of understanding - for higher value of gift.
3 CERTAINTIES
LJ Turner in Milroy v Lord recognised 3 methods of giving property away:
o Outright gift to the donee
o Transfer to trustees to hold on trust for the person to be benefitted; or
o Declaration of self as trustee for the person to be benefitted
In order for a gift or trust (Knight v Knight) to be valid, it must comply with the 3 certainties: intention, subject and object, beneficiary principle
and rules against perpetuity.
INTENTION
*Is this a gift or is this a trust? – ‘2,000 to my friend, Gary Smith in the hope he will spend a good proportion of it on his two children, Any and Jodie’
GIFT TRANSER TO TRUSTEE DECLARATION OF HOLDING AS
TRUSTEE
The intention of the transferor at the time of Certainty of words - it is necessary to examine the words used by the owner. The settlor
the transfer of the property is crucial. must demonstrate an intention to impose an obligation upon the trustee. Also, it is not SAME AS TRANSFER TO TRUSTEE
This can usually be inferred from the necessary for settlors to use a particular form of words to create a trust. ‘Equity looks to
circumstances (no need for express intent rather than form’. ‘To hold for someone…’
words- e.g. Christmas day/ birthday/ Paul v Constance - Statements such as ‘the money is as much yours as mine’ as well
special occasion) as conduct will be sufficient to demonstrate certainty of intention with regards to
(Re Beaney)- ‘I give/ I am giving’ creation of trust= The word ‘TRUST’ does not have to be used
example Re Adams and Kensington Vestry - Precatory words will not suffice to demonstrate
This is the easiest method to transfer certainty of intention. ‘In full confidence/ hoping that/believing that/expecting that/ I
absolute ownership- rarely an issue if know that/I would like/in the hope that’- they must be imperative words not
intention with gifts in wills precatory (falls short of legal obligation, precatory words convey moral obligation=
in this case it would be an outright gift)
SUBJECT MATTER
GIFT TRANSFER TO TRUSTEE DECLARATION OF
HOLDING AS TRUSTEE
The subject matter of the gift must be First when creating the trust, the settlor or testator must identify the trust property clearly (what
certain. The wording must be certain. property the trust is over, or trust fails) e.g. state the name of company/ shares (specificity is key) What does ‘good
‘My best shares/ 100 of my CASE EXAMPLES proportion’ mean?
shares out of 200’- not certain Palmer v Where the court cannot be sure which parts of the residue are meant to be held
‘The best of’ is not a certain Simmonds on trust, the trust will fail; terms such as ‘bulk’ are too uncertain for the court to
concept determine what was meant.
Palmer v Simmonds: court Re London For a trust to be validly constituted, there must be certainty of subject matter -
rejected a gift of ‘bulk of my Wine where the trust property cannot be differentiated from other property, the trust
residuary estate’ due to Company will fail The buyers of wine stored in a warehouse but not segregated from the
uncertainty (Shippers) Ltd general stock of wine could not establish a trust as the subject matter was too
uncertain.
Hunter v Moss Where the trust concerns intangible and identical property (such as shares), the SAME AS TRANSFER TO
(shares) settlor does not need to stipulate which of these will constitute the subject matter TRUSTEE
of the trust- they just need to be the same type (all carrying the same voting
If subject matter is an issue: ‘one of rights) if some shares from a larger number (10,000 out of 20,000) if is not
several clocks’- not clear which clock necessary to have distinguished the particular 10,000 shares, assuming all the
this is if fails will pass on residue to 20,000 are identical
other person or charity. Re Lewis’s of Robert Walker J held that the traders were able to recover the money held in the
Would have been clearer to let Leicester bank account because there was a valid trust for them. The subject matter was
object choose clocks or specify a certain because by placing the money in a separate account, it had been
particular clock in the will segregated from Lewis’s other money.
Mac-Jordan Trust of retained money not accomplished because there was uncertainty of
‘Rest of my estate’ – is clear as it Construction subject matter. The retention monies had not been segregated from Brook mount
means everything not otherwise Ltd other funds.
specifically given to others Re Golay The subject matter of a trust will be certain if the settlor gives a workable formula
for calculating income- ‘A reasonable income’ where someone had previously
been getting a steady income was sufficiently certain – position may be different
for capital however (not clear enough)
Nature of beneficial interests:
Vested - unconditional Contingent - conditional: You will not get it if not met.
*These terms describe whether someone will benefit- this can change over time upon someone meeting a condition
CREATION OF GIFTS AND TRUSTS
IDENTIFICATION OF ISSUE
*Start by explaining that the question is concerned with the validity of gifts and trusts
MENTAL CAPACITY
To give a gift the donor must be able to understand the nature of the transaction and its consequences.
