Purpose Trusts: Charitable and Non-Charitable Purpose Trusts

Question 1

what is the difference between purpose trusts and normal trusts of people?

Answer 1

purpose trusts lack beneficiaries - exception to the beneficiary principle

trusts of people = enforceable by Bs

charitable trusts = enforceable by Attorney General

non-charitable purpose trusts = not enforceable (trusts of imperfect obligation)

Question 2

what are the requirements for a valid charitable purpose trust?

Answer 2

there must be an intention to apply property for a charitable purpose

(1) must be for a charitable purpose = fall under one of the 12 heads of charity

(2) must satisfy the public benefit test = an identifiable benefit which benefits a section of the public

(3) must be wholly and exclusively for charity = must not have a mix of non-charitable purposes

Question 3

what is the public benefit test ? (2 requriements)

Answer 3

(1) identifiable benefit

(2) benefit to the public or section of the public =
- not to a private class of citizens
- settlor should not benefit
- Bs must not be negligible in number
- does not depend to their relationship to a particular individual (will not be the public)

Question 4

if a trust has both charitable and non-charitable purposes, will it fail because it is not ‘wholly and exclusively charitable’?

Answer 4

If charitable and non-charitable purposes can be separated and a portion of fund can be allocated to each, court can sever it

otherwise it will be void

Question 5

what perpetuity rules apply to charitable purpose trusts?

Answer 5

the statutory rule against remoteness of vesting

the charity must obtain a vested interest in possession within 125 years

Question 6

what is the cy-pres doctrine?

Answer 6

where a charitable purpose trust fails, any surplus funds will be applies to another charitable purpose if the settlor had a general charitable intention

trust can fail if:
- original purpose fulfilled or cannot be carried out
- original purpose still workable but does not provide for use of all the property (surplus)
- original purpose referred to an area or class which is not relevant or suitable
- purpose ceases to be charitable

Question 7

what is a non-charitable purpose trust?

Answer 7

the Endocatt exceptions to the beneficiary principle provide the only purposes allowed for non-charitable purpose trusts

(1) trusts for maintenance of particular animals

(2) trusts for erection and maintenance of monuments and graves

(3) trusts for the saying of private masses

Question 8

what is the perpetuity requirement for non-charitable purpose trusts?

Answer 8

the common law rule against inalienability = requires the trust to come to an end within 21 years and all income and capital to be disposed of before then

the trust will fail if no perpetuity is specified (even if realistically the trust will not last for 21 years e.g., animal will die before)

wait and see rules do not apply

this can be extended by reference to a life in being = 21-year period starts to run when the specified life in being dies

Question 9

is this trust void:

Testator leaves £10,000 on trust in their will, the income from which is used to maintain their grave

Answer 9

void because of the rule against inalienability

the capital will not be disposed of before the 21 year limit

Question 10

is this trust void:

Testator leaves £10,000 on trust in their will from which both the capital and income are to be used to maintain their grave

Answer 10

void because it is not clear when the capital may be disposed of - it may last beyond the 21 year perpetuity period

Question 11

Is this trust void:

Testator leaves £10,000 on trust in their will from which both the capital and income are to be used to maintain their pet tortoise/dog

Answer 11

void because animal may not die within the 21-year perpetuity period