The three certainties

Within this category of trusts are both fixed trusts and discretionary trusts. A fixed trust is where the trustees have no choice as to who the beneficiaries are or how much they receive. With a discretionary trust, they distribute the trust property as they see fit however, they must distribute it as they cannot keep it for themselves.

The three certainties

This issue is determined by reference to all the circumstances of the case. Thus, oral and written statements, as well as the conduct of the parties, are construed by the courts to determine whether a trust relationship has been created.

The question is whether the settlor has manifested a present, unequivocal and irrevocable intention to create a trust.

The three certainties

Oral statements, the conduct of the parties and documentary evidence, if any, will be construed by the courts. Accordingly the issue is whether objectively a trust was intended, by reference to the relevant facts of each case.

Alternative expressions will be construed by reference to the surrounding circumstances for the purpose of ascertaining whether the trust concept is intended. The doctrine of binding precedent is not applicable here and each case is determined on its own facts. In Shah v Shah, the issue was whether a letter signed by a shareholder, coupled with the signing of a share transfer form, amounted to sufficiently clear evidence of an intention to create a trust.

Dismissing the appeal, the Court decided that on construction of the letter and the execution of the share transfer form, D had declared a trust of the shares in favour of M.

The question of intention to create a trust was to be judged objectively by reference to the wording of the letter and the facts. The terms of the letter indicated an intention from the date of its execution that D was holding the shares for M.

These words conveyed an intention to hold the beneficial interest in the shares for M until registration. Here there is no doubt that Dinesh Shah D manifested an intention that the letter should take effect forthwith: To give effect to those words, there has to be a disposition only of a beneficial interest since … legal title did not pass until registration … Judged objectively, did the words used convey an intention to give a beneficial interest there and then or an intention to hold that interest for Mr Mahendra Shah M until registration?

Accordingly Mr Dinesh Shah must be taken in law to have intended a trust and not a gift. One of the ways of making an immediate gift is for the donor to declare a trust.

In my judgment that is what happened in this case. There are many modes of providing a benefit to another, such as gifts, exchanges and sales of property. But the requirement here is whether the settlor intended to benefit another solely by creating a trust.

The trust mode of providing a benefit concerns a specific and ancient regime. The trust involves the separation of the legal and equitable interests and imposes fiduciary duties on the trustees with correlative rights in the hands of the beneficiaries.

Decided cases are used merely for illustrative purposes. A few days later, he told his solicitor: I think it would be a very dangerous example if loose conversations of this sort, in important transactions of this kind, should have the effect of declarations of trust.

In this case the claimant, a serving prisoner, contended that a trust was imposed on a prison governor to retain as a trustee and invest cash sums surrendered by prisoners.

In Paul v Constance [] 1 WLRCA, the court considered the oral statements and conduct of the parties and concluded that there was sufficient evidence of an intention to create a trust.

The court, however, acknowledged that this was a borderline case because it was not easy to pinpoint the specific time of the declaration of trust. Mr C, by his words and deeds, declared himself a trustee for himself and Ms P of the damages.

Accordingly, 50 per cent of the fund was held upon trust for Ms P. The judge accepted that conclusion.Start studying Three certainties - Trust and Equity. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

Mar 19,  · For a trust to be valid, it requires the coincidence of three conditions which are known as "the three certainties". If any of these conditions are absent then the trust will be void ab initio, form the very start.

The proposition of the three certainties is taken from the dictum of Lord Langdale in.

The three certainties

The Three Certainties * Knight v. Knight (); + Lord Langdale - To be valid as a trust there must be: a) Certainty of intention to create a trust – Is a trust intended as a q. of fact? understand the three certainties test and appreciate its significance in the creation of an express trust comprehend, define and distinguish between linguistic (conceptual) and evidential uncertainty and administrative unworkability.

understand the three certainties test and appreciate its significance in the creation of an express trust comprehend, define and distinguish between linguistic (conceptual) and evidential uncertainty and administrative unworkability. Trust Basics – The Three Certainties January 30, January 30, Hull & Hull LLP Estate & Trust Tags: Estate & Trust, Trusts 0 Comments In our fast paced and busy lives, we can often overlook the basics, getting bogged down in the details and not seeing the forest for the trees.

The Three Certainties