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Trust Law > Purpose Trusts > Flashcards

Purpose Trusts Flashcards

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1
Q

What are the two significant exceptions to the beneficiary principle?

A

Charitable purpose trusts and non-charitable purpose trusts (Endacott exceptions).

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2
Q

Why are charitable purpose trusts not void for infringement of the beneficiary principle?

A

They are enforceable by the Attorney-General, with practical responsibility for enforcement lying with the Charity Commission.

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3
Q

What is charity considered as?

A

Charity is a status, not a legal form or structure.

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4
Q

What are the benefits of charitable status?

A

No requirement to comply with the beneficiary principle, more flexible rules on certainty of objects, no limit on duration, cy-pres doctrine, and tax benefits.

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5
Q

What must the purpose of a non-charitable purpose trust fall within?

A

A recognised exception to the beneficiary principle.

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6
Q

What are the two related rules regarding perpetuity?

A

The rule against remoteness of vesting and the rule against inalienability.

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7
Q

What does the rule against remoteness of vesting apply to?

A

Charitable trusts.

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8
Q

What is the common law rule against inalienability?

A

Assets cannot be tied up on trust for longer than a life in being plus 21 years.

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9
Q

How does certainty of purpose differ between charitable and non-charitable purpose trusts?

A

Charitable purpose trusts have more flexible rules on certainty than non-charitable purpose trusts.

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10
Q

What was the outcome of Re Astor’s Settlement Trusts?

A

An attempted non-charitable purpose trust was found to be void due to uncertainty of purpose.

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11
Q

What are the four traditional heads of charity?

A

The relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community.

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12
Q

What is a charitable purpose under the Charities Act 2011?

A

A purpose that falls within section 3(1) and is for the public benefit.

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13
Q

What does the term ‘poverty’ mean in the context of charitable purposes?

A

Poverty does not mean destitution; it refers to degrees of financial hardship.

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14
Q

How is the advancement of education defined?

A

It includes training, research, and broader education beyond formal instruction.

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15
Q

What does the advancement of religion entail?

A

It involves promoting and spreading religious belief and practices.

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16
Q

What does the advancement of health include?

A

The prevention or relief of sickness, disease, or human suffering.

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17
Q

What is included under citizenship/community development?

A

Rural and urban regeneration and the promotion of civic responsibility.

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18
Q

What is required for arts, culture, heritage, or science to be considered charitable?

A

The art must be of merit, which may require expert evidence.

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19
Q

What does the advancement of amateur sport refer to?

A

It includes promoting participation in amateur sports.

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20
Q

What was the outcome of the case Re Delius?

A

The trust related to the music of the composer Delius was considered charitable.

The judge left open the question regarding trusts related to lesser composers.

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21
Q

What was the outcome of the case Re Pinion?

A

The art collection in Re Pinion was described as ‘junk’ and the trust was not charitable.

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22
Q

What does Section 3(2)(d) of the Charities Act 2011 define as ‘sport’?

A

‘Sport’ is defined as sports or games which promote health by involving physical or mental skill or exertion.

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23
Q

Which types of activities are included under ‘sport’ according to the Charities Act?

A

Physical sports like football and athletics are included, as well as chess due to the mental skill involved.

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24
Q

What was the Charity Commission’s decision regarding the Bridge Club?

A

The Bridge Club was found to be charitable based on its involvement of logical and lateral thinking skills.

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25
Q

What was the Charity Commission’s decision regarding the Cambridgeshire Target Shooting Association?

A

The Commission accepted the need for physical and mental fitness in target shooting but did not find sufficient health benefits from the activity itself.

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26
Q

What does Section 3(1)(h) of the Charities Act provide for?

A

It provides for the advancement of human rights, conflict resolution, reconciliation, and the promotion of religious or racial harmony.

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27
Q

What must not be included in charitable purposes under human rights?

A

The purpose must not stray into political objectives such as seeking to procure changes to the law.

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28
Q

What examples fall under the advancement of human rights according to Charity Commission guidance?

A

Examples include raising awareness of human rights issues and promoting restorative justice.

This includes relieving victims and securing enforcement of human rights laws.

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29
Q

What does Section 3(1)(i) of the Charities Act cover?

A

It covers the protection and improvement of the environment.

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30
Q

What is included in the advancement of environmental protection?

A

It includes preservation and conservation of the natural environment and promotion of sustainable development.

31
Q

What may charities need to provide for environmental conservation?

A

Charities may need to produce independent expert evidence to show that the species, land, or habitat is worthy of conservation.

32
Q

What does the relief of those in need encompass?

A

It encompasses relief for youth, age, ill-health, disability, financial hardship, or other disadvantage.

33
Q

How is the relief of those in need distinct from the relief of poverty?

A

A person does not need to be poor to be in need; they must have a specific need.

34
Q

What was established in Joseph Rowntree Memorial Trust Housing Association v Attorney General?

A

The case established that accommodation could be provided for the elderly without a poverty requirement.

35
Q

What does the advancement of animal welfare include?

A

It includes providing for the welfare of particular types of animals and improving methods for slaughtering animals.

36
Q

What was the ruling regarding the abolition of vivisection?

A

The pursuit of abolishing vivisection was found not to be charitable as it was a political purpose seeking a change in the law.

37
Q

What does Section 3(1)(I) relate to?

A

It relates to the efficiency of public services such as armed forces, police, fire services, and ambulance services.

38
Q

What examples of charitable purposes are suggested under the efficiency of public services?

A

Examples include increasing technical knowledge through educational resources and providing opportunities for personnel to gain relevant experience.

39
Q

What does the general purpose category in Section 3(1)(m) recognize?

A

It recognizes charitable purposes not captured within the previous 12 heads of charity.

