Purpose Trusts Flashcards
What is the rule against inalienability?
The rule against inalienability applies to private purpose trusts. Assets cannot be tied up on trust for longer than the common law perpetuity period of a life in being plus a period of 21 years (or just 21 years if no life in being is specified).
What is the rule against perpetuities?
No interest in property is valid unless it can be shown that the interest will vest no later than:
21 years after the creation of the interest (for trusts created before 6 April 2010)
125 years after the creation of the interest (for trusts created on/after 6 April 2010)
What are the two exceptions to the beneficiary principle?
- Charitable trusts which don’t require ascertainabe beneficiaries.
- Non-charitable purpose trusts with limited scope (subject to the perpetuity rule).
Non-charitable purpose trusts - Endacott exceptions to the beneficiary principle:
Trusts for the maintenance of particular animals/pets. Must be expressly limited in perpetuity.
Trusts for the erection & maintenance of monuments/graves.
Trusts for the saying of private masses.
What two elements are required to make up a charitable trust?
- Charitable purpose
- Public benefit
Charitable trusts - ‘public benefit’:
Charity Commission guidance:
Principle 1: there must be an identifiable public benefit/benefits
Principle 2: the benefit must be to the public, or a section of the public.
Key difference between charitable and non-charitable purpose trusts:
Charitable trusts are exempt from the rule against perpetuities vs. non-charitable purpose trusts, which must be vested no later than 21 years after some life in being at the creation of the interest (i.e. a beneficiary).
What is the Cyprès doctrine?
When a charitable trust fails because its purpose is impossible/cannot be fulfilled, but a general charitable intention can be ascertained, the Cyprès doctrine applies to reconstitute the settlor’s charitable intentions.
