FLK2 · Trusts

Beneficial entitlement & types of trust

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

TR.03 — Beneficial Entitlement & Types of Trust

Core idea. A trust splits ownership: the trustee holds the legal title; the beneficiary holds the equitable (beneficial) interest. Equity treats the beneficiary as the "real" owner. The trustee's job is fiduciary — manage the property for the beneficiary, not themselves.

Fixed vs discretionary trusts

Fixed trust — beneficiaries' shares are defined ("to A and B equally"). Certainty of objects test: the complete list test (IRC v Broadway Cottages) — you must be able to list every beneficiary.
Discretionary trust — trustees choose who, among a class, benefits and how much. Objects test: the "is or is not" / given postulant test (McPhail v Doulton; Re Baden (No 2)) — can you say of any given person whether they are or are not within the class. No list needed.
Power of appointment (not a trust duty): same "is or is not" test (Re Gulbenkian), but trustees may, not must, exercise it.

Vested vs contingent

Vested interest — already belongs to the beneficiary (even if possession is postponed). A vested interest passes to the beneficiary's estate on death.
Contingent interest — depends on a future event (e.g. "to A if she reaches 21"). If the condition fails, the interest fails.

The Saunders v Vautier rule

A beneficiary who is adult (18+), of sound mind, and absolutely entitled can demand the trust property and end the trust early — overriding the settlor's wishes. If interests are shared, all beneficiaries together (sui juris, between them absolutely entitled) can collapse the trust (Saunders v Vautier).

Bare trusts

Trustee holds for a single absolutely-entitled beneficiary with no active duties — beneficiary can call for the property at any time.

Common traps

Don't confuse the certainty-of-objects tests. Fixed = complete list; discretionary/powers = is-or-is-not. Mixing them loses marks.
Administrative unworkability can still void a discretionary trust even if the is/is/not test is met (R v District Auditor ex p West Yorkshire — "all residents of West Yorkshire").
Conceptual vs evidential certainty. Only conceptual uncertainty (vague class definition) is fatal; evidential gaps are not.
Vested ≠ in possession. A remainder can be vested but enjoyed later.
Saunders v Vautier needs all beneficiaries acting together and absolute collective entitlement — one minor or unborn beneficiary blocks it.

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A woman is the treasurer of a small amateur football club. Members pay £20 each month in cash, which the woman is instructed by the club's rules to bank into the club's dedicated account within seven days. One month she receives £200 in subscriptions but, being short of money, uses the cash to pay her own gas bill. She intends to replace the £200 from her wages before anyone notices, and she does in fact pay an equivalent £200 into the club account two weeks later. The woman is charged with theft of the £200. Which of the following is the strongest basis for finding the property belonged to another at the time she used it?

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