Chapter 6: Purpose Trusts Flashcards
what is a purpose trust?
created for a purpose rather than to benefit people. But NO named beneficiaries.
What are the 2 types of purpose trusts?
Non-charitable purpose trust (private)
Charitable purpose trust (public)
what is the general principle on private trusts with no beneficiaries? and why?
Private trusts without beneficiaries are usually void
no one to benefit/ enforce?
what are the steps to determine if a trust with no beneficiaries is void?
Is the purpose charitable?
No? = VOID
What are the 3 exceptions to a trust with no beneficiaries being void?
Trusts for the erection or maintenance of tombs/ monuments
Trusts for the saying of masses
Trusts for the maintenance of pets
Conditions for a trust for erection or maintenance of tombs/ monuments to be valid purpose non-charitable trust?
not on religious grounds/ buildings= private purpose
erected = impliedly limited in perpetuity
upkeep = must be expressly limited in perpetuity
Conditions for a trust for saying of the masses to be valid purpose non-charitable trust?
Private mass = non- charitable purpose trust
expressly limited in perpetuity
Conditions for a trust for maintenance of pets to be valid private non-charitable trust?
expressly limited in perpetuity
court can give judicial notice for some animals
in summary when will a non-charitable purpose trust be valid?
- One of 3 exceptions
- Limited in perpetuity
- Executor/ trustee are willing to carry it out
when will a non-charitable purpose trust be valid if it is NOT a listed exception?
Directly or indirectly for the benefit of an individual or individuals (ascertainable)
Expressly limited in perpetuity
what are the rules of perpetuity for purpose trusts?
Must vest in the time period (death of live in being + 21 years)
No beneficiaries = perpetuity period is 21 years
2009 act does not apply to purpose trusts (125 years perpetuity period)
Must expressly limit the trust in perpetuity to be valid in a purpose trust.
what is a charitable public purpose trust?
Purpose is exclusively charitable
It is for the public benefit
what does ‘public’ mean?
benefit general public/ large number of people AND possible class must not be connected to the founder or a key member e.g employer (personal nexus).
what does ‘benefit’ mean?
identifiable or tangible and any detriment must be outweighed by the benefit
what are the benefits of a charitable trust?
Objects (beneficiaries do not need to be certain)
Not subject to perpetuity (can go on forever)
Exempt from certain taxes
what are the 4 differences between charitable and non - charitable purpose trusts?
charitable trusts can act by majority vs non-charitable must act unanimously
charitable trusts enforce by AG
charitable trust can continue indefinitely vs non-charitable must be limited in perpetuity
failure of charitable trust can apply cy-pres doctrine vs non-charitable
