Purpose Trusts Flashcards
Generally speaking, are purpose trusts permissible by law? Why?
no
- beneficiary principle -> need for someone to be able to enforce the trust
- perpetuity rule -> trusts cannot last forever; need to eventually be able to be used
What are the 2 kinds of purpose trusts which may succeed?
- charitable purpose trust
- private purpose trust
What is a private purpose trust?
- set up by an individual
- to carry out a particular function after they have died
e.g. £1000 to look after their pet cat
In order for a purpose to be ‘charitable’ what 3 criterion must it fulfill?
Defined under Charity Act 2011
- charitable purpose
- public benefit; must be sufficiently numerous
- exclusively charitable
Which is more likely to succeed: charitable trust or private purpose trust?
charitable trust
A key issue with private purpose trusts is that there is nobody to enforce them (beneficiary principle). There are however 3 common exceptions - what are these?
- maintaining monuments and graves
- maintenance of pets
- saying of private masses
What is meant by the “remoteness of vesting” rule
rule that a gift over under a trust must vest within the perpetuity period.
- “vest” -> property eventually goes to beneficiary
- “perpetuity period” -> no longer than 125 years
- “gift over” -> gift is given after some event
e.g. gift to a charity must vest after 125 years
What type of purpose trust does the “remoteness of vesting” rule NOT apply to and why?
Private purpose trusts
why? -> rule of inalienability
What is the rule against inalienability?
perpetuity rule for private trusts -> private trust cannot last longer than “a life in being” plus 21years from the date the person dies
- “life in being” -> must be an identifiable person at the time the trust was set up; must be expressly stated in the trust deed
note: rule against inalienability does not apply to charitable purpose trusts
Do charitable purpose trusts need certainty of purpose?
no; only need for some charitable intention of the settlor
