Charitable And Non-charitable Puropse Trusts Flashcards
What are purpose trusts?
When a settlor sets up a trust to carry out a purpose or advance a cause.
What are the validity rules for the declaration of a purpose trust?
Certainty of intention
Certainty of subject matter
Certainty f objects (object is the purpose)
Beneficiary principle (must benefit individuals - this is an ISSUE for purpose trusts)
Perpetuities: must not be locked away
Formalities: if land, must abide by LPA 1925.
What is the issue with beneficiary principle for purpose trusts?
Purpose trusts potentially offend the beneficiary principle, therefore as a GENERAL RULE - purpose trusts are VOID because of this.
What are the issues of rule against perpetuities for purpose trusts?
Should not be locked away for too long, up to 125 years.
Rules are NOT AS GENEROUS for purpose trusts - cannot be for a period of more than 21 years - inalienability of capital rule.
“For as long as the law allows”
Or able to spend all trust capital on the purpose at ONE TIME, therefore ending at any time.
What purpose trusts are exempt from beneficiary principle AND rule against inalienability?
Charitable trusts
What are charitable trusts?
Enforced by attorney general and charity commission
Must be for charitable purpose
Must have sufficient public benefit
Trust must be exclusively charitable
What are the different charitable purposes?
Prevention of relief or poverty
Advance of education
Advance of religion
Advance of health or saving lives
Advance on citizenship or community development
Advancement of art, culture, heritage or science
Advancement of amateur sport
Advancement of human rights, conflict resultion or promotion of religious or racial harmony or equality and diversity
Advancement of environmental protection or improvement
Relief of those in need
Advancenet of animal welfare
Promotion of efficiency of armed forces/police/fire etc
Analogous charitable purposes
What must the public benefit be in charitable trusts?
Must have SUFFICIENT public benefit
Trust purpose must have identifiable benefit or benefits, and,
Benefit must accrue to the public or sufficient large section of public
What are identifiable benefits for public benefit of charitable trust?
Must be clear, relate to purpose of charity
What benefit must be to the public for a charitable trust?
Must benefit the PUBLIC, therefore any space that is offered to WHOLE of public, is accepted.
What happens if only a SMALL number of public can take advantage of it?
What are the exceptions to the large public benefit rule of a charitable trust?
If prevention of relief or property (relieve poverty amongst friends and relatives- is charitable)
advancement or religion (if place of worship is open to all, even though a small number attend, or not open to al, but members of relevant congregation “live in this world ad mix with others”
advancement of education (specified) - personal nexus test
What ar ethe situations where advancement of education can be for a charitable purpose even if they dont meet the public benefit?
Personal nexus test - people linked by personal nexus - NOT SUFFICIENT.
“Class within a class” - class of people who can benefit can be limited, so one as limits are legitimate, and justifiable, given nature of trust - eg geographical restrictions are okay. Arbitrary restrictions are NOT.
Charitable trusts must NOT exclude the poor. A charitable institution can charge FEES for service, so long a s any profit goes BACK into a charitable purpose.
Must a charitable trust be exclusively charitable?
YES, a trust with both charitable and non charitable will NOT be charitable trust.
What are examples of non charitable purposes?
Political purposes (supporting a party or campaigning for a change of law or policy)
If charitable organisation charge fees and profits are ploughed back to private individuals. Must go back into CHARITY.
What are the 2 exceptions to non-valid charitable purpose trusts?
Re Denley and Trust of imperfect obligation
