Beneficiary Principle and the Rule against Perpetuity

Question 1

Steps required

Answer 1

1. State whether it is an outright gift or a trust
2. Explain that the issue concerns the beneficiary principle
   (deal with any exceptions that may apply)
3. Consider the rules against perpetuity

Question 2

Definition of ‘beneficiary principle’

Answer 2

Need identifiable human beneficiaries who can enforce the trust
Morice v Bishop of Durham

Question 3

Exceptions to the beneficiary principle

Answer 3

1. Unusual exceptions
2. Purpose trusts
3. Charitable exception
4. Non-charitable unincorporated exception

Question 4

Unusual Exceptions

Beneficiary Principle

Answer 4

• Care/maintenance of animals (Re Dean)

- Care/maintenance of graves/monuments (Re Hooper)

Question 5

Purpose trusts exception

Beneficiary Principle

Answer 5

Purpose trusts normally violate the principle due to lack of ascertainable beneficiaries BUT exceptions will be made where purpose trusts have ascertainable beneficiaries and are directly for the tangible benefit of individuals.

Question 6

Charitable Exception (Beneficiary Principle)

Answer 6

Charitable Trusts will not violate the beneficiary principle because they are enforced by the Attorney General.

Question 7

Criteria for a valid charitable trust

Answer 7

a. Charitable purpose (s.2(1) Charities Act 2011). Purposes are listed in s.3(1) of CA2011.
b. Sufficient Public benefit
c. Exclusively charitable (no political purpose - McGovern); will be permitted if non-charitable purpose is merely incidental)

Question 8

Notes for meeting criteria of sufficient public benefit for charitable trust

Answer 8

‘public benefit’ defined in s.4(3) Charities Act 2011

Numbers can't be negligible; can't be a class within a class (IRC v Baddeley)
Trusts for relief of poverty are charitable even if benefit is limited to small class of objects (Re Scarisbrick)

See YourGDL p. 86 for more

Question 9

Non-charitable unincorporated association - definition

Answer 9

A group bound together for a common purpose;

not being a business purpose (Burrell)

Question 10

Non-charitable unincorporated association exception

Beneficiary Principle

Answer 10

General principle - ‘unincorporated associations have no legal personality and so cannot hold property in the name of the association’
(Morice v Bishop of Durham)
- No identifiable human beneficiaries to enforce trust

Question 11

Giving effect to a trust for a non-charitable unincorporated association

Answer 11

a. Trust as outright gift to members, as an accretion to the association’s funds - Re Recher’s Will Trusts

b. Trust for purpose, if a purpose is specified that benefits the members.
Need to consider whether it can be effected un Re Lipinksi’s Will Trusts, Re Recher or Re Denley

Question 12

The rule against inalienability

Rules against perpetuity

Answer 12

Non-charitable purpose trusts must either:
a. allow the trustees to spend all the trust capital on the given purpose, hence ending the trust at any time; or
b. be limited in duration to 21 years
(Re Hooper)

Question 13

The rule against remoteness of vesting

Rules against perpetuity

Answer 13

A contingent interest may become a vested interest within 125 years for all trusts made after 6 April 2006
(Perpetuities Act 2009)