Creation and requirements of express trusts - Certainty of o...

Learning Outcomes

This article examines the requirement of certainty of objects for the creation of valid express private trusts, including:

• Fixed trusts, the need to identify every beneficiary, and how to apply the complete list test in SQE1-style scenarios.
• Discretionary trusts, focusing on the given postulant ('is or is not') test and how it differs from the complete list test.
• The beneficiary principle, its connection to certainty of objects, and how it underpins enforceability and supervision of private trusts.
• Conceptual and evidential certainty, with examples of wording that is likely valid or void, and their impact on exam problem questions.
• Administrative unworkability and capriciousness, when these doctrines invalidate otherwise conceptually certain discretionary trusts, and how to argue borderline cases.
• Fiduciary mere powers, the application of the same given postulant test, and the different duties owed by trustees exercising such powers.
• Gifts subject to a condition precedent, the Re Barlow approach, and how this less strict test contrasts with discretionary trust analysis.
• The consequences when certainty of objects is not satisfied, including failure of the trust and the operation of resulting trusts.

SQE1 Syllabus

For SQE1, you are required to understand the requirements for creating a valid express trust as they relate to certainty of objects, with a focus on the following syllabus points:

• The three certainties required for an express trust.
• The beneficiary principle and its relevance to certainty of objects.
• The test for certainty of objects in fixed trusts (the 'complete list' test).
• The test for certainty of objects in discretionary trusts (the 'is or is not'/'given postulant' test).
• The concepts of conceptual and evidential certainty.
• The principles of administrative unworkability and capriciousness.
• The consequences of uncertainty of objects.
• How the given postulant test applies to fiduciary mere powers as well as discretionary trusts.
• The role of extrinsic evidence in resolving evidential uncertainty.
• When third-party decision-makers can cure conceptual uncertainty by providing measurable criteria.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which test is used to determine certainty of objects for a fixed trust?
   1. The 'is or is not' test.
   2. The 'complete list' test.
   3. The administrative workability test.
   4. The capricious intention test.
2. A trust is created 'for such of my old colleagues as my trustees shall in their absolute discretion select'. Which certainty issue is most likely to cause this trust to fail?
   1. Certainty of intention.
   2. Certainty of subject matter.
   3. Conceptual uncertainty of objects.
   4. Evidential uncertainty of objects.
3. Which of the following correctly states the consequence if an intended express trust fails for uncertainty of objects?
   1. The property passes to the intended trustee absolutely.
   2. The property is held on resulting trust for the settlor (or their estate).
   3. The property passes under the rules of intestacy regardless of any will.
   4. The court will appoint new beneficiaries.

Introduction

For an express trust to be valid and enforceable, it must satisfy the 'three certainties': certainty of intention, certainty of subject matter, and certainty of objects. This article focuses on the third requirement: certainty of objects. This means that the people who are intended to benefit from the trust (the beneficiaries or 'objects') must be identified or identifiable with sufficient certainty. Without this clarity, the trustees cannot properly execute their duties, and the court cannot supervise the trust's administration. The level of certainty required differs depending on the type of trust created.

Certainty of objects guards two core values: trustee accountability and judicial oversight. Trustees need to know who they must consider or pay, and the court must be able to say whether distributions accord with the terms of the trust. In fixed trusts, certainty is more stringent because shares depend on the number of beneficiaries; in discretionary trusts, certainty focuses on whether any given person falls within the class rather than on listing every member.

The Beneficiary Principle

Fundamental to the requirement for certainty of objects is the beneficiary principle. This fundamental rule states that, subject to limited exceptions (such as charitable trusts or certain anomalous non-charitable purpose trusts), a trust must have ascertainable beneficiaries who are capable of enforcing the trust against the trustees. If there are no beneficiaries, or they cannot be identified, the trust will generally be void.

Key Term: Beneficiary Principle
The principle that a valid non-charitable trust must have ascertainable human beneficiaries who can enforce the trustees' obligations.

The courts have repeatedly endorsed the beneficiary principle in private trusts. Classic invalid purpose trusts include those “for the maintenance of good understanding between nations” or similar abstract aims (illustrated by Re Astor’s ST). By contrast, trusts drafted to achieve a purpose but conferring a direct benefit on persons can be upheld because there are identifiable beneficiaries who can enforce them (for example, employees using a sports ground in Re Denley’s Trust Deed). The exceptions for non-charitable purpose trusts (such as maintaining specific tombs or caring for specific animals) are narrow and treated as anomalies (Re Endacott). These doctrines operate alongside certainty of objects: even where beneficiaries exist, their class must still be sufficiently certain.

Key Term: Certainty of Objects
The requirement that the beneficiaries of a trust must be sufficiently identifiable.

