Purpose trusts

Question 1

What are the two exceptions to the beneficiary principle?

Answer 1

1. Charitable purpose trusts are recognised despite the absence of ascertainable beneficiaries because they are for the public benefit.
2. Non-charitable purpose trusts have been recognised as valid in specific, exceptional cases. These are known as the ‘Endacott’ exceptions.

Question 2

What are the requirements for a charitable purpose trust?

Answer 2

Be for a charitable purpose + satisfy a public benefit test + be wholly and exclusively charitable.

Question 3

What are the 12 specific heads of charity set out under S3(1) Charities Act 2011?

Answer 3

1. The prevention or relief of property
2. The advancement of education
3. The advancement of religion
4. The advancement of health or the saving of lives
5. The advancement of citizenship or community development
6. The advancement of the arts, culture, heritage or science
7. The advancement of amateur sport
8. The advancement of human rights, conflict resolution or reconciliation or the promotion of religious/racial harmony and equality
9. The advancement of environmental protection or improvement
10. The relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage
11. The advancement of animal welfare
12. The promotion of the efficiency of the armed forces/emergency services

Question 4

What is the general purpose under the Charities Act 2011?

Answer 4

There is also a wide additional category which recognises that some charitable purposes may not be captured in the 12 heads of charity. Those within the spirit of charity or analogous to it can fall under this category.

Question 5

What are the two elements to the public benefit requirement for charitable purpose trusts?

Answer 5

1. Whether there is an identifiable benefit
2. What constitutes the public, or a section of the public

Question 6

What is the cy-pres doctrine?

Answer 6

This provides that where a charitable purpose trust fails any surplus funds will be applied to another charitable purpose by way of a scheme established by the Charity Commission or Court.

Question 7

When do the Re Endacott (1960) exceptions apply?

Answer 7

These exceptions apply only when a trust is created in a will and were classified in the case of Re Endacott (1960).

They are sometimes referred to as trusts of imperfect obligation because although the Court recognises their validity, they are not enforceable.

Question 8

What are the non-charitable purpose trusts that fall within the Re Endacott (1960) exceptions?

Answer 8

Trusts for the maintenance of particular animals-e.g. pets

Trusts for the erection and maintenance of monuments and graves-e.g. family graves

Trusts for the saying of private masses-e.g. private family mass in the testator’s memory

Question 9

Does the rule against inalienability apply to non-charitable purpose trusts?

Answer 9

Yes, the rule requires the trust to come to an end within the common law period of 21 years, which can be extended by reference to a human life in being such as a Royal.

It must be certain at the time the trust is created that it will come to an end within the perpetuity period, otherwise the trust will be void.