Introduction
This essay explores the concept of the creation of trusts within the framework of equity and trusts under English law. A trust, as a foundational principle of equity, enables property to be held by one party (the trustee) for the benefit of another (the beneficiary). The purpose of this essay is to examine the essential elements required for the valid creation of a trust, focusing on the three certainties—certainty of intention, subject matter, and objects—as well as the formalities mandated by law. By critically assessing these components, the essay will highlight their significance in ensuring a trust’s enforceability and consider potential limitations in their application. The discussion draws on established legal principles and authoritative sources to provide a sound understanding of this area of law, relevant to both theoretical study and practical application.
The Three Certainties: Foundation of Trust Creation
The creation of a valid express trust hinges on the satisfaction of the three certainties, a concept articulated in the landmark case of Knight v Knight (1840). First, certainty of intention requires that the settlor demonstrates a clear intent to create a trust, distinguishing it from a mere gift or moral obligation. As Megarry J noted in Re Adams and Kensington Vestry (1884), the language used must impose a binding obligation on the trustee; precatory words, such as ‘hope’ or ‘wish,’ often fail to satisfy this requirement (Hudson, 2015). This criterion ensures that the settlor’s purpose is unambiguous, though courts sometimes face challenges in interpreting vague expressions.
Second, certainty of subject matter demands that the property to be held in trust is clearly identifiable. If the trust property is not specified, as seen in Palmer v Simmonds (1854), the trust cannot stand. This requirement prevents disputes over what constitutes the trust fund, though difficulties can arise with intangible assets or fluctuating values (Moffat et al., 2018). Finally, certainty of objects necessitates that the beneficiaries are ascertainable, whether through a fixed list or a clear conceptual test, as established in McPhail v Doulton (1971). Without this, a trust risks being void for uncertainty, underscoring the balance between flexibility and clarity in trust law.
Formalities and Legal Requirements
Beyond the three certainties, certain formalities must be observed for a trust to be legally enforceable. Under the Law of Property Act 1925, trusts of land must be evidenced in writing and signed by the settlor (Section 53(1)(b)). This statutory requirement, while safeguarding against fraud, can pose barriers when informal arrangements are intended. Furthermore, where a settlor declares themselves trustee, no transfer of property is needed, but the declaration must still be clear and unequivocal (Hudson, 2015). Failure to comply with formalities may render a trust unenforceable, though equity sometimes intervenes, as in cases of constructive trusts, to prevent injustice. However, such interventions are inconsistent and arguably undermine legal certainty.
Critical Challenges and Limitations
While the principles governing trust creation are well-established, their application is not without challenges. For instance, determining intention can be subjective, particularly in family arrangements where informal language is common. Moreover, the requirement for certainty of objects can be problematic in discretionary trusts, where flexibility for trustees is often desired but risks invalidity if too vague (Moffat et al., 2018). These limitations highlight the tension between strict legal rules and the equitable aim of giving effect to a settlor’s wishes. Indeed, the evolving nature of property, such as digital assets, further complicates the certainty of subject matter, an issue yet to be fully addressed by courts.
Conclusion
In summary, the creation of a trust under English law demands adherence to the three certainties—intention, subject matter, and objects—alongside compliance with statutory formalities. These requirements ensure clarity and enforceability, protecting both trustees and beneficiaries. However, their application reveals limitations, particularly in interpreting intention and accommodating modern forms of property. This analysis underscores the importance of precision in trust creation while acknowledging the ongoing need for equity to adapt to contemporary challenges. Understanding these principles is essential for navigating the complexities of trust law, with implications for legal practice and the protection of proprietary rights.
References
- Hudson, A. (2015) Equity and Trusts. 9th edn. Routledge.
- Moffat, G., Bean, G. and Dewar, J. (2018) Trusts Law: Text and Materials. 6th edn. Cambridge University Press.
