Trusts: The Three Certainties

Understanding the three certainties is essential to grasp how express trusts operate. These certainties- intention, subject matter and objects- ensure that a trust is properly controlled, enforceable and capable of being administered.

This article provides a clear overview of each requirement and how the courts apply them.

There are several types of trust, and the most common is an express trust. Express trusts include both fixed trusts and discretionary trusts.

In a fixed trust, trustees have no discretion over who the beneficiaries are or how much they receive. In a discretionary trust, trustees decide how to distribute the trust property among a defined class of beneficiaries, but they must distribute it; they cannot retain it for themselves.

For an express trust to be valid, the three certainties must be present: certainty of intention, certainty of subject matter and certainty of objects. Without them, the trust fails. These requirements ensure clarity, prevent misuse of property and allow trustees to carry out their duties effectively.

Certainty of intention

The key question is whether the settlor intended to impose a binding obligation on someone to hold property for another’s benefit.

The word “trust” does not need to be used, and even when it is, context may show that no trust was intended. Courts look at the substance of the settlor’s words and actions to determine whether they intended to create a duty rather than merely express a hope or wish.

If the language is precatory- words like “wish”, “request” or “confident”- it is unlikely to show the necessary intention.

The test is objective: the court asks what a reasonable person would understand the settlor to have meant. In Re Gulbenkian [1970] AC 508, Lord Upjohn emphasised that courts should use common sense to interpret the settlor’s intentions, even where the language is obscure.

Certainty of intention often causes difficulty in self‑declaration cases.

In Jones v Lock [1865] 1 Ch App 25, a father said he would “put [a cheque] away” for his son, but this was held insufficient to create a trust. Loose or informal statements cannot be relied upon to impose legal obligations.

In commercial contexts, courts are cautious about finding trusts unless the intention is clearly present, but where the intention exists, a trust will be recognised.

If certainty of intention is absent, no trust is created. If property has been transferred to trustees, they may take it beneficially. If the settlor attempted a self‑declaration, it has no legal effect at all.

Certainty of subject matter

A trust can be declared over any type of property, including intangible assets such as debts or contractual rights.

However, the trust property must be clearly defined. If the description is vague, for example, referring to the “bulk” of an estate, as in Palmer v Simmonds [1854], the trust fails because the subject matter cannot be identified. By contrast, in Re Last [1958] P 137, the phrase “anything that is left” of the testator’s estate was held sufficiently clear.

The property must also be identifiable.

If it cannot be located or distinguished, the trust is void. Hunter v Moss [1994] established that intangible property such as shares does not require segregation; a trust can exist over an identified number of identical shares. This differs from Re London Wine Co (Shippers) Ltd [1986], where tangible property (bottles of wine) had to be specifically identified before a trust could arise.

If certainty of subject matter is lacking, the consequences depend on the type of uncertainty. If the identity of the property is unclear, the trust cannot attach to anything, and the trustee takes absolutely.

If the uncertainty relates to how the property is divided among beneficiaries, a resulting trust arises because it is clear the settlor did not intend the trustee to take beneficially.

Certainty of objects

The required level of certainty depends on the type of express trust.

For fixed trusts, trustees must be able to identify all beneficiaries so they can distribute the property correctly. This is known as the complete list test. A full list must be capable of being drawn up at the time of distribution, not necessarily now the trust is created.

Where fixed trusts are subject to conditions, the test varies.

For a condition subsequent, a condition that removes a beneficiary’s entitlement if triggered, the condition must be certain from the outset. For a condition precedent, a condition that must be satisfied before entitlement arises, the trust is valid if at least one person can satisfy the condition.

Discretionary trusts require certainty of objects, so trustees know whom to consider when exercising their discretion. The original complete list test proved impractical, leading to the adoption of the “is or is not” test.

Under this test, a potential beneficiary must show they fall within the defined class of objects. If one person cannot prove they qualify, the trust does not fail; that individual is simply excluded from consideration.

If certainty of objects is absent, the trustee holds the property on a resulting trust for the settlor, who may reclaim the legal title and create a new, valid trust. In testamentary trusts, the property passes to those entitled to the residuary estate.