Purpose Trusts Flashcards
What are the benefits to trusts of having charitable status?
Can exist in perpetuity
Flexibility on beneficiary / certainty of objects
Tax benefits
Cy-pres doctrine
How can a non-charitable purpose trust be valid?
Must fall into the Re Endacott exceptions
Closed class - narrowly construed.
How are the certainty rules made more flexible for charitable purpose trusts?
Intention to apply property for a charitable purpose - trustees can direct this for such charitable purposes as they select
Once charitable intent is found - courts will strive to resolve any uncertainty
What three requirements are there for a trust to have a charitable status?
1) Exist for a charitable purpose
2) Satisfy the public benefit test
3) Be wholly and exclusively charitable
What are the heads of charity under S3(1)?
12 heads as well as a wide additional head of charity which codifies the common law principle of “charitable purposes falling within the spirit of the law”
What are the twelve heads of charity?
Prevention or relief of poverty
Advancement of education
Advancement of religion
Advancement of health or the saving of lives
Advancement of citizenship or community
Arts, culture, heritage, science
Amateur sport
Human rights, conflict resolution, religious / racial harmony / equality / diversity
Advancing environmental protection / improvement
Relief of those in need
Animal welfare
Promoting efficiency of army / police force / ambulance services.
How is poverty understood?
Going short - need not be destitution, considered relatively, can be temporary or inferred.
Purpose can’t benefit the rich
working class does not equal poor
Requirement that class of beneficiaries can’t be defined in relation to one person is relaxed here - can be for a particular description of poor people.
How is education understood
Very widely - training, research, scholarships, ancillary organisations, reports.
research must be of educational value to the researcher / directed as to lead to something which could be of educational value
Issues around fee paying schools: social mobility issues. Provisions to include more must be ‘more than token’.
How is religion understood?
Very widely - but they must ‘advance’ the religion.
Examples: religious services, missionary work, supporting a religious order, masses, etc.
Now the public benefit element must be proven.
How is advancing health understood?
Very broadly, including complementary / alternative / holistic medicine. Must be evidence of the benefits of the method used.
Includes rescue services.
What does citizenship / community development include?
Rural / urban regeneration
Promotion of civic responsibility
How is advancement of amateur sport understood?
Understood as sport / games which promote health involving physical or mental skill or exertion.
How is arts / culture / heritage / science understood?
Must be of merit
What do charities need to do to prove that something is worthy of conservation?
Produce independent evidence to show that the particular species / land / habitant is worthy.
Give examples of promoting the efficiency of public services?
A library in the army
Promotion of physical fitness
Technical knowledge of armed force members
How is the ‘general purpose’ sweeper understood?
Covers purposes analogous to / within the spirit of statutory heads of charity / earlier case law.
How is ‘wholly and exclusively charitable’ understood?
If there is a NCPT incidental or subsidiary to the main purpose - trust can remain effective.
Trust can be severed to cut off charitable bit - trust language must contemplate this severance.
What two elements are there to the public benefit requirement?
Is there an identifiable benefit?
What constitutes the public / a section of the public.
How is ‘identifiable benefit’ understood?
Balanced against any harm emerging from purpose. Benefit must be identifiable even if it cannot be quantified or measured.
How is public / section thereof understood?
Beneficiaries cannot be negligible in number
Cannot depend on their relationship to a particular individual / employer.
When can charities choose to focus on certain beneficiaries?
If they have proper reasons
Don’t exclude the poor
People are a sufficient section of the public for the charity’s purpose.
Can charities charge / make a profit?
Yes - as long as it is reasonable and necessary. If poor can’t afford, charity must help them to do so.
Can charities be political?
Can use political means but not be aiming toward a political goal
Issues here with public benefit and advancing human rights: securing law change in another country is not of public benefit in the UK - Amnesty.
What is the cy-pres doctrine?
Private trust fails - resulting trust to settlor.
If charitable purpose fails - surplus finds are applied to another charitable purpose by a scheme of CC.
What are the five grounds on which the original purpose of a charitable gift can be altered?
Original purpose has been fulfilled / cannot be carried out
Surplus funds
Property from trusts is combined to be used more effectively
Area / class of people is no longer relevant
Purpose has
- Been provided for by other means
- Ceased to be charitable in law
- Ceased to provide a suitable method of using the property
When will property be applied cy-pres if there has been an initial failure?
Only if settlor has shown a general charitable intention - a general mode of charity.
What are the Endacott exceptions?
Trusts for the maintenance of particular animals
Erection and maintenance of monuments and graves
Saying of private masses
How do courts approach the Re Endacott exceptions?
Narrowly construed
What practically should be checked with NCPTs?
That the trustee is willing to carry out the terms of the trust. Court will then make a Pettingall order.
Aside from the Endacott exceptions, what else does a NCPT need to be valid?
Must comply with common law perpetuity rules and be sufficiently certain.
