What is a trust? Three certainties to ensure validity

    It is said that the only certainties in life are death and taxes, but for legal purposes the language of trusts is also subject to the security of certainty.

    Indeed, there are three such certainties. Trusts can be contentious, and in order for them to be upheld, there are three certainties required to ensure validity.

    Certainty of intention

    Firstly, there must be ‘certainty of intention’: this requires evidence that the settlor – the one who sets up the trust – intended such a trust to begin with.

    There is no specific wording needed, but the instructions to the trustees must be easily identifiable as the instructions to the trustees. In other words, a particular person must be designated as being in charge of the assets of another person, the beneficiary. Interestingly, the use of the word ‘trust’ is not required or even necessarily preferred; specificity is what matters.

    Certainty of subject matter

    Secondly, there must be ‘certainty of subject matter’, meaning that the exact property or assets to be held on trust must be clearly defined, and that the interests of each beneficiary must also be carefully delineated so that the trustee knows precisely how to manage the trust.

    Certainty of objects

    Thirdly, there must be ‘certainty of objects’: in other words, it must be clear who the beneficiaries are. If the trustee were to distribute assets to a party not clearly named as a beneficiary, they could be made personally liable to replace the lost assets.

    Deviation from any of these three principles could result in ‘uncertainty’, leading to the trust being vitiated and beneficiaries potentially losing out on money or property that should have been owed to them. In such a case, the property that was intended to be part of a trust will revert to the original owner.

    If you are uncertain about how a trust works or have a legal query relating to trusts please contact Christopher Hall, Head of Private Client at Vardags.

    You can also get in touch with our London team by calling: 020 7404 9390
    or our Manchester team by calling: 0161 956 3838