40
Q

What is required for a trust to have charitable status?

A

All purposes of the trust must be wholly and exclusively charitable.

41
Q

What happens if a trust has both charitable and non-charitable purposes?

A

The trust may be void unless the non-charitable purpose falls within a recognized category or can be considered incidental to the charitable purpose.

42
Q

What is the principle of recognizing charitable purposes by analogy?

A

It allows for the inclusion of additional purposes that were not specifically envisaged but merit charitable status.

43
Q

What are the requirements for a trust to have charitable status?

A

A trust must be for a charitable purpose, satisfy a public benefit test, and be wholly and exclusively charitable.

44
Q

What is the public benefit test?

A

The public benefit test requires an identifiable benefit and defines what constitutes the public or a section of the public.

45
Q

Is there a presumption of public benefit in the Charities Act?

A

No, there is no presumption of public benefit as stated in section 4(2) of the Act.

46
Q

What must charity trustees consider regarding public benefit?

A

Charity trustees must have regard to any guidance published by the Charity Commission in pursuance of its public benefit objective.

47
Q

What is meant by ‘identifiable benefit’?

A

Identifiable benefit refers to whether there is a benefit to the public based on evidence, separate from the trust’s charitable purpose.

48
Q

What must be balanced against the benefit in a public benefit test?

A

The benefit must be balanced against any detriment or harm arising from the purpose.

49
Q

What is an example of a case where a benefit could not be identified?

A

In Re Hummeltenberg, a benefit could not be identified for a training college for mediums despite the settlor’s belief in its benefit.

50
Q

What is required for a trust to benefit the public?

A

The purpose must be beneficial to the public or a section of the public, not to a private class of individuals.

51
Q

What are the criteria for a section of the public to be considered in a charitable trust?

A

The possible beneficiaries must not be negligible in number and must not be defined by their relationship to a particular individual.

52
Q

What does the Charity Commission guidance state about focusing on certain beneficiaries?

A

Charities can focus on certain beneficiaries if they have proper reasons, do not exclude the poor, and the focused group is a sufficient section of the public.

53
Q

Can charities charge for services?

A

Yes, charities can charge for services or facilities, provided it is reasonable and necessary to carry out the charity’s aims.

54
Q

What happens if the purposes of a charitable trust fail?

A

The cy-près doctrine applies, allowing surplus funds to be applied to another charitable purpose.

55
Q

What are the grounds for altering the original purpose of a charitable gift under the Charities Act 2011?

A

The grounds include fulfillment of the original purpose, surplus funds, combining property from similar trusts, irrelevance of the original purpose, or cessation of charitable status.

56
Q

What is the distinction between charitable and non-charitable purpose trusts?

A

Charitable trusts must satisfy the public benefit test, while non-charitable purpose trusts must fall within a recognized exception to the beneficiary principle.

57
Q

What are the recognized exceptions for non-charitable purpose trusts according to Re Endacott?

A

The exceptions are trusts for the maintenance of particular animals, for the erection and maintenance of monuments and graves, and for the saying of private masses.

58
Q

Can a trust for the care of a particular animal be charitable?

A

No, a trust for the care of a particular animal would not be charitable as it does not pass the public benefit test.

59
Q

What is the status of trusts for maintaining family graves?

A

Trusts for the maintenance of family graves can be valid but are not charitable unless they are of cultural or historical importance.

60
Q

What is the ruling regarding private masses as a purpose trust?

A

A trust for saying private masses is not charitable as it does not pass the public benefit test, but it can be valid if it complies with certainty and perpetuity requirements.

61
Q

What was the outcome of the case Re Endacott?

A

The trust was held to be void as the purpose was too uncertain and did not fall within a recognized class of non-charitable purpose trusts.

62
Q

What are trusts of imperfect obligation?

A

These are non-charitable purpose trusts that are recognized for validity but are not enforceable.

63
Q

What must a non-charitable purpose trust fall within to be valid?

A

The purpose must fall within one of the recognised Endacott exceptions to the beneficiary principle.

64
Q

What are the recognised Endacott exceptions?

A
  1. Trusts for the maintenance of particular animals
  2. Trusts for the erection and maintenance of monuments and graves
  3. Trusts for the saying of private masses
65
Q

Can the class of Endacott exceptions be extended by analogy?

A

No, the class of exceptions is anomalous and cannot be extended, even by analogy.

66
Q

What does the rule against inalienability require for private purpose trusts?

A

The trust must come to an end within the common law perpetuity period of 21 years.

67
Q

How can the common law perpetuity period be extended?

A

It can be extended by reference to a life in being, but it must be clear from the outset that the trust will end within that time.

68
Q

Are animal lives considered lives in being for perpetuity purposes?

A

No, animal lives are not lives in being, even if the maintenance of the animal is the purpose of the trust.

69
Q

What is advisable to include in a non-charitable purpose trust?

A

It is advisable to include an express perpetuity period as the perpetuity rules are strict.

70
Q

What is the status of non-charitable purpose trusts in terms of enforceability?

A

They are technically unenforceable; however, if the trustee is willing to act, the court will grant a Pettingall order.

71
Q

What does a Pettingall order require?

A

It requires the trustee to give an undertaking to comply with the trust.

72
Q

What can testator’s residuary legatees do if the trustee does not comply with the undertaking?

A

They can sue to enforce the undertaking and prevent a misapplication of the fund.

73
Q

When does the 21-year perpetuity period start to run?

A

It starts to run when the trust comes into effect, i.e., on the date of the testator’s death.

74
Q

What is not considered best drafting practice regarding perpetuity?

A

It is not best drafting practice to use ambiguous references to perpetuity; an express perpetuity period should be included.

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