Purpose trusts Flashcards
What are the key exceptions to the beneficiary principle?
- Charitable purpose trusts
- Non-charitable purpose trusts (endacott exceptions)
Why are charitable trusts not void for infringing the beneficiary principle?
There is an eforcement mechanism
Who enforces charitable trusts?
Attorney general
practical enforcement lies with charity commission
Non-charitable purpose trusts are ‘trusts of imperfect obligation’ - what does this mean?
No recognisable enforcement mechanism
What are the key differences between charitable and non-charitable purpose trusts?
- enforceability
- certainty of objects
- perpetuity
What perpetuity rule applies to trusts with beneficiaries or charitable trusts?
Rule against remoteness of vesting
What perpetuity rule applies to non-charitable purpose trusts?
Rule agains inalienability
What is the likely effect of a non-charitable trust having uncertain objects/purpose?
Void
What must a trust satisfy to have charitable status?
- Be for a charitable purpose
- Public benefit test
- Be wholly and exclusively charitable
What are the heads of charity?
- poverty
- education
- religion
- health/saving lives
- citizenship/community
- arts, culture, heritage, science
- amateur sport
- human rights
- environmental protection
- those in need
- animal welfare
- public services
- general purpose
If there is a mix of charitable and non-charitable purposes in a trust, can the trust be upheld?
- if non-charitable purpose ‘incidental or subsidiary’
- if purposes can be separated and trust contemplates severance
- purpose falls within non-charitable category
What are the two elements of the public benefit requirement?
- identifiable benefit
- public or section of the public
How is identifiable benefit ascertained regarding charitable trusts?
- balanced against detriment
- capable of being identified/described
How is ‘public or section of the public’ ascertained regarding charitable trusts?
- possible beneficiaries not negligence in number
- Distinguishing quality must no depend on relationship to particular individual
When may a charity focus on certain beneficiaries?
o Proper reason
o Poor not excluded
o Sufficient section of the public
What can charities not pursue?
Political objectives
What is the cy-pres doctrine?
Where charitable trust fails, surplus funds applied to another charitable purpose
What are the grounds for the cy-pres doctrine?
1) Original purpose fulfilled/cant be carried out
2) Surplus funds
3) Property from similar trusts combined
4) Area or class is no longer relevant/suitable
5) Purpose has been adequately provided for by other means, ceased to be charitable or ceased to provide suitable and effective method of using property
Regarding the cy-pres doctrine, what may happen where there is an initial failure of the trust?
only cy-pres if settlor showed general charitable intention
When will endacott exceptions apply?
Trusts created in Wills
What are the endacott exceptions?
a) Maintenance of particular animals
b) Erection and maintenance of monuments and graves
c) Saying of private masses
Are non charitable purpose trusts enforceable?
No
How will the courts make a non-charitable trust enforceable?
Pettingall order
What is a pettingall order
Requires trustee to give undertaking to comply
What may happen where a trustee fails to comply with a pettingall order?
Residuary legatees can sue to enforce undertaking
Which trusts does the rule against remoteness of vesting apply to?
Trusts with people or charities
Which trusts does the rule against inalienability apply to?
Non-charitable purpose trusts
What is the rule against remoteness of vesting?
Person/charity must obtain vested interest in trust property within 125 years
What is the perpetuity period for the rule against inalienability?
Life in being plus 21 years (or 21 years if no life in being)
What is the important drafting rule regarding the rule against inalienability?
Perpetuity period must be clear
