Charitable trust

Question 1

Must fall under?

Answer 1

Definition of charity in s 1 CA 2011. “Charity is an institution that is established for charitable purposes only”

Question 2

s 3 (1) Charities act

Answer 2

Charitable purposes means one of the purposes & is for the public benefit

Question 3

Charitable trusts must be?

Answer 3

Exclusively charitable

Question 4

The benefits of the trust must be?

Answer 4

• Related to the aims of the charity
• Balanced against any detriment or harm
  caused.
• To the general public

Question 5

The public interest test will fail where?

Answer 5

There is a link between the donor and the beneficiaries

Question 6

Re Compton - public interest

Answer 6

A trust for the education of three of the settlor’s relatives was held not to be charitable

Question 7

A charity can give preference to particular individuals but?

Answer 7

Needs to be a sufficient section of the public to satisfy the test, and usually must be public

Question 8

Gilmour v Coats - public interest

Answer 8

Gift failed because it was made to an order of 20

cloistered nuns who did not engage with wider society

Question 9

Oppenheim v Tobacco Securities (1951) - public interest

Answer 9

Beneficiaries cannot be
numerically negligible and should not be connected between themselves by
blood or contract. This was a gift for the education of the children of employees of British American Tobacco. Therefore, they are too connected and too small

Question 10

Relief of poverty will always?

Answer 10

Be in the public interest, even where the classes of beneficiaries is very small

Question 11

Dingle v Turner (1972) - relief of poverty

Answer 11

Allowed a charitable trust for the relief of poverty among employees of a company

Question 12

Re Coulthurst’s Will Trust (1951) - Lord Evershed - relief of poverty

Answer 12

“poverty does not mean destitution; it is a word of wide and somewhat
indefinite import; it may not unfairly be paraphrased for present purposes as meaning persons who have to ‘go short’ in the ordinary
acceptation of that term, due regard being had to their status in life, and so forth”

Question 13

Re Sanders (1954) - relief of poverty

Answer 13

A gift failed because it was held that w/c people cannot necessarily be claimed to be in poverty. Working class and poverty are not synonymous. Equally, being middle class does not prevent destitution.

Question 14

Re Niyazi’s Will Trusts (1978) - relief of poverty

Answer 14

Here a gift for the construction of a working men’s hostel was held to be a charitable purpose. Hostels are used to house those who cannot afford housing.

Question 15

Re Shaw (1957) - education

Answer 15

George Bernhard Shaw left a legacy for the research and
development of a 48 letter alphabet. Held that the advancement of education must involve some element of learning and teaching. Not just about the increase in
knowledge.

Question 16

Incorporated Council for Law Reporting of England and Wales v AG (1971) - education

Answer 16

Whether law reports could fall under the head of education. AG argued that it was merely providing lawyers with ‘tools of their trade’. Not charitable:

Question 17

A charity that is for … will fail

Answer 17

Political purposes

Question 18

A charity that’s aim is to bring about change within the law will?

Answer 18

Fail, will be considered political

Question 19

Mc Govern v IRC (1982) - political purposes

Answer 19

Amnesty International were held not to be charitable because they campaigned for changes in the law, release of
prisoners, abolition of torture and observance of human rights. They now have two arms - one charitable
and one non-charitable

Question 20

A charitable trust

Answer 20

Property settled on trust for charitable purposes and

is managed by one or more trustees

Question 21

An unincorporated charitable association

Answer 21

Purposes of the UA are entirely charitable and its income is more than £5,000 pa, requires registration with the CC

Question 22

Charitable Incorporated Organisation (CIO)

Answer 22

Requires incorporation

and registration with the Charity Commission.

Question 23

Important characteristics of charitable incorporated organisation

Answer 23

• Legal entity
• Registration is long
• If the association stops being entirely charitable, will be forced to close.

Question 24

Charitable company

Answer 24

• A limited company (usually by guarantee as cannot distribute to shareholders). Must have charitable aims.
• strict requirements of filing accounts

Question 25

Tax advantages of being a charity

Answer 25

- Tax exemptions - No income tax on interest, provided it is applied only for charitable purposes - No CGT - Exemptions from VAT - 80% exemption from business rates - No charge to inheritance tax if someone dies and leaves a gift to charity

Question 26

Charitable trusts are not subject to?

Answer 26

The beneficiary principle.

Question 27

Distinctive features of the charitable trust

Answer 27

- purpose trusts and will fail if they are not expressed to be for a charitable purpose.

Question 28

Charitable trusts undermine?

Answer 28

the principles applicable to private purpose trusts and the idea that there is nobody to enforce the trust and that it would be contrary to the process of transferring property because there would be no beneficial owner.

Question 29

Private purpose trusts have problems with?

Answer 29

Enforcement because usually private trusts are enforced by the beneficiary. However, charitable trusts are enforced by the AG on behalf of the Crown.

Question 30

Charitable objects need not be

Answer 30

Certain, as long as there is general charitable purpose, the Charity Commission or the courts will fill the gap

Question 31

A perpetual trust for charity would be?

