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by or with whom the said Nubar Sarkis Gulbenkian may from time to time be employed or residing”Gift over/ taker in default clauses To distribute amongst such of a, b and c as she, in her absolute discretion, shall select and in default of such selection to x. These clauses have two parts which need to be analysed separately. The first part will be a mere power as there is no obligation to act –ie the settlor has envisaged
2 TUTORIAL 2 - OBJECTS AND POWERS that the donee may or may not act. The second part (ie the default part) will be a trust power. Analyse the mere power and then the trust power. 2.Is there certainty of subject matter? (in brief) 3.Is the description of any class of object valid? 4.Has any class been described with sufficient certainty? Fixed trust: Requires list certainty (McPhail v Doulton) –at the time of distribution, the trustees must be able to draw up a list of all the beneficiaries entitled to a share of the trust property. If the existence or whereabouts of a beneficiary is unknown, their share can be paid into court until the uncertainty is resolved. ‘Colleagues’ is inherently uncertain: McPhail v DoultonUnless otherwise specified, each object receives an equal amount out of the trust property. Discretionary trust powers and mere powers Consider: (a) Criterion certainty (sometimes referred to as linguistic or semantic certainty); (b) evidentiary uncertainty; and (c) administrative unworkability. .
3 TUTORIAL 2 - OBJECTS AND POWERS Criterion certainty: is there sufficient information given to allow the trustee to exercise the power (eg ‘my old friends’was void without further information: Re Gulbenkian)? If not, the power is invalid. This may be overcome if the trust deed provides a method for overcoming the uncertainty (eg (a) ‘any disputes being resolved by the chief rabbi’: Re Tuck’s Settlement Trusts; (b) in the context, ‘friends’ meant ‘next-of-kin’: Lempens v Reid). Accordingly, a power requiring subjectivity or the exercise of judgment by the trustee may be invalid if there is no guidance about how the trustee is to exercise that judgment. If the entire clause is a gift over, then the default provision comes into effect. Evidentiary uncertaintywill not cause a power to fail. Criteria, for example, of ‘residence’, ‘employed’ and ‘care and control’ can be resolved by application to court. Administrative unworkabilityis where the beneficiaries do not constitute a coherent class (McPhail v Doulton) or the beneficiaries are too numerous to have their claims properly considered (R v District Auditor ex parte WYMC). A bare power will not be void due to administrative unworkability because the trustee has the discretion as to whether to exercise the power.