Charitable and Non-Charitable Purpose Trusts Flashcards
Give an example of a purpose trust
£100k to my trustees on trust to advance education in London
What are the two main issues with purpose trusts?
They need to be properly declared and constituted, but they often offend the beneficiary and perpetuities principles.
Beneficiary principle - because there aren’t specified beneficiaries who can go to court to enforce the trust
Perpetuities - purpose trusts can only exist for 21 years, rather than the standard 125 years
General position for purpose trusts
They are generally void
Give an overview of the charitable trust exception
Enforced by Attorney General, so exempt from beneficiary and perpetuities principles
Even if the class is conceptually uncertain, if the conditions are met, it is valid
Three conditions as overview:
1) Trust must be for a charitable purpose
2) Trust must have sufficient public benefit
3) Trust must be exclusively charitable
Explain the ‘charitable purpose’ requirement
13 purposes in statute
Main relevant ones are:
- Prevention or relief from poverty – could help the unemployed, asylum seekers or those suffering after natural disaster
- Advancement of education
- Advancement of religion – must take positive steps to sustain and increase religious belief
Explain the ‘sufficient public benefit’ requirement
Two sub-elements
- There must be an identifiable benefit, so benefit must be clear and relate to the purposes of the charity
- Benefit must be for the public (there are prohibitions)
For prevention or relief of poverty, a trust for your family is permissible, but for named individuals is not
Same for a place of worship open to all – sufficient public benefit
What are the prohibitions in relation to the ‘public benefit’ requirement for charitable trusts?
1) Personal nexus – if people who might benefit from the purpose trust are linked in a certain way, that section of people won’t constitute the public
- If trust is for family or employees of X, it wouldn’t be classed as for the public
2) Class within a class – the more restricted the class you intend to aid, the less likely the trust is to be charitable
- Two restrictions is not necessarily definitively not charitable
3) Excluding the poor – charitable trust can charge for its services, but must take steps to support poor and the assistance must be more than minimal (fee-paying schools offering bursaries for example)
Explain the ‘exclusively charitable’ requirement
Trust must not have political purposes or, if they are present, they are ancillary to main goal
(RSPCA campaigning for harsher animal cruelty sentences is ancillary to animal protection aims)
What are Re Denley trusts?
Trusts for a non-charitable purpose - to be valid:
1) The purpose of the trust must be sufficiently clear and give rise to a sufficiently tangible benefit
2) The people who stand to benefit from the purpose must be ascertainable individuals
- Description of class must be conceptually certain
3) Must meet perpetuity requirements
- Cannot exceed 21 years in duration; or
- The trustees must be able to spend the trust capital on the purpose in one go
Example of when a Re Denley trust may fail
Trusts for maintenance of a sports centre
Maintenance suggests a long running obligation, so fails the perpetuity requirement
What are trusts of imperfect obligation?
They have no human beneficiaries, so are valid but unenforceable
Must meet perpetuity requirements
- Cannot exceed 21 years in duration; or
- Trustees must be able to spend the trust capital in one go
An example is when someone leaves money for someone to look after a treasured pet
