Challenging the Validity of Trust

Certainty of words or intention on the part of the settlor or the testator:

• No particular form of words is needed and it is not necessary to use the word “trust”.

Certainty of words or intention on the part of the settlor or the testator:

• The rule applies to both trust property and the respective interests of the beneficiaries. Trustees must know exactly what is included in the trust.

Certainty of objects:

• Beneficiaries must be clearly defined or there must be a suitable methodology to enable trustees to identify them.
• All three certainties must be present for the trust to be valid. In the absence of certainty an outright gift is presumed.
• There are different rules for charitable trusts, resulting and constructive trusts.

For what reason might a trust be set aside and assets claimed by third parties?

• The trust may be void for uncertainty
• The assets may be located in a jurisdiction that does not recognise trusts
• The will effectively comprising the trust deed is invalid
• The trust is fraudulent
• The trust is a sham

What makes a will invalid?

• You can contest a Will on the basis that it is invalid by relying on one or more of the following grounds:
  1. The Will has not been correctly executed
  2. The testator lacked the necessary mental capacity
  3. The testator lacked knowledge or approval of the contents of their Will
  4. The testator was subject to undue influence
  5. The Will is forged/fraudulent

What is a sham trust?

The most recognised definition of a sham is taken from the judgment of Mr Justice Diplock in Snook v London and West Riding Investments Ltd [1967]:

It is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create”

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