A discretionary trust is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed but are determined by the criteria set out in the trust instrument by the settlor.2 Whereas, a fixed trust is one where the beneficiaries are listed out and can be identifiable as a complete list and the entitlements are also certain.
For a trust to be valid in law, there must be a certain degree of certainty about the instrument. the certainty must b in terms of certainty of subject matter of the trust (the trust property), certainty of purpose (or at least an indication of the creator’s desire on how the trust property or its proceeds are to be distributed) and certainty of objects (or, the beneficiaries, or recipients of the trust benefits). In this case, we are concerned about the last aspect, that is, the certainty of objects.
For a Trust, Power of Appointment, Testamentary Gift or other such instruments to be enforced, it must be possible to determine who the beneficiaries (objects) are, either in person or as members of a particular class. There is a great deal of uncertainty in this area, and the principles vary somewhat according to the type of trust under consideration. However, what is clear is that certainty of objects, unlike Certainty of Intention, is a question of law, and therefore the usual rules of precedent apply.
In a Fixed Trust, the trustees have no discretion on how to distribute the benefits to and between the beneficiaries. The position, for fixed trusts, has always been that, for the trust to be valid, it must be possible to make a complete list of all the beneficiaries of the trust (often called the ‘complete list’ test).
In a discretionary trust, however, where the trustees have a discretion as to which beneficiaries within a class will take a benefit, it is not necessary to be able to list every member in the class. .