Re Gulbenkian's Theory Of Discretionary Trust

A discretionary trust is where the trustee is given the discretion to select, from amongst a specified class of beneficiaries, who will benefit under the trust and often to what extent . Comparably, a fiduciary mere power enables trustees to act as they choose to do so, imposing no obligation or discretion, to distribute property . In Re Gulbenkian , Lord Upjohn stated to ratify a fiduciary mere power the “is or is not” test would apply. Likewise, Lord Wilberforce in McPhail v Doulton concurred with Lord Upjohn and declared that the “is or is not” test was also the test for discretionary trusts. Similarly, in the case of Re Baden (No. 2) , to validate a discretionary trust from the perspective of certainty of objects, the “is or is not …show more content…
Firstly, Hopkins fundamentally states that a trust could exclusively be valid if there was certainty of objects, because the beneficiaries were those who could exclusively enforce the trust against the trustees in court . Harris supports this by stating that the courts assumed a duty on the trustee to go to court and take what was theirs. In his view, he describes the relationship as ‘a rule-concept of duty’, when a discretionary trust imposes an obligation or requirement for the trustee to act logically. However, on the other hand, Thomas and Hudson argue that the later courts required a certainty list because they could only execute a trust, by dividing the property equally among the beneficiaries . After all, there were actual cases in which the later courts appointed a new trustee, ensured there was distribution by the trustee and asked beneficiaries to create a distribution scheme. Therefore, this compelled their Lordships in McPhail v Doulton to change the test because nothing was conforming them to the strict requirement of certainty which was essential and this current test proved to be very ineffective in obtaining certainty of