Trust

OBJECTIVES NOTES: UNIT 23 – DISCRETIONARY & PROTECTIVE TRUSTS

1 Powers of appointment & discretionary trusts (DTs)

• DTs exist where A has duty to select, from class of DTs beneficiaries, who to receive property/ income & in what proportions (Mettoy Pension Trustees Ltd v Evans [1990]) whereas power gives authority to deal with property in some way without imposing duty to so act & gift over in default of appointment indicates power since settlor envisaged not making selection so not intended to impose duty, albeit absence of gift over doesn’t itself necessarily constitute trust because final determination requires wording to be examined & construed;

• Powers may be (i) general in favour of anyone in world; (ii) special exercisable among individuals or group; or (iii) intermediate/ hybrid exercisable in favour of any one other than individuals/ classes specified, & settlement not specifying what happens if donee fails to select, likely to be construed trust power or power in nature of trust rather than DT, but where settlement found to be DT, trustees have duty to distribute – with discretion as to whom - & should they fail so to do, court will but, because needs complete list of beneficiaries, distribution difficult/ impossible where class too wide/ vague where trust fails for uncertainty of objects;

• Distinctions only really important where selection not made, since, if not power either those entitled under gift over will benefit or those determined by court, if trust controllable, subject to, pre-1970, certainty of objects tests being met because unless complete list could be drawn up, trust invalid, but distinctions between powers & DTs fine & judges may legitimately interp same wording differently.

2 Reasons for DT certainty of objects requirements

• Rules needed to determine certainty of objects since, where trustees do not administer trusts, courts then control & without certainty can’t distribute property amongst...