Trust 3: Purpose Trusts Flashcards
What are the requirements for a charitable trust (general)?
- Must be for a charitable purpose
- Satisfy a public benefit test
- Be wholly and exclusively charitable
What are the defined charitable purposes?
- prevention or relief of poverty
- advancement of education
- advancement of religion
- advancement of health or the saving of lives
- advancement of citizenship or community development
- advancement of the arts. Culture heritage or science
- advancement of amateur sport
- advancement of human rights, conflict resolution
- advancement of environmental protection or improvement
- relief of those in need because disadvantage
- advancement of animal welfare
- promotion of the efficiency, police, fire and rescue services or ambulance
Can a charitable purpose trust be made for a case outside of the defined list?
General purpose
- Recognises those that would have counted under previous law or purposes which are analogous to or within the spirit of statutory heads of charity
What is the test for public benefit (general)?
- Whether there is an identifiable benefit, and
- What constitutes the public, or section of the public
What is the test for an identifiable public benefit?
- It is a question of fact as to whether there is a benefit to the public having regard to all the evidence in the particular case
- The settlor’s belief as to the benefit is not relevant
- if it is not obvious that the purpose is beneficial, the charity commission may require evidence
- Should not have political objectives (but can use political means to achieve non-political objectives)
What is the test for if a charitable trust benefits the public or a section of the public?
- Possible beneficiaries must not be negligible in number, and
- The quality which distinguishes them from other members of the community must be a quality which does not depend on their relationship to a particular individual or business
Exception
- if purpose if the prevention or relief of poverty requirement that class of beneficiaries must not be defined by reference to their relationship with a single person is relaxed
- However beneficiaries cannot be named
When might a charitable trust not fail for not being wholly or exclusively charitable?
Incidental
- If the non charitable part be construed as incidental or subsidiary to main, charitable purpose, the trust will remain effective
Separate
- If the charitable and non-charitable purpose can be separated, and a portion of the fund allocated to each
- Then court will sever the trust and recognise the charitable part
- Only possible when trust language contemplated severance of the fund (amount allocated to each must be quantifiable)
What are the rules against perpetuity for charitable trusts?
Inalienability rule does not apply
- Can direct trustees of charity to invest captial and apply income for charitable purposes INDEFINATLY
Remoteness of Vesting
- Initial gift must vest within perpetuity period
- However, gift from one charity to another can take place at any time
(eg To X charity for so long as they do X-thing. If they cease to do X-thing to Y charity. )
When can court use Cy-Pres doctrine?
Initial Failure
- means property cannot be applied to the specific purpose form the beginning
- cy-pres only applied if the settlor has shown a general charitable intention
Subsequent failiure
- gift cannot go back on a resulting trust
- cy-prés applied
What shows a general charitable intention?
- court will ask whether there was a specific intention to benefit a particular object, or an intention to give effect to a general mode of charity
- gift expressed a being dedicated to charitable purpose but which fails to specify the mode of application would show general charitable intent
General intention shown
- intended purpose was to provide soup kitchen in Shoreditch
- suitable land could not be found
- court found that there was generable charitable intent to benefit sick and poor of the parish
Not shown
- trust to provide rest home in Hull was found to be too specific to demonstrate general charitable intent
- testator had created detailed plans relating to the management of the homes which the court found inconsistent with general charitable intent
What is a Denley Trust
- trust that appears to be for private purpose will succeed if it is actually for benefit of ascertainable human beneficiary who may enforce trust
Example
- for maintenance and use of football pitch for employees of company for as long as the law may allow and then with gift over of the land at end of period.
Who can enforce a densely trust?
- although it does not confer a beneficial interest on identifiable individual they have power to enforce
What are the causes a honorary trust can be for?
- Trust for the maintenance of particular animals
- Trust for erection and maintenance of monuments and graves
- Trusts for the sating of private masses
how are honorary trusts enforceable?
- Non charitable trusts are technically unenforceable
- If trustee is willing to act then court will grant a Pettingall order, securing the enforcement
What is the perpetuity rules for honorary trusts?
- Human life plus 21 years (or just 21 years)
Example
- Must be certain from the outset
- Ie. “maintain animal for x years” or “build/maintain memorial for X years”, “as long as the law may allow
