Perpetuities and Charitable Trusts Flashcards
What is the Rule Against Perpetuities (RAP)?
The RAP restricts the length of time a settlor can control property after death, ensuring property does not remain tied up in trusts indefinitely. An interest is void if it may vest later than 21 years after the death of a life in being at the creation of the interest
What does the common law Rule Against Perpetuities state?
“No interest is good unless it must vest, if at all, not later than twenty-one years after the death of some life in being at the creation of the interest”
What is the Perpetuity and Accumulation Act of 1964?
It allowed an 80-year perpetuity period and adopted a wait-and-see approach, where trusts are not void unless it’s clear the interest will not vest within the specified period
What changes were made in the Perpetuity and Accumulation Act of 2009?
It extended the perpetuity period to 125 years and continued the wait-and-see approach for trusts created after April 6, 2010
How do statutory rules on perpetuities differ from common law RAP?
Statutory rules apply to people trusts, and common law RAP applies to non-charitable purpose trusts. Statutory rules allow longer perpetuity periods and a wait-and-see approach
What is the key difference between private and charitable trusts?
Private trusts benefit individuals or small groups, while charitable trusts benefit the general public and are not subject to the rule against perpetuities
What is the cy-près doctrine in charitable trusts?
The cy-près doctrine allows charitable trusts to be modified if the original purpose cannot be fulfilled, to make it as close as possible to the original intention
What are some charitable purposes under the Charities Act 2011?
Relief of poverty, advancement of education, advancement of religion, health, environmental protection, animal welfare, and human rights
What does the Charitable Purpose Test require?
It requires the purpose to be exclusively charitable (cannot serve non-charitable purposes) and must benefit the public, not a private group
How did Dingle v. Turner [1972] affect charitable trusts?
The House of Lords ruled that trust for employees was charitable, as it advanced public benefit despite being based on employment status, emphasising the “question of degree” when assessing public benefit
Who enforces private and charitable trusts?
Beneficiaries can sue the trustee for private trusts, while the Charity Commission or Attorney General enforces charitable trusts
What does “Perpetuity” mean in legal terms?
Perpetuity refers to the duration of a property interest or trust. A perpetuity prevents a property from being tied up indefinitely
What is a Charitable Trust?
A charitable trust is a trust established to benefit the public by fulfilling a recognised charitable purpose
What is the beneficiary principle in the context of charitable trusts?
The beneficiary principle requires that a trust must have identifiable beneficiaries
In private trusts, the beneficiaries are individuals or groups, while charitable trusts benefit the public and do not need identifiable individual beneficiaries. Charitable trusts are exempt from the beneficiary principle
