Re Manisty’s Settlement

Key Notes

• Facts: A trust was established, and the question arose whether it was valid based on the class of beneficiaries and the intent behind the trust. The trust's language suggested a group of beneficiaries that might have lacked any coherent or purposeful connection to the settlor.

• Outcome: Lord Templeman held that the trust was invalid, describing it as "capricious" because the class of beneficiaries lacked a discernible link with the settlor and appeared arbitrary.

• Reasoning: The trust was deemed capricious because it had no clear or sensible intention behind the selection of the beneficiaries. For instance, selecting beneficiaries based purely on an arbitrary characteristic, such as names starting with a certain letter (e.g., "C"), was considered to lack a valid intention to benefit individuals in any meaningful way.

Impact & Analysis

• Capricious Trusts: This case reinforces the principle that a trust may be invalid if it lacks a clear, sensible intention behind the designation of beneficiaries. A trust that benefits a random or arbitrary group of people with no connection to the settlor or any clear purpose is likely to fail.

• Prevention of Arbitrary Trusts: The decision aims to prevent trusts from being established with capricious or whimsical intentions that cannot be justified by a rational link to the settlor’s wishes or practical considerations.

• Public Policy Considerations: The ruling also suggests that equity will intervene to prevent trusts that would lead to arbitrary distributions, especially when the criteria for selecting beneficiaries are as random as "names beginning with C." This serves to safeguard the clarity and purposefulness of trust arrangements.