Fixed Trusts

A fixed trust is one where the entitlement of each beneficiary is determined by the settlor in the trust instrument. The trustees have no discretion regarding who will benefit or in what proportions; their duty is simply to distribute the trust property according to the fixed shares specified by the settlor.

Key Term: Fixed Trust
A trust where the beneficiaries and their respective shares of the trust property are predetermined by the settlor.

The 'Complete List' Test

Because the trustees must distribute the property precisely according to the settlor's instructions, they must be able to identify every single beneficiary. Therefore, the test for certainty of objects in a fixed trust is the 'complete list' test. It must be possible, either at the time the trust comes into effect or when the interests vest, to draw up a conclusive list of all the beneficiaries (IRC v Broadway Cottages Trust [1955]).

Key Term: Complete List Test
The test for certainty of objects in a fixed trust, requiring that it must be possible to draw up a definitive list of all beneficiaries.

To satisfy the complete list test, both conceptual certainty and evidential certainty are required:

• Conceptual certainty: The description of the class of beneficiaries must be clear and unambiguous. Words like 'children' or 'nephews' are generally conceptually certain, whereas terms like 'good friends' or 'deserving relatives' are usually too vague.
• Evidential certainty: It must be possible in practice to gather sufficient factual evidence to compile the complete list of beneficiaries based on the conceptually certain description. If records are missing or it is impossible to prove who falls within the class, the trust may fail for evidential uncertainty.

Key Term: Conceptual Certainty
The clarity of the class description; the words used must set an objective, ascertainable criterion for membership.

Key Term: Evidential Certainty
The availability of proof to establish whether specific people fall within a conceptually certain class.

The fact that a known beneficiary cannot be located (their whereabouts are unknown) does not cause the trust to fail for uncertainty of objects. In such cases, trustees can apply to the court for directions or pay the missing beneficiary's share into court.

Courts may admit extrinsic evidence to address evidential uncertainty (for example, employment contracts or registers) but cannot cure conceptual uncertainty by adding meaning where none exists. If a class description is conceptually uncertain, the trust is void even if the trustees think they “know” who was meant.

Worked Example 1.1

Ahmed's will leaves '£100,000 on trust to be divided equally amongst all my former colleagues who worked with me at Tech Solutions Ltd between 2010 and 2015'. Tech Solutions Ltd went into liquidation in 2018, and its employment records for that period were destroyed.

Is the trust for Ahmed's former colleagues valid?

Answer:
This is a fixed trust, requiring equal division. The test is the 'complete list' test. 'Former colleagues who worked with me at Tech Solutions Ltd between 2010 and 2015' is likely conceptually certain. However, due to the destruction of employment records, it is impossible to compile a complete list of all beneficiaries. The trust fails for lack of evidential certainty. The £100,000 will likely fall into the residue of Ahmed's estate.

Worked Example 1.2

A will clause states: “£120,000 on trust for my deserving friends in equal shares.”

Does this fixed trust satisfy certainty of objects?

Answer:
“Deserving friends” is conceptually uncertain. Different trustees might evaluate “deserving” in incompatible ways, and “friends” lacks a single objective meaning. The trust fails for conceptual uncertainty, regardless of any informal lists the trustees could compile. The fund will be held on resulting trust for the testator’s estate.

Discretionary Trusts

In a discretionary trust, the trustees are given the power (or discretion) to decide which person(s) from within a class defined by the settlor will receive distributions from the trust fund, and often in what amounts. No single potential beneficiary has an absolute right to receive anything; they only have the right to be considered by the trustees.

Key Term: Discretionary Trust
A trust where the trustees have discretion regarding which beneficiaries (from a defined class) will receive benefits and potentially the amount of those benefits.

The 'Is or Is Not' / 'Given Postulant' Test

Since trustees of a discretionary trust do not necessarily have to distribute to every member of the class, a complete list is not required. The House of Lords in McPhail v Doulton [1971] AC 424 established a less stringent test: the 'is or is not' test, sometimes called the 'given postulant' test. The trust is valid if it can be said with certainty whether any given individual (postulant) is or is not a member of the class described by the settlor.

Key Term: Given Postulant Test
The test for certainty of objects in a discretionary trust, requiring that it must be possible to determine with certainty whether any given individual is or is not a member of the beneficiary class. Also known as the 'is or is not' test.

This test focuses primarily on conceptual certainty. The description of the class must be sufficiently clear for a trustee (or the court) to determine if someone meets the criteria. Evidential difficulty (i.e., difficulty in proving whether someone falls within the class) will not necessarily invalidate the trust. If a person cannot prove they are within the class, they simply fall outside it.

