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Sarah sets up a trust in which her trustees are required to provide income for the children of soldiers who were killed in combat. The trustees are having difficulty identifying all the potential beneficiaries and seek guidance. Which of the following statements best describes the position?

A. Sarah has created a fixed trust and the trustees should compile a list of beneficiaries living as at the date of the trust.

B. Sarah has created a fixed trust and the trustees should apply the "any given postulant" test.

C. Sarah has created a discretionary trust and the trustees should compile a list of beneficiaries living as at the date of the trust.

D. Sarah has created a discretionary trust and the trustees should apply the "any given postulant" test.

E. Sarah's trust is void for uncertainty as there is no certainty of objects.

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The correct answer is D. Sarah's trust is a discretionary trust because the trustees have the authority to decide how to allocate the income among the children of soldiers. They should apply the "any given postulant" test to determine if a claimant fits the trust's criteria. The trust terms are sufficiently defined to establish the class of beneficiaries.

Key Point: In discretionary trusts, trustees have the authority to decide how the trust assets are distributed. The "any given postulant" test is used to ensure that the beneficiaries meet the criteria set out in the trust deed.

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Trust LawUnit 3Chapter 5

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