Almost any item of property, real or personal, can be made the subject of a trust. However, the trust instrument must allow the property to be identified clearly. In addition, if the trust property is to be allocated to a numnber of different beneficiaries, it must be clear from the outset how the allocation is to be made. Thus there are two elements to certainty of subject matter: certainty of trust property, and certainty of beneficial interest. Both are questions of law (unlike CertaintyOfIntention, which is a question of fact). Consequently, precedent applies in the usual way.
This element is easy enough to understand -- it must be clear which property is to be put into the trust.
For example, in PalmerVSimmonds1854 it was held that the expression ``...the bulk of my said residuary estate...'' did not allow the subject matter to be identified, even though there was a clear intention to create a trust.
Modern practice is to avoid undoing a trust for uncertainty where possible. In ReGolaysWillTrusts1965 a trust to provide a `reasonable income' was upheld.
If certainty of trust property is rigidly enforced, it can lead to an outcome unwanted by any party to the trust agreement, which seems unjust. For example, early cases involving trusts of money suggested that individual banknotes had to be indentified. Most commentators regard this as an absurd situation. As the courts are now keen to avoid invalidating a trust on the basis of uncertainty when there is no good reason to, they have adopted a certain amount of flexibility, at least where intangibles are concerned.
In HunterVMoss1993 the Court of Appeal ruled that the appropriate test for certainty was whether, immediately after the declaration of trust, a court could attach an order to the property to enforce the trust. However, Golay and Hunter have been much criticised, since they distinguish earlier authorities on the basis that they (the present cases) were concerned with trusts of intagibles, which were essentially indistinguishable from one another. This means that trusts of tangible objects are, presumably, subject to the earlier, inflexible rules. This makes perfect sense where the trust property is distinguishable from other property the settlor owns. For example, it would be unacceptable to allow a trust of `a statue' to succeed, where the settlor owned a collection of statues and there was no way to determine which one was intended. However, in situations such as in ReLondonWine1975 -- which concern tangibles (identical bottles of wine in that case) which are indistinguishable -- it seems that the settlor must continue to segregate the trust property from his own property.
It can be argued that there is no logical reason to distinguish trusts of indistiguishable goods from trusts of intangibles, but the law appears to do so at present. However, if this distinction were abolished, it would leave the courts to decide whether particular goods were distinguishable or indistinguishable, and that would often be very difficult.
This is a bit more complex. Not only must the trust property itself be certain, but the interests to be taken by the various beneficiaries must also be certain.
For example, in BoyceVBoyce1849 a testator left four houses, one to be chosen by a certain beneficiary and the other three to go to another. In the event, the first beneficiary predeceased the testator, making it impossible to identify which three of the four houses should be settled. This seems a harsh rule; the testator wished to dispose of four houses, and was not concerned which went to whom. His wishes could have been effected by allowing one house to go to his residual estate, chosen by his executor, leaving the other three to go to the named beneficiary. However, the court chose to uphold the principle that the precise beneficial interest should be determinable. In this case, the uncertainty was not in the trust property - this was clearly the four houses - but in the beneficial interest to be assigned. Consequently, the effect of the uncertainty was a resulting trust in favour of the settlor's estate.
If the settlor fails to specify the trust property properly, but the property reaches the intended trustee, then the trustee is entitled to the property absolutely. This is sometimes a harsh outcome for the intended beneficiaries, but there is no other logical outcome. It might be felt that the transferee should hold the property on resulting or constructive trust, but there is simply no way to determine which property to impose this trust on. Consider a situation where X wills a large some of money to Y, with the intention that Y holds `some money' on trust for Z. If `some money' is not precise enough to validate a trust in favour of Z, it is equally not precise enough to validate a resulting trust in favour of the settlor. Any trust whose subject matter is certain enough to form a resulting trust is certain enough to form the trust originally intended. In fact, the `trust' in these circumstances is not a trustee at all, he is essentially the recipient of a gift.
If the settlor specifies the trust property properly, but does not specify the allocation of beneficial interests, then there is a resulting trust in favour of the trustee. In practice, the property will revert to the settlor's estate, because the fact that the question of certainty arises at all is probably because the settlor is dead. This situation is different from the case where the trust property itself is uncertain, in that the intended trustee is a trustee. However, since the distribution to the beneficiaries is unclear, he is a resulting trustee for the settlor.
If the settlor does not transfer the legal title to the intended trustee, then the question of who takes the benefit does not arise -- the settlor has not disposed of the benefit in the first place.
Where the subject matter is uncertain, no trust is created. It is as though the test for CertaintyOfIntention was unsatisfied. It such a case, if an effective transfer has taken place, the transferee takes free of a trust. If the property is certain, but the beneficial interest is uncertain, then a ResultingTrust arises in favour of the settlor.
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