Purpose trusts Flashcards
What is a purpose trust?
Where a settlor may wish to set up a trust to carry out a purpose of advance a cause.
What are the validity rules for a declaration of trust for a purpose trust?
Meets the three certainties
Complies with the beneficiary principle (which it does not given its nature)
Complies with the perpetuity rules
Comply with the formalities where relevant (e.g. land trusts)
What is the beneficiary principle?
Trusts are only valid if there is a beneficiary to enforce them.
What are the exceptions to the beneficiary principle?
Charitable trusts
Trusts of imperfect obligation
Denley trusts
What are the rules against perpetuity for non-charitable purpose trusts?
The trust cannot last longer than 21 years
The trustee may spend all the trust capital on the purpose and thereby end the trust
What is a charitable trust?
A trust which seeks to promote or attain at least one of the purposes listed in the Charities Act.
They are exempt from the beneficiary principle and the rule against alienability.
What are the requirements to be registered as a charity?
It must be for a charitable purpose
It must have sufficient public benefit
It must be exclusively charitable.
What is required to set up a Denley trust?
The purpose of the trust must be sufficiently clear and give rise to a sufficiently tangible benefit
The persons who stand to benefit must be ascertainable
It must be limited to 21 years in duration
What a trust of imperfect obligation?
A non-charitable purpose trust which is valid that includes trusts to care for specific animals or graves/tombs.
They offend the beneficiary principle but they are still valid, however nobody can enforce them if a trustee does not do as intended.
