Charitable Trusts Flashcards
What is a charitable trust
A public trust for purposes that provide a benefit to the public or a section of the public
Heavily regulated by statute and and there are specific rules that must be complied with
Definition of charity
S1 charities act 2011- ‘an institution which is established for charitable purposes only’
Charitable purposes defined as: falls within 13 purposes under s3.1 CA 2011 and is for the public benefit under s4
Benefits of charitable trusts
- Perpetual duration: can last forever once vested
- Rules are more relaxed: once a general intention is established it will give effect to the trust and objects can be broader
- Tax exemptions and reliefs
- Cypres doctrine takes effect so surplus is given to a similar charity determined by the charities commission or attorney general.
Disadvantage of charitable trusts
Several bureaucratic rules and regulations govern charitable trusts including requirement for the filing of annual reports and other filings.
2 stage test for charitable purpose
- Exclusively for a charitable purpose
- For the public benefit
Exclusively charitable purpose
Can’t be a mixture of charitable and non-charitable purposes: Chichester diocesan fund and board of finance incorporated v Simpson
Previous law- 4 purposes - commissioners for special purposes of income tax and pemsel
Replaced by s3 CA 2011:
- prevention of relief of poverty
- + education
- + religion
- + health or the saving of lives
- + citizenship or community development
- + arts, culture, heritage or science
- + amateur sport
- +human rights, conflict resolution or reconciliation or promotion of religious or racial harmony or equality or diversity
- + environmental protection or improvement
- relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage
- + animal welfare
- promotion of armed forces or police, fire rescue, ambulance services
- any other closely similar to the above
Prevention of relief of poverty
Identified as a charitable purpose in the Pemsel case
The independent schools council v charity commission for England and wales- doesnt always mean destitute, its someone who cannot reasonably afford to meet a particular need by purchasing at the full cost price.
Re Coulthurst: temporary financial hardship is sufficient
IRC v Oldham training and enterprise council- trust set up for unemployed people is sufficient
Advancement of education
‘Education’= teaching at home or abroad, not confined to a school and considers mental and physical elements- indep schools council v charity commission
Also encompasses research- incorporated council of law reporting for England and wales v AG
Advancement of religion
Any belief of a higher being- not necessarily ‘god’
S3.2 CA 2011- more than one god- Buddhism, Hinduism
United grand lodge of ancient free and accepted masons of England v Holborn Borough council- Scientology not a religion- has to be a belief of a higher power such as a god. Also applies to freemasonry
Charity commission on application for registration by the Temple of the Jedi order
Advancement of animal welfare
- all animals
- trusts for the RSPCA fall under this category
- also includes other purposes related to welfare of animals such as methods of slaughtering animals
Other charitable purposes
Allows the court to create flexibility for new purposes that may arise in the future.
Certain conditions: has to be recognised under existing charity law and be reasonably similar to the other 12 purposes
Implication of not being a charitable purpose
- generally render it void And trust property will be held on a resulting trust for the settlor or the settlors estate
- Chichester diocesan fund and board of finance v Simpson- next of kin entitled to property
In rare cases you can sever the property
- only possible where language can be construed as directing such a division
- Salusbury v Denton
Public benefit
S4 CA 2011
2 distinct aspects: benefit aspect and public aspect
The benefit aspect
Must be shown that the benefit outweighs any detriment, risk or harm to be public from pursuing that purpose
Parts 3 and 4 charity commission guidelines 2013: capable of being proved by evidence where necessary, not based on personal views and any harm doesnt outweigh the benefit.
Re hummeltenberg: opinion of the judge not the settlor is relevant
The public aspect
Must benefit the public in general or a sufficient section of the public
‘Public class’- sufficient size and represents the public- re Duffy 2013
Cannot relate to people that a settlor has a personal relationship with e.g no personal nexus between creator and public class which benefits from it- dingle and turner
This rule is relaxed in relation to trusts for the relief or prevention of property
- can relate to family- re scarisbrick
Cannot be for a purpose which is for the benefit of named individuals even if its for poverty.
Public class cannot relate to skin colour- equality act 2010
