What is subject matter?
The requirement of subject matter is one of the three certainties (requirements) that has to be present for an express trust to be valid. The certainty of subject matter is the requirement that the trust property left to the beneficiary must be easily identified along with the interests gained by the beneficiary.
What happens where there is uncertainty as to the trust property?
Once the intention to create a trust has been identified, it is then necessary to determine the property that was left on trust. The trust is likely to fail if the property left on trust is unidentifiable or uncertain. If someone who owns several house in London states they wish to leave on trust ‘ my house in London’ there is difficulty in establishing which house they meant. This could cause the trust to fail.
What if the trust property forms part of a larger quantity?
A trust is liable to fail where there is uncertainty of the trust property where the property in question cannot be identified or separated from a larger quantity. If it was the case that the person leaving the property on trust for the beneficiary tried to segregate and separate the trust property away from the rest of the quantity then there may be a valid trust given all the other requirements are satisfied. If there is no distinction from the property held on trust and the rest of a larger quantity then it is almost impossible to identify what exactly belongs to the beneficiary.
What will happen if the words used to define the property are open to may interpretations?
A trust is liable to fail for uncertainty of subject matter where the words used to explain what the property was that was left on trust are relative words, and therefore could be interpreted to mean a number of different things. For example if a person was to state in the trust agreement that they were to leave ‘the bulk’ of his residuary estate to his daughter. What is meant by ‘the bulk? Many people may say bulk means different things depending on what they consider bulk to mean. In this circumstance the trust would fail as it is almost impossible to determine what the testator actually meant when he stated ‘the bulk’ of his estate.
What if the property is given to one person absolutely and then the left over property is to be passed on to another?
There may be a situation where the testator declares in his trust that his property is to be left to the beneficiary and anything the beneficiary does not want or has no use for is to be left to a third person. In cases like this it is almost impossible to enforce a trust due to the inability to determine what the beneficiary will decide to pass on to the third party.
The situations where the courts will be prepared to hold a trust valid where the property consists of the left over property from a prior gift.
There are two situations where a trust of this type may be accepted. These are:
- Where the prior gift is interpreted as creating a life interest: This will occur where the testator gives the property to the beneficiary with the intention that they are to pass on to others as a life gift and not only for immediate benefits. For example if a trustee leaves property for a grandfather remainder to go to the grandchildren.
- Where the gift of left over property is made in the context of a secret trust or a will: The terms in which secret trusts and wills are created sometimes dictates that property is to be taken by one person absolutely but any of that property that may remain on that persons death is to be passed on to another.
What if the material information that identifies the extent of the subject matter is unavailable?
A situation may arise where a person leaves in their trust agreement a ‘collection’ which is to be identified by making reference to a document such as a directory or stock take. If this document is unavailable and the collection consists of more than one piece then there is the difficulty of what sections of the collection were left on trust as the document that tells us is unavailable. In this scenario the trust would fail as to uncertainty of subject matter.