In Re Baden's Deed Trusts (No 2) [1973] Ch 9, the Court of Appeal considered the terms 'relatives' and 'dependants'. 'Relatives' was held to be conceptually certain (commonly understood as descendants from a common ancestor), although practical proof may be challenging. 'Dependants' was also conceptually certain (meaning persons who are financially dependent, wholly or in part). The case confirms that definitional clarity at the level of concept is important, while evidential shortfalls typically affect entitlement rather than validity.

The same given postulant test applies to fiduciary mere powers of appointment (Re Gulbenkian's Settlements [1970] AC 508). The key distinction is that trustees under a mere power are obliged only to consider whether to exercise the power; they are not bound to distribute. The certainty test is identical; the duty to act differs.

Key Term: Mere Power
A fiduciary power allowing (but not obliging) trustees to select beneficiaries from a defined class. The given postulant test applies to the class description.

Trustees of wide discretionary trusts must also be able to “appreciate the width of the field” before deciding, so they sensibly survey who might qualify (Re Hay’s Settlement Trusts). If they cannot meaningfully survey the class because it is too large or indefinite, different problems—like administrative unworkability—may arise.

Administrative Unworkability

Even if a discretionary trust satisfies the 'is or is not' test for conceptual certainty, it may still fail if the class of potential beneficiaries is so wide that the trust is administratively unworkable. This occurs when the class is 'so hopelessly wide as not to form anything like a class', making it impossible for trustees to sensibly survey the field and exercise their discretion (R v District Auditor ex p West Yorkshire Metropolitan County Council [1986], involving a trust for the 2.5 million inhabitants of West Yorkshire).

Key Term: Administrative Unworkability
A reason for the failure of a discretionary trust where the class of potential beneficiaries, although conceptually certain, is considered too large for the trust to be practically administered.

Administrative unworkability is fact-sensitive. The sheer number of potential beneficiaries, the fund size, and the trust’s purpose matter. A large class may be manageable with a modest, well-defined remit and reasonable procedures; it may be unworkable when the class is the entire population of a region and the fund is small, with no coherent basis for selection. The objection is practical rather than conceptual.

Capriciousness

A discretionary trust might also fail if it is deemed capricious. This means the settlor's intention appears irrational, nonsensical, or serves no sensible purpose, making it impossible for trustees to exercise their discretion in a logical manner (Re Manisty's Settlement [1974]). The concern is an absence of any rational connection or organising principle for the class, making trustee decision-making arbitrary rather than discretionary.

Capriciousness is rarely invoked. Most broad classes have at least a minimal rational connection to the settlor or a discernible purpose. Courts are slow to strike down trusts on this ground unless the category is wholly arbitrary.

Key Term: Capriciousness
A potential reason for the failure of a discretionary trust where the settlor's choice of beneficiaries appears entirely irrational or whimsical, lacking any discernible link or sensible purpose.

Worked Example 1.3

A trust deed establishes a fund 'to be distributed in the trustees' absolute discretion amongst any person with red hair residing in Birmingham'.

Is this trust likely to be valid?

Answer:
This is a discretionary trust, so the 'is or is not' test applies. 'Person with red hair' is arguably conceptually certain (though borderline cases might exist). 'Residing in Birmingham' is also likely conceptually certain. Evidential difficulty in identifying every red-haired resident is not fatal. However, the class is potentially extremely large. The trust is likely void for administrative unworkability, similar to the West Yorkshire case. It might also be argued to be capricious if the settlor had no connection to Birmingham or red-haired people.

Worked Example 1.4

A settlement provides: “The trustees may in their discretion apply income to any of my relatives or dependants.”

Is the class sufficiently certain, and does it matter that this is framed as a mere power?

Answer:
‘Relatives’ and ‘dependants’ are conceptually certain (Re Baden (No 2)). The given postulant test is satisfied if, for any person presented, the trustees can say they are or are not within the class. The fact this is a mere power does not change the certainty test; it changes the duty. Trustees must consider whether to exercise the power and avoid ignoring a relevant request, but they are not obliged to distribute to anyone.

Worked Example 1.5

A discretionary trust reads: “For any residents of Greater London as my trustees think fit.” The fund is £50,000.

Is this trust likely to be valid?

Answer:
The class “residents of Greater London” is conceptually certain, but the size (millions) and lack of selection criteria may render the trust administratively unworkable given the small fund and absence of a manageable basis for surveying the class. Unless the trustees can devise rational procedures to select beneficiaries that make administration practicable, the trust is likely to be void for administrative unworkability.

Consequences of Uncertainty of Objects

If an attempted express trust fails for uncertainty of objects (under either the complete list test or the 'is or is not' test), the trust is void. The person holding the legal title (either the settlor who declared themselves trustee or the third-party trustee to whom property was transferred) cannot take the property beneficially. They hold the property on a resulting trust for the settlor or, if the trust was created by will, for the testator's estate (meaning it passes under the residuary clause of the will or, if none, under the rules of intestacy).

