Chapter 5: Charitable Trusts and other Purpose Trusts

Question 1

Does a charitable trust need to have an ascertainable human beneficiary?

Answer 1

No

Question 2

Can a charitable trust be perpetual?

Answer 2

A charitable trust may last forever as it is not subject to the Rule Against Perpetuities

Question 3

A trust can only qualify as a charitable trust if it is for a recognised charitable purpose. Is the advancement of political views included?

Answer 3

No, the advancement of political views is not a charitable purpose

Question 4

Will a trust fail if it has political activity which is ancillary to its main purpose fail?

Answer 4

No

Question 5

A mere charitable purpose is insufficient to create a charitable trust. What two things must the trust bestow?

Answer 5

(1) An identifiable benefit
(2) To the public or a section of the public

Question 6

If the group who stand to benefit in a charitable trust are defined by reference to the settlor’s relationship with them, will the trust fail?

Answer 6

Yes, the trust will fail

E.g. a trust for the education of the children of employees of a company

Question 7

If a trust incidentally benefits some private individuals (e.g. staff who are working for the charity), will the charitable trust fail?

Answer 7

No. If a trust incidentally benefits some private individuals, the trust will not fail

Question 8

Will a charity which charges fees fail the public interest test?

Answer 8

Yes, if only those who can afford to pay fees can benefit

Question 9

If a charitable trust contains more than one purpose, is it sufficient for just one to be charitable in nature?

Answer 9

No, each purpose must be charitable in nature. If a trust contains some charitable and some non charitable objects, the court can sever the charitable from the non charitable

Question 10

Who enforces charitable trusts?

Answer 10

The Attorney General on behalf of the public

Question 11

What is the remoteness of vesting rule?

Answer 11

• Applies to charities only
• Cannot be for more than 125 years
• Rule does not apply to gift from charity to another charity

Question 12

What is the rule against inalienability?

Answer 12

• Applies to private purpose trusts only
• Trust cannot last longer than life in being + 21 years from death

Question 13

Does the rule against inalienability apply to charitable trusts?

Answer 13

No

Question 14

Must a gift to a charity vest within the perpetuity period?

Answer 14

Yes

Exception - gift from one charity to another can take effect at any time

Question 15

When may the cy-pres doctrine apply?

Answer 15

When a trust becomes impossible or impractical to carry out

Question 16

What does the cy-pres doctrine allow the court to do?

Answer 16

Direct that the trust property is applied to another charitable purpose as close as possible to the original one (instead of allowing the trust to fail)

Question 17

Can the cy-pres doctrine be applied if the charitable gift or trust is impossible or impractical to carry out at the time it came into operation?

Answer 17

Yes, but only if the settlor has showed a general charitable intention

Question 18

Can the cy-pres doctrine be applied if the charitable gift or trust is impossible or impractical to carry out after it has come into operation?

Answer 18

Yes and the funds may be applied without any requirement to show general charitable intention on the part of the settlor

Applicable in situations where a charity has closed down after the testators death - the gift is already vested and general charitable intention is not required

Question 19

If money has been collected via collection box or via an anonymous person, can the cy-pres doctrine apply?

Answer 19

If the settlors are not known, the cy-pres doctrine can be applied even in the case of initial failure

E.g. Funds raised to buy land for sports ground for village children, but target is not met. In such cases, the cy-pres doctrine can be applied and funds can be applied elsewhere

Question 20

Generally, a non charitable purpose trust has an ascertainable human beneficiary. What is the exception?

Answer 20

• Denley Trusts
• Trusts for the maintenance of particular animals
• Trusts for saying of private masses
• Trusts for the erection and maintenance of monuments and graves

Question 21

What is a Denley Trust?

Answer 21

A trust which is for a purpose will succeed if it is actually for the benefit of ascertainable human beneficiaries who can enforce the trust

E.g. Trust for sports ground for use and enjoyment of specified company - the beneficiaries are the employees of the company who could enforce the trust

Question 22

Honorary trusts are unenforceable. What does this mean?

Answer 22

• The trust is binding in honour only
• If the trustee is willing to carry out the terms of the trust, they are permitted to do so

Question 23

For how long can a honorary trust last?

Answer 23

The perpetuity period applies i.e. 21 years or a life in being plus 21 years

Question 24

Would a gift leaving £10,000 to Lucy to invest and use the income to maintain my dog Bruno fail?

Answer 24

Yes, it contravenes the rule against perpetuities. The addition of the words “for as long as the law allows” or “for a maximum of 21 years would save the gift

Question 25

Would a gift in a will leaving £1,000 for the maintenance and benefit of my cat Felix fail?

Answer 25

This trust would be likely to succeed as the money is likely to be exhausted within the perpetuity period