Advantages Of Discretionary Trust

1293 Words6 Pages
Discretionary trusts are the second area of trust law where the three certainties, and in particular the certainty of objects, apply. These trust differ from those of a fixed nature in that the property to be given to the beneficiaries are at the discretion of the trustee to allot as they see fit. Prior to 1971 the courts used the same test they did for fixed trust. However, the case of McPhail v Doulton utilized and applied a new test to deal with discretionary trusts. Powers fall under discretionary trust and are not held to the same standard as discretionary trusts. A power is the authorisation to do certain things that may affect property . Powers are further split between mere powers and fiduciary
…show more content…
The case of Re Gulbenkian is a preceded the McPhail case which was the beginning of a change from the previous position. The judges agreed with the stance after that of Re Gestetner and applied a similar test. This was as long as the trustee of a power can say with certainty when a potential “postulant” comes before them the trustee can say the person “is or is not” a beneficiary. This “any given postulant test” now applied to all powers but the courts decided the list certainty test in fixed trusts still applied equally to discretionary trusts. It was only a year later that the courts decided to apply the test for powers to discretionary…show more content…
However, it will be through a resulting trust provided for in a resulting clause of a will. In the years since Knight v Knight introduced the three certainties the courts have shown the wide array of complexities associated with them. Particularly in the area of certainty of objects. The test applied for certainty of objects is well suited for this area. The complete list test allows the trustee to see all of the beneficiaries he owes a duty to and what property they are to receive. Where the trustee is unable to do so the trust must fail because at the core of a fixed trust, the settlor or testator have allocated a finite amount of property to a finite amount of persons. As a result, the trustee cannot move property between the beneficiaries if not all are

More about Advantages Of Discretionary Trust

Open Document