Unit 4 Flashcards
Purpose Trusts
What are purpose trusts?
Trusts to carry out a purpose or advance a cause (unlike dividing the trust fund between the B’s).
The State will enforce the trust (public policy reasons).
What are the objections to a purpose trust?
The beneficiary principle - must have human beneficiaries to enforce the trust (Morice) and must benefit them (Bowman).
Certainty - how is the trust funds to be used?
Rule against inalienability of trust capital - cannot exceed 21 years which must be stated AND all of trust capital must be spent at the end of the 21 years.
Capricious purposes - trusts which have no useful purpose.
What type of non-charitable purpose trusts are exempt from the beneficiary principle?
Care for particular animals.
Maintenance of specific graves and monuments.
What are charitable purpose trusts?
Charitable trusts are established exclusively charitable purposes and is subject to the jurisdiction of the High Court (s1(1) Charities Act 2011).
What 3 conditions establish if a trust is ‘charitable’?
The trust must be established for a purpose the law regards as charitable (s3 CA 2011).
The trust must be wholly and exclusively charitable (s1(1)(a)).
The purposes benefit the public / sufficient section of the public (s4)
What are the benefits of a charitable trust?
Not subject to BP. AG will enforce the trust terms.
Not subject to rule against inalienability (can last forever).
Not subject to certainty of objects.
Tax benefits
Disadvantages of charitable trusts.
Admin burdens (including registration with charities commission).
Strict compliance with annual reporting (Part 8 CA 2011). Failure = criminal penalties.
What are the forms of charitable trusts?
Prevention / relief of poverty (s3(1)(a)).
Advancement of education (s3(1)(b)).
Advancement of religion (s3(1)(c)).
What can the charitable purpose (1) be for a trust advancing education?
Schools, universities, trusts to provide scholarships.
Trusts for research could be charitable providing it will be published (Re Besterman’s).
What is the public benefit (2) test for trusts advancing education?
Peopled linked by a personal nexus are not a sufficient section of the public (Re Compton).
Section of public must not be numerically negligible and the qualities distinguishing members does not depend on their relationship (Oppenheim).
Are trusts advancing education exclusively charitable (3)?
Providing the profits from fees charged must be ploughed back into the charity trust (Independent Schools Council v Charity Commission for England & Wales).
No political purpose (but can be ancillary to their primary purpose).
What can the charitable purpose (1) be for trusts preventing / relieving poverty?
Poverty = those who have to go short in the ordinary acceptation of that term (Re Coulthurst). Not complete destitution.
Charity Commission Guidance - likely to be charitable to relieve financial hardship of anyone who does not have the resources to provide for themselves for things most people take for granted.
What is the public benefit (2) of trusts preventing / relieving poverty?
Sufficient section of the public
Relief of poverty amongst class of persons is charitable but individuals not (Re Scarisbrick).
Helps if the class of persons is capable of expanding (Re Segelman).
Trusts relieving poverty amongst employees / members of a society is charitable (HM Attorney General v Charity Commission for England & Wales).
[Generous rule - still applies to small classes / groups of people].
Are trusts preventing / relieving poverty exclusively charitable (3)?
Yes, providing they do not help those not in poverty.
No political purpose (but can be ancillary to their primary purpose).
What are the charitable purposes (1) of trusts advancing religion?
‘religion’ includes - (a) belief in more than one god and (b) no belief in a god (s3(2)(a) CA 2011).
Such trusts must actively advance religion - taking positive steps to sustain and increase religious beliefs. Must be more than mere moral / ethical / philosophical debates (Re South Place Ethical Society).
