Variation of Trust Purposes Flashcards
how can the purpose of a trust be varied?
- common law
- statute
how can the purpose of a trust be varied by common law?
a) the truster can reduce the necessity of requiring a variation by conferring wide powers of appointment on the trustees
b) any beneficiary without legal disability may assign or surrender his interest to a third party or another trust. This is limited in relation to an alimentary right even if the truster consents (see Main Trustees v Main 1917)
c) a variation in trust purposes can be implemented if all the possible beneficiaries consent (Earl of Lindsay v Shaw 1959)
d) for public trusts the common law provided for vaiation of purposes under the cy pres doctrine
how does statute vary a trusts purpose?
certain statutes provide for the variation of trusts purposes in respect of certain limited classes of trusts. This can be found in Trusts Act 1921 ss 5 and 16 and Trusts Act 1961 s1
what does the Trust Act (1921) section 5 and 16 tell us?
limited to making good particular defects in the machinery of a trust and are not suited to dealing with cases where these purposes are still workable but have been found to be unsuitable due to changed circumstances
what does the Trusts Act 1961 section 1 state?
Permits the trustees or any of the beneficiaries to petition the court to sanction a variation of the terms or purposes of the trust
what is the cy pres doctrine?
a common law doctrine which applies only to public trusts.
what is the cy pres doctrine used for?
using this doctrine the court may avoid the lapse of a public trust, when the initial purposes become impossible, by diverting the trust to a similar purpose.
is the cy pres doctrine restricted?
not it is not restricted to charitable trusts
Anderson’s Trs v Scott 1914
when will the cy pres doctrine be used?
when the original purpose of the trust must have become impossible or particularly inappropriate to justify the application of the doctrine and only then will the doctrine be applied in the discretion of the court.
when will a cy pres scheme be inappropriate?
if the truster has provided in the trust deed what is to occur to the trust funds if they require to be diverted because the trust cannot be continued. This is generally known as a trust deed with a destination-over.
is the cy pres scheme still relevant?
It has been superseded to a considerable extent by statutory power to enable the court to approve a scheme to vary public trust under Law Reform Act 1990
what will happen when there is a distinction between initial and supervening impossibility to the cy pres scheme?
Where there is initial but not supervening impossibility the courts will grant a cy pres scheme only if the terms of the trust deed show that the truster had a general intent to benefit public purposes. Where the failure of the original trust purposes is initial or supervening a cy pres scheme will require that the proposed replacement purposes are approximate to the original purposes.
what did the Law Reform Act 1990 ss9 and 10 introduce?
a statutory power to enable the court to approve a scheme to vary public trusts.
despite the Law Reform Act 1990 when will the cy pres jurisdiction still be relevant?
where a proposed variation falls outwith the scope of the statutory grounds, for example (the Mining Institute of Scotland Benevolent Fund Trs 1994
what were the aims of the Law Reform Act 1990
to make variation of public trusts simpler, quicker and cheaper
