Trusts and powers. Handbook

A.Difficulties Inherent In Making The Distinction

1.Overlapping DefinitionsHanbury & Maudsley (13th edition) p.163: ‘Essentially a trust is imperative and a power discretionary. But the dividing line is not as clear as one would hope; for many trusts contain discretionary elements; and many powers are given to trustees who are governed by fiduciary duties in the exercise of their powers.’

McPhail v. Doulton [1971] AC 242 at 448G per Lord Wilberforce: ‘It is striking how narrow and in a sense artificial is the distinction…between trusts, or as the particular type of trust is called, trust powers and powers…A layman and, I suspect, a logician would find it hard to understand what the difference is.’

2.Confusion Of TerminologyMettoy Pension Trustees Ltd v. Evans [1990] 1 W.L.R. 1587

3.Power Or Discretionary Trust May Be Contained Within An Existing Trust 4.Question Is Linked With Requirement Of Certainty Of Intention (see III. infra.) 5.Exhaustive and Non-exhaustive Discretionary Trusts

Re Gourju’s Will Trusts [1943] Ch 24

B.Making The Distinction

1.Asking The Correct QuestionsTwo distinct but allied questions when interpreting a disposition: a. Doesthe disposition create a power of appointment or a discretionary trust?* b. What obligations – if any – are there on the person vested with the discretion to exercise it? * considered infra. under certainty of intention

2.The Four Possible Ways In Which A Disposition May Be Interpreted a.personal powerb.mere powerc.fiduciary powerd.discretionary trust

3.Need For Consistent Terminologya.Discretionary Trustb.Power of Appointment – mere and fiduciaryc.Dispositions/Discretions To Appoint

C.Importance of Classifying A Disposition As A Trust Or Power

1.Certainty – considered infra.2.*Enforceability Of Disposition By The Potential Objects*