Certainty of objects: a requirement to create an express trust

What is certainty of objects?

The objects of a trust are the persons who benefits from the trust itself also called beneficiaries. Certainty of objects may also refer to the purposes for which the trust has been declared.

Why do we need to identify the objects of the trusts?

There must be somebody to enforce the trust against the trustee if necessary. There must be someone capable of bringing an action to court if the obligations of the trustee(s) are not fulfilled. The trust must also be capable of being implemented and if there is no human beneficiary to gain the benefits then the whole concept of the trust is pointless.

Certainty of objects where there is a trust for an individual

  • Where the person who will benefit from the trust is expressly named in the trust document then there is no confusion as to the certainty of objects.

  • Where an individual is not expressly named in the trust document but the document refers to a description of the person that should benefit from the trust property, if the description is so precise and clear that it is obviously that person then this requirement is satisfied. For example, ‘Hold property on trust for my mother… or eldest son’.  

Certainty of objects where the trust is created for a group of people

  • Where a trust is created for a class or group of people described in the document such as ‘my children’, this will only succeed where there is sufficient certainty to identify every member of that class/group of people.  

Difficulties that may arise

  • The group of people may be defined or described in such vague terms that its meaning could be interpreted in a number of different ways; this is known as conceptual uncertainty.  

  • It may also be the case that if there is any evidence needed to show who is actually in the class of people, the evidence may be unavailable.

The tests to establish whether the group of people can be identified

There are two tests created to see if all the individuals within a group of people can be clearly identified. 

  1. Firstly, the class ascertainability test. This comes into play if it is possible for the trustees to create a complete list of every person that comes within the group to benefit from the trust.

  2. Secondly, the individual ascertainability test. This occurs where it is possible for the trustees to say if any of the named people are or are not within the group of beneficiaries. 

What test do I apply?

It has been long established that what test to apply depends on whether the trust itself is considered a fixed trust or discretionary trust. 

A Fixed Trust

  • A fixed trust is where the person who makes the trusts divides the property into equal shares for the whole group. So, for instance, If there was £100 of trust property and there was 10 people in the group, if the testator gives £10 per person then this is a fixed trust. 

  • In the case of a fixed trust the class Ascertainability test is applicable

A Discretionary Trust

  • A discretionary trust gives the trustees the power to divide up the property as they see fit, the shares are not pre-determined by the person who creates the trust. 

  • In the case of a discretionary trust, since the landmark case of McPhail v Doulton, the courts have stated that the appropriate test to use is the Individual Ascertainability test.  

Reasons why a trust may be uncertain as to the objects of the trust

Failure on the grounds of Administrative Unworkability

Even where a discretionary trust passes the Individual Ascertainability Test, the trust may still fail on the basis of administrative unworkability. This could occur where the meaning of the words used in the trust document are clear but the definition of who the beneficiaries are is so wide that it is practically impossible to establish the group of beneficiaries. For example, if a trust was established for ‘all the residents of London’, there is no possible way of establishing exactly who would come into this category of people. 

How could uncertainty be resolved?

Apart from satisfying the stated tests uncertainty as to subject matter may also be resolved with reference to a third party 

Curing uncertainty by referring to a third party

Where a trust could fail on the grounds that the group of beneficiaries has been defined so vaguely that it is not possible to identify who is actually part of the group then this could be solved by stating in your trust document that if there is any uncertainty as to who is exactly in the group refer to a third party for guidance. If this was to ever occur then the third party may have evidence to show exactly who is in the group or may have had the discretionary power to appoint who should be included in the group.