Exception to rule against private purpose trusts Flashcards
Current perpetuity rule
125 years - valid PURPOSE trust must vest in this period.
trust made after 01.04.2010
Old perpetuity rule
a life in being plus 21 years. will fail if it might not vest in this period
wait and see rule - wait and see if it vests within 80 years
trusts before 01.04.2010
What kind of purposes are valid for private purpose trusts
erecting and maintenance of tombs, graves, monuments.
The care and maintenance of specific animals
fox hunting
ways to circumvent the rule against private purpose trusts
create a company with objects corresponding to intended purposes
establish or find unincorporated association with intended purposes and give money to it
Re Denley trust
make a gift to a charity determinable in favour of another charity upon the happening of an event connected to the desired purpose
What is a quisclose trust
When borrower holds money on RT for lender with power to use it for a specific purpose. Lender remains beneficial owner of funds unless they’re applied for specific purpose.
borrower have FD and contract ob to apply money for that specific purpose only
What happens to money in quisclose trust if borrower becomes insolvent before applying funds
funds cannot be used to satisfy creditors
What is an Re Denley trust
a valid private purpose trust
when individuals directly and tangibly benefit by the purpose performance
e.g. trust to provide a sports field for employees of a specific company
how can money be given to an unincorporated association
no legal personality so transfer absolutely as gift to members subject to contract / rules of association.
or to treasurer of organisation to hold on trust for members but only if purposes of association are charitable.
what is an unincorporated association
an association that has not been incorporated (made into a company) so no separate legal personality. This means money cannot be transferred to organization but must be given to members absolutely as gift to hold subject to contract.
can an unincorporated association change their contract to allow property to be applied for other purposes
yes
what happens to property when members leave or join an unincorporated association
leave - give up rights to property subject to contract
join- gain rights to property under contract
what if an unincorporated association’s contract does not allow it to dissolve and split property between members
gift will fail if this isn’t possible
How can an unincorporated association be dissolved
in accordance with the association’s rules, because there is only one member left, it is moribound (dying due to inaction)
what happens to surplus funds when an unincorporated association is dissolved
split between members according to contract. If contract is silent split equally. If there is only one member left they get everything.
if charitable - Cy-pres
If re Denely - revert to S on RT unless disclaimed then to crown
when is property disclaimed
when they never expect it to be returned under any circumstances
