Certainty of Object

I am presented with a Will made in 2016. It purports to leave everything to a discretionary trust.

Clause 6 gifted the residuary estate to a trust (‘the Trust’):

‘UNTO my trustees UPON TRUST for my said sister Mrs. X to
be held in a discretionary trust in accordance with clause 7 of this my will for the benefit of my sister Mrs. X and I DIRECT that the Trustees can
use at their absolute discretion the income of the fund and the capital of the fund for the comfort and benefit of my said sister Mrs. X’

Clause 7 contains further provisions in relation to the Trust:

‘7.1. In this clause the following expressions shall have the following meanings:

  1. ‘The trust period’ means the period starting with the date of my death and ending one hundred and twenty five years afterwards (and that period shall be the perpetuity period applicable hereto) PROVIDED THAT my trustees may declare by irrevocable deed that the trust period (but not the perpetuity period) shall terminate on such earlier date as they may specify.

  2. ‘The beneficiary’ means my sister Mrs. X

Clause 7.2.1 gave the trustees (at least two in number) the power to add or remove beneficiaries.

Clause 7.2.2 provides that this power should not be used to defeat previous distributions or vested interest.

Clause 7.2.3 gives the power to extinguish the power to add or remove beneficiaries.

Clause 7.2.4 is a ‘for avoidance of doubt’ clause which is that the testator’s home is to form part of the Trust with some consequential provisions.

Clause 7.2.5 gives an overriding power of appointment. 7.2.6 provides some restrictions on the exercise of this power.

Clause 7.2.7 contains the default trusts:

'In default of and subject to any exercise of the powers given then by the preceding provisions:

(a) during the trust period my trustees shall pay or apply the income of my residuary trust fund to or for the maintenance education support or otherwise for the benefit of such one or more of the beneficiaries as my trustees may in their absolute discretion think fit but with power to accumulate such income or any part or arts [sic] of it (with power to apply the accumulations of past years as if they income of the current year) and with power (during the trust period) to resolve to hold the whole or any part or parts of such income as income on trust for any of the beneficiaries absolutely; and

(b) on the expiry of the trust period my trustees shall hold my residuary trust fund as to both capital and income on trust absolutely to be divided equally between Registered Charity 1 and Registered Charity 2’

  1. Clause 7.2.8 permits self-dealing so long as there is an trustee who does not have an interest.

  2. Clause 8 sets out that no provision has been made for Mrs. Y due to estrangement.

  3. Clauses 9, 10 and 11 contain administrative provisions.

Mrs. X predeceased the testator. Therefore, at the time that the trust was to come into existence, there was no living beneficiary or class of beneficiaries.

The trustees do however have the power to appoint beneficiaries, and there are named charitable remaindermen.

I should be grateful for members’ thoughts on whether or not the trust failed for lack of certainty of object.

Is it the case that if there is no certain object that the trust could never have been established and so the Trustees power to appoint a beneficiary is irrelevant, as is the giftover to the remaindermen?

This seems to me to be an issue upon which Chancery counsel should be approached.

My own view is that a trust does exist, with the charities entitled when it is wound up. That their entitlement is delayed does not mean they are not valid objects.

In the meantime, the trustees can exercise the power to add beneficiaries.

However, that leaves the question of what happens to the income. If the trustees have power to accumulate, that may be exercised. If they have no such power, it may be due to the charities (as default beneficiaries) or be “undisposed off” and subject to the intestacy rules – this will depend upon the precise wording of the will.

I note that under clause 7.1.1(?) the trustees have power to shorten the trust period, so as to terminate the trust at any time, which the charities might seek to encourage so that the trust can be wound up in their favour at an early date.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Dear Paul,

Thank you very much for your useful comments.

I have instructed Chancery counsel and will wait to see what they say.

Kind regards,

Matthew