Purpose trusts

Question 1

What are the key exceptions to the beneficiary principle?

Answer 1

• Charitable purpose trusts
• Non-charitable purpose trusts (endacott exceptions)

Question 2

Why are charitable trusts not void for infringing the beneficiary principle?

Answer 2

There is an eforcement mechanism

Question 3

Who enforces charitable trusts?

Answer 3

Attorney general
practical enforcement lies with charity commission

Question 4

Non-charitable purpose trusts are ‘trusts of imperfect obligation’ - what does this mean?

Answer 4

No recognisable enforcement mechanism

Question 5

What are the key differences between charitable and non-charitable purpose trusts?

Answer 5

• enforceability
• certainty of objects
• perpetuity

Question 6

What perpetuity rule applies to trusts with beneficiaries or charitable trusts?

Answer 6

Rule against remoteness of vesting

Question 7

What perpetuity rule applies to non-charitable purpose trusts?

Answer 7

Rule agains inalienability

Question 8

What is the likely effect of a non-charitable trust having uncertain objects/purpose?

Answer 8

Void

Question 9

What must a trust satisfy to have charitable status?

Answer 9

• Be for a charitable purpose
• Public benefit test
• Be wholly and exclusively charitable

Question 10

What are the heads of charity?

Answer 10

• 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

Question 11

If there is a mix of charitable and non-charitable purposes in a trust, can the trust be upheld?

Answer 11

• if non-charitable purpose ‘incidental or subsidiary’
• if purposes can be separated and trust contemplates severance
• purpose falls within non-charitable category

Question 12

What are the two elements of the public benefit requirement?

Answer 12

• identifiable benefit
• public or section of the public

Question 13

How is identifiable benefit ascertained regarding charitable trusts?

Answer 13

• balanced against detriment
• capable of being identified/described

Question 14

How is ‘public or section of the public’ ascertained regarding charitable trusts?

Answer 14

• possible beneficiaries not negligence in number
• Distinguishing quality must no depend on relationship to particular individual

Question 15

When may a charity focus on certain beneficiaries?

Answer 15

o Proper reason
o Poor not excluded
o Sufficient section of the public

Question 16

What can charities not pursue?

Answer 16

Political objectives

Question 17

What is the cy-pres doctrine?

Answer 17

Where charitable trust fails, surplus funds applied to another charitable purpose

Question 18

What are the grounds for the cy-pres doctrine?

Answer 18

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

Question 19

Regarding the cy-pres doctrine, what may happen where there is an initial failure of the trust?

Answer 19

only cy-pres if settlor showed general charitable intention

Question 20

When will endacott exceptions apply?

Answer 20

Trusts created in Wills

Question 21

What are the endacott exceptions?

Answer 21

a) Maintenance of particular animals
b) Erection and maintenance of monuments and graves
c) Saying of private masses

Question 22

Are non charitable purpose trusts enforceable?

Answer 22

No

Question 23

How will the courts make a non-charitable trust enforceable?

Answer 23

Pettingall order

Question 24

What is a pettingall order

Answer 24

Requires trustee to give undertaking to comply

Question 25

What may happen where a trustee fails to comply with a pettingall order?

Answer 25

Residuary legatees can sue to enforce undertaking

Question 26

Which trusts does the rule against remoteness of vesting apply to?

Answer 26

Trusts with people or charities

Question 27

Which trusts does the rule against inalienability apply to?

Answer 27

Non-charitable purpose trusts

Question 28

What is the rule against remoteness of vesting?

Answer 28

Person/charity must obtain vested interest in trust property within 125 years

Question 29

What is the perpetuity period for the rule against inalienability?

Answer 29

Life in being plus 21 years (or 21 years if no life in being)

Question 30

What is the important drafting rule regarding the rule against inalienability?

Answer 30

Perpetuity period must be clear