The three certainties 

An express trust requires certainty of intention, subject matter and objects. The requirements are not technical: a trustee must know what they hold, for whom, and on what terms, and a court must be able to enforce and if necessary to administer the trust.

Note at the outset that a concept named "certainty" also appears in contract law, where it asks a different question about whether the parties have agreed enough to have a contract. The two are unrelated, and the coincidence of names has misled more than one answer.

Certainty of intention

Knight v Knight (1840) 3 Beav 148¹ is the source of all three certainties this article covers. Certainty of intention asks: did the person intend to impose an enforceable obligation to hold property for another? The question is one of substance, decided from the words and conduct as a whole and in context.

• No form of words is required, and the word "trust" is neither necessary nor sufficient.
• Precatory words — hope, wish, desire, confidence, request — generally do not create a trust, though they may in context.
• Commercial arrangements are construed against their commercial background: segregating money in a separate account for a stated purpose may evidence a trust, while a general promise to apply money in a particular way usually creates only a debt.
• The distinction from a gift, a debt, a charge and an agency relationship must be drawn expressly.

Failure: if no trust was intended, the recipient takes beneficially, or the arrangement takes effect as whatever it actually is — usually a gift or a debt.

Certainty of subject matter

Two aspects, and both must be satisfied.

The trust property must be identified. Property described as "the bulk of my estate" or "whatever is left" is too vague. Tangible property that is not segregated is generally insufficient — a declaration over fifty cases of wine from a larger undifferentiated stock fails, because no one can say which fifty. Intangible property of a homogeneous kind is treated more indulgently, since one share of a class is identical to another, and a declaration over a stated number of shares in a single holding has been upheld. The distinction is criticised but is the working position.

The beneficial interests must be identified. It must be possible to say what each beneficiary takes, though a formula or a mechanism for determination suffices, and a discretionary trust satisfies this by leaving the allocation to the trustee.

Failure: if the property is uncertain there is no trust at all. If the property is certain but the beneficial interests are not, the trustee holds on a resulting trust for the settlor.

Certainty of objects

The test depends on the kind of disposition, and identifying the kind first is what makes this section straightforward rather than confusing.

• Fixed trust — the trustee must distribute in defined shares. The complete list test applies: it must be possible to ascertain every beneficiary, because the size of each share cannot otherwise be calculated.
• Discretionary trust — the trustee must distribute, but chooses among a class. The criterion certainty test applies: it must be possible to say of any given person that they are or are not within the class. A complete list is not required.
• Mere power of appointment — the donee may appoint but need not. The same is-or-is-not test applies, with the court's supervision correspondingly lighter.

Two distinctions do the work in hard cases:

• Conceptual uncertainty — the class description itself is unclear, as with "my good friends". This is fatal.
• Evidential uncertainty — the description is clear but proof of membership is difficult. This is not fatal; the trustee distributes to those who prove their claim.

A discretionary trust may also fail for administrative unworkability where the class is so hopelessly wide that the trustee cannot form any sensible view of how to exercise the discretion, and for capriciousness where the class bears no rational relationship to any discernible intention.

Failure: the property is held on resulting trust for the settlor or their estate.

Applying this in a problem question

1. Take the certainties in order; a failure at intention makes the others irrelevant.
2. For intention, quote the words used and construe them in context rather than reciting the precatory word rule.
3. For subject matter, address both the property and the beneficial interests.
4. Classify the disposition — fixed, discretionary or power — before choosing the objects test. This is the step most often skipped.
5. State the consequence of any failure, and identify who takes the property instead.

Where the authority sits

Case law, including a substantial English line adopted in Australia on the objects tests, with Australian authority on intention in commercial contexts.