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Summary SQE2 - Black Letter Law Equity
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THREE CERTAINTIES ANDDECLARATIONS
Will Formalities
s.9 Wills Act 1837 must be in writing, signed and witnessed by two parties to be valid.
s.15 Wills Act 1837 states that witnesses nor their spouses may receive from the will if they have
witnessed. This does not affect the validity of the will. MAKE SURE YOU LOOK AT WHO
WITNESSES WHAT.
Wills and trust may only take effect after death, until then anything expressed in them is not in
existence. Wills are automatically revoked in the event of the following:
- the marriage of the testator
- Destruction of the current will with the intention of revocation
- drawing up a new will over the same property
- revocation of individual gifts by codicil
The intestacy rules will apply if there is no will or to any residue if there is no residue gift or said
gift fails.
Gift
For a valid gift to be presented the three certainties must be met intention, subject and object.
Intention
Firstly, the donor must have intent and said intent must come from a donor who has the necessary
mental capacity. The level of the mental capacity rises with the value and size of the gift (Re
Beaney).
Subject
The subject must be sufficiently certain i.e. there is a tangible benefit that can be enforced. Terms
like ‘the bulk of’ are not sufficiently certain (Palmer v Simmonds). Additionally, tangible items need
to be separate from similar items or they will be deemed too uncertain (Re London Wine Company).
This does not apply to intangible items of the same class i.e. shares as these are indistinguishable
(Hunter v Moss). Furthermore, if there is a workable formula for calculating the amount in question
then the subject will be sufficiently certain. In Re Golay ‘a reasonable income’ was valid. This
however is unlikely to apply to capital sums.
Object
The intended person/s of the trust must be certain (Morice v Bishops of Durham). In said case Sir
William Grant stated - ‘every trust must have a definite object’.
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,Trust With Self As Trustee
The three certainties must be present for a trust to be validly formed. Additionally, the beneficiary
principle, rules against perpetuity and the formalities must all be satisfied.
Intention
It must be clear that the settler intended to create the trust. There must be imperative wording that
illustrate an intention to create a legally binding obligation. Intention is established by words or
conduct but no express use of the word trust is needed (Paul v Constance; Re Kayford). Precatory
words which merely form a moral obligation will not be sufficient for intent (Re Adams and
Kensington Vestry).
Subject
See above
Object
See above
Beneficiary Principle
The trust must have ascertainable human beneficiaries who can enforce the terms of the trust
(Morice v Bishop of Durham).
Rules Against Perpetuity
These rules are designed to keep money freely flowing through-out the economy. For a
discretionary trust there is a rule against remoteness of vesting - pre 1/4/2010 vesting must have
occurred within 80 years (Perpetuities and Accumulations Act 1964) and post 1/4/2010 vesting must
have occurred within 125 years (Perpetuities and Accumulations Act 2009).
For a non-charitable purpose trust (Honorary and Denley Trusts) the rules against alienability mean
the trust must be vested within 21 years or allow the trustees to spend all the trust capital on the
purpose.
Formalities for Declaration
Declarations of trust over land must be evidenced in writing and signed by the transferor (s.53(1)(b)
LPA 1925).
Trust With Other As Trustee
The three certainties must be present for a trust to be validly formed. Additionally, the beneficiary
principle, rules against perpetuity and the formalities must all be satisfied.
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, Intention
It must be clear that the settler intended to create the trust. There must be imperative wording that
illustrate an intention to create a legally binding obligation. Intention is established by words or
conduct but no express use of the word trust is needed (Paul v Constance; Re Kayford). Precatory
words which merely form a moral obligation will not be sufficient for intent (Re Adams and
Kensington Vestry).
Should be noted that intention is not normally and issue in this case as the settler is normally dead
and thus the intent is the will.
Subject
See above
Object
See above
Beneficiary Principle
The trust must have ascertainable human beneficiaries who can enforce the terms of the trust
(Morice v Bishop of Durham).
Rules Against Perpetuity
These rules are designed to keep money freely flowing through-out the economy. For a
discretionary trust there is a rile against remoteness of vesting - pre 1/4/2010 vesting must have
occurred within 80 years (Perpetuities and Accumulations Act 1964) and post 1/4/2010 vesting must
have occurred within 125 years (Perpetuities and Accumulations Act 2009).
For a non-charitable purpose trust (Honorary and Denley) the rules against alienability mean the
trust must be vested within 21 years or allow the trustees to spend all the trust capital on the
purpose.
Formalities for Declaration
Declarations of trust over land must be evidenced in writing and signed by the transferor (s.53(1)(b)
LPA 1925).
Failure For Uncertainties
If the trust fails on one of the three certainties then the following occurs:
- Failure of intention but certain subject matter = a gift to the trustee (Re Adams and Kensington
Vestry).
- Failure of subject matter but certain intention = test is void (Palmer v Simmonds)
- Uncertain objects = a resulting trust back to the settlor (Vandervell v IRC)
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