Purpose Trusts

Question 1

Key Facts about Purpose Trusts

Answer 1

• Trusts generally need a human beneficiary.
• There are limited exceptions to the beneficiary principle.
• Transfers to unincorporated associations appear to have extended the exceptions.
• Gifts with a particular purpose have been held valid in commercial situations.
• Valid purpose trusts must comply with the rules on perpetuity.

Question 2

Trusts that do not have a human beneficiary are generally void:

Answer 2

Re Astors ST

Question 3

The beneficiary principle requires a valid trust to have human beneficiaries:

Answer 3

Morice v Bishop of Durham

Question 4

Barclays Bank v Quistclose

Answer 4

Money was lent to a company to pay dividends. The money was held in the bank, the dividends were not paid, and the company went into liquidation.

The money was lent with a primary purpose; when that purpose failed, a secondary resulting trust arose for the lender.

Question 5

Re Denley’s Trust Deed

Answer 5

Employees sports ground - The land was held for ascertainable individuals who would supervise the trust. It was not a purpose trust, and was not contrary to the beneficiary principle as the individuals would ensure no fraud.