Purpose trusts Flashcards
What is a purpose trust?
2 types: private purpose and charitable
What is the perpetuity principle?
Trusts cannot go on forever - limit of 125 years.
What is the beneficiary princple?
Trusts must have a beneficiary.
The principle is based on the idea that there must be someone who can hold the trustees accountable and ensure that the trust’s terms are carried out.
Are purpose trusts for people allowed? This is called a private purpose trust.
Generally, no. Purpose trusts can only succeed if they are made for a charitable purpose.
What is a private purpose trust?
When settlor wants trustee to do a particular act with the trust property as opposed to it going to a beneficiary. To serve a particular function.
But generally this is void because there is no beneficiary to enforce the trust.
What are the limited instances where a private purpose trust can be allowed and can take effect?
For:
+ the maintanence of graves
+ the saying of private masses
+ the mainanence of animals
+ the erection and maintence of memorials
Does a private purpose trust have to comply with ‘rule against inalienability’?
The rule against inalienability is a legal principle that prevents property from being made nontransferable or tied up in a trust forever. It’s also known as the rule against trusts of perpetual duration.
It is the life of being of the person specified (possibly the trustee) in the trust + 21 years.
So it must have a deadline where the trust ends.
What is a charitable trust? This one automatically is successful as a purpose trust
When a trust is made for charity exclusively and for the public benefit (so benefits numerous people).
Private purpose trusts must be specific and charitable purpose trusts can simply show charitable intention and be soemwhat unclear and the courts will make a charitable donation etc. Is this true?
Yes.
If private purpose trusts are not made specific, it will be voided.
Does the rule against inalienability apply to charitable purpose trusts?
No. These can go on forever.
