Private Trusts for Indefinite Beneficiaries

Recently, in McPhail v. Doulton (In re Baden’s Deed Trusts), the House of Lords reached a decision that marks an important change in the English law of trusts which could be important also for American law. It held that there is a single test of validity for private trusts and for powers of appointment where the issue is whether the beneficiaries of the trust or the objects of the power are sufficiently definite, and that this single test is that applicable to powers of appointment. For nearly 170 years, since the decision in Morice v. Bishop of Durham, English law has had a stricter test of validity for a trust than for a power, and the same has been true in virtually all American jurisdictions. For private trusts in which the beneficiaries are designated by some group description, the settled rule has been that the trust fails unless the entire class of beneficiaries is capable of ascertainment. This has been true even though the trustee is given a power of selection from within the group, so that through the exercise of the power the beneficiaries would in fact be defined or identified. This test was thought to be settled for English law by the decision of the Court of Appeal in Inland Revenue Commissioners v. Broadway Cottages Trust, where the court said that “a trust for such members of a given class of objects as the trustees shall select is void for uncertainty, unless the whole range of objects eligible for selection is ascertained or capable of ascertainment …. “