Answer 31

Valid

Question 32

When private trusts fail, the property is usually held on?

Answer 32

Resulting trust for the settlor. When charitable trusts fail, the cy-pres doctrine may step in to save the gift

Question 33

Failure of objects in a private purpose trust - cy-pres

Answer 33

The property will revert back to settlor on resulting trust

Question 34

Failure of purpose in a charitable trust

Answer 34

The doctrine of cy-pres may operate

Question 35

Cy-pres doctrine

Answer 35

As near as possible to the testator's or donor's intentions when these cannot be precisely followed.

Question 36

In some circumstances, the trust property can? - Cy- pres

Answer 36

Be applied to other charities with the same purposes, where there was a general charitable intention

Question 37

Statutory extension of the meaning of failure - cy- pres

Answer 37

Under common law, had to show it was impossible or impracticable to carry out the purpose.

Question 38

Where initial failure of charitable purpose, the property will only be applied cy-pres where

Answer 38

The donor can be shown to have a ‘general charitable intention’ rather than merely wanting to benefit one cause

Question 39

Subsequent failure - cy - pres

Answer 39

Will be applied cy-pres, whether or not there was | a general intention

Question 40

What happens even when the charity ceased to exist?

Answer 40

The purpose may carry on | elsewhere

Question 41

Re Faraker (1912) - Cy-pres

Answer 41

``` Money left to ‘Mrs Bailey’s Charity, Rotherhithe’. This charity (assisting widows) had been consolidated with other local charities. ```

Question 42

Re Slatter’s Will Trust (1964) - Cy- pres

Answer 42

Money left to a tuberculosis hospital. This had been closed down because TB had been controlled in the area. Held that there was initial failure of purpose as the purpose had failed

Question 43

Re Rymer (1895) - cy - pres

Answer 43

Where the gift is clearly for a specific charitable institution, rather than the general purpose, and the institution ceases to exist before the death of the testator, there will be initial failure

Question 44

Re Finger’s WT (1972) - cy - pres

Answer 44

Will also be dependent on whether the charity was incorporated or unincorporated. Gift to an unincorporated charity will always be for a purpose and there will be no initial failure if the purpose continues elsewhere. Gift to an incorporated charity is to a separate legal person and will fail if the body no longer exists.

Question 45

If no general charitable intent

Answer 45

Will revert to the settlor on resulting trust

Question 46

Re Rymer (1895)

Answer 46

Testator left money for the education of priests at a seminary in London. This had closed down and students transferred to Birmingham. Held: the testator meant to benefit the seminary rather than the purpose and the trust failed. Gift was too specific.

Question 47

Re Good’s Will Trusts (1950)

Answer 47

Money was left to buy land and build six rest homes. The money was insufficient for this. Held: the money could not be applied cy-pres because the testator had been too specific as to their wishes

Question 48

Re Harwood (1936)

Answer 48

Testator left money to Wisbech Peace Society and the Peace Society of Belfast. WPS did exist but had closed down before testator’s death. PSB had never existed. Only the money to PSB could be applied cy-pres. Naming an existing charity is likely to make it too specific – the non-existent charity shows a general purpose

Question 49

Re Spence (1979)

Answer 49

Gift to a specific old people’s home. The home had | closed down. Held not to be general enough to be a gift to the old in the area.

Question 50

Re Finger’s WT

Answer 50

Will find general charitable intent where the charity has | amalgamated with another and is still continuing

Question 51

Re Slevin (1891)

Answer 51

Gift to an orphanage. The orphanage closed after the | death of the testator (so gift took effect) but before assets were distributed. The funds were applied cy-pres.

Question 52

Re King (1923)

Answer 52

Gift for the construction of a stained glass window. There | was £1,000 surplus. This was applied cy-pres despite no general charitable intention

Question 53

s 62 Charities Act 2011 - failure

Answer 53

Allowed greater court freedom to modify the purposes of a charitable trust.

Question 54

Under s 62 Charities Act 2011 the court is allowed to alter the purpose of the trust when?

Answer 54

Original purposes in whole or part have been fulfilled OR where they “cannot be carried out, or not according to the directions given and to the spirit of the gift”

Question 55

Under s 62 Charities Act 2011 - the court is allowed to alter the purpose of the trust where the trust property?

Answer 55

- Can be more effectively used in conjunction with | other available property for similar purposes

Question 56

When the purpose of the trust ceases to be appropriate what will the court do?

Answer 56

Under s 62 Charities Act 2011 - the court can alter the purpose of the trust. When the area/ class of persons ceases to be inappropriate

Question 57

Under s 62 Charities Act 2011 - when the court makes alterations to the trust they must?

Answer 57

Consider both the spirit of the gift concerned (donor intentions) and “the social and economic circumstances prevailing at the time of the proposed alteration of the original purpose”

Question 58

Cy-pres doctrine operates to?

Answer 58

Change or modify the purpose of a charitable | trust where the original purpose is no longer possible or practicable