Key Term: Resulting Trust
An implied trust where the beneficial interest in property reverts (results back) to the settlor or their estate, often arising when an express trust fails.

The point at which the resulting trust arises depends on the facts. If the settlement never validly disposes of the beneficial interest due to uncertainty of objects, the beneficial interest “springs back” immediately to the settlor (or the estate). If a trust partially succeeds but leaves surplus funds after fulfilling its terms, those funds may result back to the contributors or the settlor’s estate, depending on construction.

Gifts Subject to a Condition Precedent

A distinction is drawn between discretionary trusts and gifts made to individuals subject to meeting a condition precedent (e.g., '£1,000 to any of my friends who attend my funeral'). In Re Barlow's Will Trusts [1979], it was held that for such gifts, a less strict test applies. It is only necessary that at least one person can be clearly identified as satisfying the condition; it is not necessary to be able to say of any person whether they satisfy it or not.

Key Term: Condition Precedent
A qualifying requirement which a claimant must satisfy to take a gift; if at least one person meets the condition, the gift can take effect without identifying every possible claimant.

The rationale is simple: in a series of individual gifts, the size of the class does not affect the share each person takes; each qualifying claimant receives the specified gift. Accordingly, even if the term “friend” is imprecise at the edges, the court can accept a workable, objective test (e.g., social relationship indicators) for identifying whether a person counts as a friend on the facts.

Worked Example 1.6

A will clause states: “Any of my friends who visit my grave on the first anniversary of my death may purchase one of my paintings at a discount.”

Is this provision likely to be valid?

Answer:
This is a gift subject to a condition precedent: “friend” plus the act of visiting on the anniversary. The Re Barlow approach applies; it is sufficient if at least one person can be identified as a friend who meets the condition. The court can adopt an objective threshold for “friend” (e.g., frequent social contact when circumstances allowed). The gift is likely valid, and each qualifying friend can take without the need to compile a complete list of all friends.

Exam Warning

Be careful not to confuse the test for gifts subject to a condition precedent with the 'is or is not' test for discretionary trusts. The Re Barlow test is less strict and applies only where individuals can claim a specific gift by meeting a condition, not where trustees have a duty to distribute amongst a class.

Additional Guidance and Practical Points

• Timing of ascertainment: In fixed trusts, the complete list must be possible when the trustees are required to distribute. Where the class changes over time (e.g., “grandchildren”), trustees must ensure the class has “closed” for equal sharing (either by the trust terms or ordinary rules on class closing).
• Using extrinsic evidence: Courts can receive evidence to establish who falls within a conceptually certain class (e.g., payroll records, family registers). This resolves evidential uncertainty but cannot rescue conceptually vague language.
• Third-party decision-makers: Where the trust nominates a decision-maker with measurable criteria (e.g., “the Chief Rabbi shall decide who is of Jewish blood”), conceptual uncertainty may be cured because the trust supplies an objective yardstick for decisions.
• Trustee process: Under very wide discretionary trusts, trustees should adopt rational selection criteria, keep proper records, and periodically review their approach to avoid arbitrary or capricious choices and to mitigate administrative unworkability concerns.

Key Point Checklist

This article has covered the following key knowledge points:

• Certainty of objects is one of the three certainties required for a valid express trust.
• The beneficiary principle requires ascertainable beneficiaries capable of enforcing the trust.
• Fixed trusts require certainty of objects assessed by the 'complete list' test, needing both conceptual and evidential certainty.
• Discretionary trusts require certainty of objects assessed by the 'is or is not' / 'given postulant' test, primarily needing conceptual certainty.
• The same given postulant test applies to fiduciary mere powers; however, trustees’ obligations differ from discretionary trusts.
• Discretionary trusts can fail for administrative unworkability if the class is too wide, or potentially for capriciousness if the purpose is irrational.
• Courts may admit extrinsic evidence to resolve evidential uncertainty, but cannot cure conceptual uncertainty.
• Gifts subject to a condition precedent have a less strict test for identifying beneficiaries than discretionary trusts (Re Barlow).
• Uncertainty of objects renders the trust void, resulting in the property being held on resulting trust for the settlor or their estate.

Key Terms and Concepts

• Beneficiary Principle
• Certainty of Objects
• Fixed Trust
• Complete List Test
• Discretionary Trust
• Given Postulant Test
• Administrative Unworkability
• Capriciousness
• Resulting Trust
• Condition Precedent
• Conceptual Certainty
• Evidential Certainty
• Mere Power