Trust 6 - Purpose Trust Flashcards
What are charitable and non-charitable purpose trusts exceptions to?
The beneficiary principle
What is a charitable purpose trust?
- Intention to apply property for a charitable purpose
- Public Benefit Test
- Be wholly and exclusively charitable
What heads of charity are there?
- Prevention of relief or property
- Advancement of education
- Religion
- Health
- Citizenship or community development
- Arts, culture, heritage or science
- Amateur sport
- Promotion of efficiency of armed forces, police etc
- Those in need due to youth, age, ill health etc
- Human rights, equality and diversity
- Animal welfare
- Environmental protection/improvement
What does ‘education’ include for charity?
Training, research and broader education
What does ‘environment’ include for charity?
Includes conservation of a particular animal, bird etc
What does ‘animal welfare’ not include for charity?
Care for particular animals e.g. testator’s pets (can be non-charitable trusts)
What can trustees do if there’s uncertainty as to how intention of a charity will be carried out?
They can direct that the property be applied for such charitable purposes as they select
Do political objectives count as charitable?
No (although can use political means to achieve a charitable objective)
Can charities charge for their services and/or make a profit?
Yes and Yes
Can make a profit if reasonable and necessary
When is a charitable trust ‘wholly and exclusively charitable’?
All purposes must be charitable
Cannot pursue political objectives (but can use political means to achieve non-political objectives)
What happens if there is a mix of charitable and non-charitable elements for a charitable purpose trust?
- Trust will be void and property returned to settlor unless non-charitable purpose falls within a recognised category of non-charitable purpose trusts
- If non-charitable purpose construed as ‘incidental or subsidiary’, trust remains effective
- If they can be separation, portion of fund allocated to each and trust severed, recognising the charitable trust. Requires that severance was contemplated by the trust AND amount allocated to each purpose to be quantifiable.
What are the elements to the public benefit test?
- identifiable benefit
- public / section of the public
What is the identifiable benefit test for the public benefit test?
a) Identifiable benefit: must be capable of being identified/described (even if not quantified or measured)
What is the public/section of the public test for the public benefit test?
b) Beneficial to public, or section of public,
- not a private class
- must not be negligible in number
- must not depend on relationship to a particular person
What is the exception to “must not depend on relationship to a particular person”
- relaxed where the aim is prevention of poverty
- can apply to family members
- can apply to small geographic areas
(must still be a description of poor persons rather than specific poor persons)
What is the cypres doctrine?
Where a charitable purpose trust fails, any surplus funds are applied to another charitable purpose by Charity Commission or court scheme (if a general charitable intention is shown)
On what grounds can the original purpose of a charitable gift be altered?
- Original purpose fulfilled or can’t be carried out
- Original purpose workable but doesn’t provide a use for all property - surplus funds
- Property from similar trusts combined to be more effective
- Original purpose for area or class no longer relevant or suitable
- Purpose has been:
- adequately provided for,
OR
- ceased to be charitable in law,
OR
- ceased to provide a suitable method of using property
What happens if the charitable gift fails from the outset?
Cy Pres will only apply if there is a general charitable intention
- soup kitchen and cottage hospital = general intention - Cy Pres applied
- detailed plans for rest homes in Hull = no general intention - Cy Pres didn’t apply
What non-charitable purpose trusts are allowed?
- particular animals
- monuments and graves - not private individuals
- private masses
What should non-charitable purpose trusts include to ensure they comply with rule against inalienability?
An express perpetuity clause
What are the requirements for a non-charitable purpose trust?
Intended purpose very certain
1. Fall within recognised exception to beneficiary principle
2. Created by will
What are the exceptions to beneficiary principle for non-charitable purpose trusts?
- Trusts for maintenance of particular animals
- Trusts for erection & maintenance of monuments and graves (not private individuals)
- Trusts for saying of private masses (if for public benefit)
Can trustees still act on a non-charitable trust?
- if trustee willing to act, a Pettingall order could be made.
