Equity and Trusts Law Essay Example | Topics and Well Written Essays - 1250 words

Equity and Trusts Law - Essay Example A fixed trust will be automatically void unless each beneficiary could be identified. Whereas with a discretionary trust a House of Lords decision held that the test was different: can it be said with any certainty that a particular person is or is not a member of the class of beneficiary It is therefore of concern that the financial advisors at Rigby, Jolly and Pinnar (RJP) are mixing fixed and discretionary trusts into a single instrument. Beneficiaries in fixed trusts are allocated a specified share or interest in the instrument. This leads to a situation whereby a fixed trust cannot be administered unless the precise number and identity of the beneficiaries is known, since each beneficiary 'owns' a specified share of the trust. It is important that there should be neither conceptual nor evidential uncertainty. There have been indications that the courts will relax this requirement to some extent provided it is possible on a balance of probabilities to compile a list of the beneficiaries in order to determine the maximum amount of shares- even if the exact identity and whereabouts of a beneficiary is unknown. Hence in Gold v Hill [1999]4 an oral direction to a beneficiary to 'look after Carol and the kids' was deemed sufficiently certain to uphold the trust, despite the fact that the exhortation is open to interpretation. Discretionary trusts however, are treated quite differently by the courts since they invariably allow the trustees discretion in selecting the beneficiaries. Provided the trustees can distribute the proceeds there is no particular need to identify each and every possible beneficiary: McPhail v Doulton [1971]5. The court will look at all the circumstances to determine a suitable distribution of the proceeds - be that appointing new trustees or a representative from the class of beneficiaries or even the original trustees. The decision in Re Baden's Deed Trusts (No 2) [1973]6 required a distinction to be made between conceptual (or semantic) uncertainty and evidential difficulty. The court applied the McPhail test to the wording "dependants" and "relatives": "Can it be said with certainty that any given individual is or is not a member of the class" For example the phrase "my children" may create evidential difficulty - which will not defeat the court, but "all those who owe me favours" is conceptually uncertain because the description in the latter is not conceptually clear. How do we define 'favours' in that phrase The class of "dependants" and "relatives" is conceptually certain. Once that had been established then it is a straightforward matter to determine whether as a matter of fact a particular individual is a relative or a dependant. Let's run the Head of Legal Services clauses past the McPhail test: My friends Assiduous lawyers working I the EU all or any of the good looking girls I dated in my youth 1. Is the phrase conceptually certain No - too ambiguous. No objective test for what a 'friend' meant to the benefactor No - the word 'assiduous' is too vague. How would the benefactor define 'assiduous' No - the phrase 'good