A proprietary interest in the fund
In the case of a power of appointment it is clear that the objects of the power have no proprietary interest in the fund unless an appointment is made in their favour. In the case of a fixed trust the beneficiaries have equitable title to the property held on trust for them, and may compel the trustees to transfer the legal title to them under the rule in Saunders v Vautier (1841) Cr & Ph 240. The position of the beneficiaries of a discretionary trust is not so clear cut and has led some commentators to suggest that they have a ‘quasi-proprietary’ right,  Conv 118. The rights of the class as a whole are essentially different from the rights of any individual members of the class.
A proprietary right for the class as a whole
By analogy with fixed trusts, since a discretionary trust is a mandatory equitable obligation and the trustees must distribute the fund amongst the beneficiaries, it would seem logical that the equitable title to the property is vested in the class of potential beneficiaries as a whole. This approach was taken in Re Smith,  Ch 915, where property was held by trustees on discretionary trust for Mrs Aspinall and her three children. Romer J, following the Court of Appeal decision in Re Nelson,  Ch 920n, held that the class as a whole could have come to the trustees and demanded the transfer of the legal title. He suggested that the principle for the class of such a discretionary trust was to ‘treat all the people put together just as though they formed one person, for whose benefit the trustees were directed to apply the whole of a particular fund,’  Ch 920. However despite its credentials in logic, this proprietary interest approach was rejected by the House of Lords in Gartside v IRC,  AC 553. The case concerned a non-exhaustive discretionary trust in favour of John Gartside and his wife and children. The central question was whether estate duty was payable on the trust fund, which had not yet been distributed at the date of John’s death. The relevant legislation, Finance Act 1940, s 43(1), would render the fund liable to estate duty if he was regarded as having an ‘interest’ in the fund. In these circumstances the House of Lords held that the deceased beneficiary had no ‘interest’ in the fund and that estate duty was not payable. To reach this conclusion it rejected any possibility of a ‘group interest’ in the fund. Lord Reid said that ‘two or more persons cannot have a single right unless they hold it jointly or in common.’ But clearly objects of a discretionary trust do not have that: they each have individual rights: they are in competition with each other and what the trustees give to one is his alone,’  AC 553 at 605-606.
Whilst the analysis adopted in Gartside v IRC was applied to exhaustive discretionary trusts in Re Weir’s settlement Trusts and Sainsbury v IRC,  Ch 712 it is arguable that the root problem lay with the drafting of the relevant taxing provisions, which would lead to a ludicrous result, rather than with the suggestion that the class of beneficiaries of a discretionary trust hold the equitable title to the property. The tax has now been abolished. It is submitted that, despite the authority of the House of Lords, the equitable interest of property subject to a discretionary trust does not remain inchoate, or ‘in the air,’ but vests in the class of potential beneficiaries as a whole. There is support for this view in the approach which is taken in relation to the variation of trusts with the consent of the beneficiaries. In the case of an exhaustive discretionary trust, the class would theoretically be able to demand the transfer of the legal title by the trustees. In reality, this will often be impossible, as the class may be incapable of complete ascertainment.
A proprietary right for individual beneficiaries
Although the class of beneficiaries of a discretionary trust may be regarded as having a collective proprietary entitlement to the fund, it is clear that members of the class cannot claim an individual proprietary entitlement to the fund or any part of the fund unless the trustees exercise their discretion to appoint property in their favour. As Lord Reid observed in Gartside v IRC:
‘…you cannot tell what any one of the beneficiaries will receive until the trustees have exercised their discretion,’ Gartside v IRC  AC 553.