There is a presumption and on evidence that is has not been rebutted
Re Beaney (In relation to Gifts) - Higher degree of understanding - for higher value of gift.
3 CERTAINTIES
LJ Turner in Milroy v Lord recognised 3 methods of giving property away:
o Outright gift to the donee
o Transfer to trustees to hold on trust for the person to be benefitted; or
o Declaration of self as trustee for the person to be benefitted
In order for a gift or trust (Knight v Knight) to be valid, it must comply with the 3 certainties: intention, subject and object, beneficiary principle
and rules against perpetuity.
INTENTION
*Is this a gift or is this a trust? – ‘2,000 to my friend, Gary Smith in the hope he will spend a good proportion of it on his two children, Any and Jodie’
GIFT TRANSER TO TRUSTEE DECLARATION OF HOLDING AS
TRUSTEE
The intention of the transferor at the time of Certainty of words - it is necessary to examine the words used by the owner. The settlor
the transfer of the property is crucial. must demonstrate an intention to impose an obligation upon the trustee. Also, it is not SAME AS TRANSFER TO TRUSTEE
This can usually be inferred from the necessary for settlors to use a particular form of words to create a trust. ‘Equity looks to
circumstances (no need for express intent rather than form’. ‘To hold for someone…’
words- e.g. Christmas day/ birthday/ Paul v Constance - Statements such as ‘the money is as much yours as mine’ as well
special occasion) as conduct will be sufficient to demonstrate certainty of intention with regards to
(Re Beaney)- ‘I give/ I am giving’ creation of trust= The word ‘TRUST’ does not have to be used
example Re Adams and Kensington Vestry - Precatory words will not suffice to demonstrate
This is the easiest method to transfer certainty of intention. ‘In full confidence/ hoping that/believing that/expecting that/ I
absolute ownership- rarely an issue if know that/I would like/in the hope that’- they must be imperative words not
intention with gifts in wills precatory (falls short of legal obligation, precatory words convey moral obligation=
in this case it would be an outright gift)
SUBJECT MATTER
GIFT TRANSFER TO TRUSTEE DECLARATION OF
HOLDING AS TRUSTEE
The subject matter of the gift must be First when creating the trust, the settlor or testator must identify the trust property clearly (what
certain. The wording must be certain. property the trust is over, or trust fails) e.g. state the name of company/ shares (specificity is key) What does ‘good
‘My best shares/ 100 of my CASE EXAMPLES proportion’ mean?
shares out of 200’- not certain Palmer v Where the court cannot be sure which parts of the residue are meant to be held
‘The best of’ is not a certain Simmonds on trust, the trust will fail; terms such as ‘bulk’ are too uncertain for the court to
concept determine what was meant.
Palmer v Simmonds: court Re London For a trust to be validly constituted, there must be certainty of subject matter -
rejected a gift of ‘bulk of my Wine where the trust property cannot be differentiated from other property, the trust
residuary estate’ due to Company will fail The buyers of wine stored in a warehouse but not segregated from the
uncertainty (Shippers) Ltd general stock of wine could not establish a trust as the subject matter was too
uncertain.
Hunter v Moss Where the trust concerns intangible and identical property (such as shares), the SAME AS TRANSFER TO
(shares) settlor does not need to stipulate which of these will constitute the subject matter TRUSTEE
of the trust- they just need to be the same type (all carrying the same voting
If subject matter is an issue: ‘one of rights) if some shares from a larger number (10,000 out of 20,000) if is not
several clocks’- not clear which clock necessary to have distinguished the particular 10,000 shares, assuming all the
this is if fails will pass on residue to 20,000 are identical
other person or charity. Re Lewis’s of Robert Walker J held that the traders were able to recover the money held in the
Would have been clearer to let Leicester bank account because there was a valid trust for them. The subject matter was
object choose clocks or specify a certain because by placing the money in a separate account, it had been
particular clock in the will segregated from Lewis’s other money.
Mac-Jordan Trust of retained money not accomplished because there was uncertainty of
‘Rest of my estate’ – is clear as it Construction subject matter. The retention monies had not been segregated from Brook mount
means everything not otherwise Ltd other funds.
specifically given to others Re Golay The subject matter of a trust will be certain if the settlor gives a workable formula
for calculating income- ‘A reasonable income’ where someone had previously
been getting a steady income was sufficiently certain – position may be different
for capital however (not clear enough)
Nature of beneficial interests:
Vested - unconditional Contingent - conditional: You will not get it if not met.
*These terms describe whether someone will benefit- this can change over time upon someone meeting a condition
