The distinction between charitable trusts & non-charitable purpose trusts Flashcards
Are private purpose trusts generally valid?
No - because there is no ascertainable beneficiary (ie. no individual who can go to court to enforce the trusts)
Exceptions:
- Trusts for charitable purposes
- Re Denley trust
- Trust within the Re Endacott exceptions
What are the exceptions to the rule that private purpose trusts are generally invalid?
Trusts for charitable purposes (exempt from beneficiary principle)
Trust within the Re Endacott exceptions - which complies with the perpetuity rules
Re Denley trust - which complies with the perpetuity rules
When will a trust be for a charitable purpose?
To be a charity, the trust must:
(a) Be for a charitable purpose - eg.
- Prevention or relief from poverty
- The advancement of education
- The advancement of religion
and
(b) Have sufficient public benefit;
- Trust purpose has an identifiable benefit
- The benefit accrues to the public or a sufficiently large section of the public
and
(c) Be exclusively charitable
- Can’t be political
What are 3 examples of charitable purpose under s3(1) Charities Act 2011?
The prevention or relief from poverty
The advancement of education
The advancement of religion
When will a trust for the purpose of prevention / relief from poverty be a valid charitable purpose trust?
Charitable trusts:
(a) Charitable purpose
(b) Public benefit
(c) Exclusively charitable
–>
(a) Prevention or relief from poverty
(b) Benefits a class of individuals (won’t pass if named individuals only)
(c) Any political purpose (eg. campaigning) is ancillary
When will a trust for the advancement of religion be a valid charitable purpose trust?
Charitable trusts:
(a) Charitable purpose
(b) Public benefit
(c) Exclusively charitable
–>
(a) Advancement of religion
(b) Worship open to public; or members of religion mix with public (ie. not nuns)
(c) No political purpose
When will a trust for the advancement of education be a valid charitable purpose trust?
Charitable trusts:
(a) Charitable purpose
(b) Public benefit
(c) Exclusively charitable
–>
(a) Advancement of education
(b) Must be more than numerically negligible & does not pass:
- The personal nexus test (only benefits people linked by a relationship to a particular individual / company)
- Class within a class test (places arbitrary restrictions - limited class of people can benefit, so long as limits are legitimate, proportionate, rational or justifiable given nature of charitable trust)
- Excluding the poor (fee paying schools must provide ‘more than minimal’ assistance to children who can’t afford fees)
(c) No political purpose + profits go back to the charitable purpose
If a private purpose trust is for non-charitable purposes, will it be valid?
No, unless it falls within the Re Endacott exceptions or within Re Denley AND follows the perpetuity rules
What are the five Re Endacott exceptions?
- Erection & maintenance of monuments and graves
- Saying of private masses
- Maintenance of specific animals
- Misc. (main one was fox-hunting, which is now illegal)
- Unincorporated associations (better view is that such gifts only valid if can be interpreted in a manner complying with beneficiary principle)
The provisions must comply with the perpetuities rules!
When will a trust for monuments & graves fall within the Re Endacott exception?
For the construction &.or maintenance of monuments & graves of a ‘funerary nature’
The purpose must be non-abstract - eg. a ‘useful memorial’ will fail because trustee must be able to decide what they’re doing
If it is for construction, there must be a valid perpetuity period
If maintenance, likely to fail on perpetuity (could carry on indefinitely, so no certainty comes to end within 21 years)
Nb. If inside church, for monuments of historic/cultural importance, or for maintenance of churchyard in general likely to be held as charitable
When will a trust for the saying of masses fall within the Re Endacott exception?
When the masses are said in PRIVATE
(if in public, may be charitable instead)
& falls within the perpetuity rules
When will a trust for specific animals fall within the Re Endacott exception?
Trust for an individual animal may be upheld as a valid private purpose trust
eg. trust for £50 a year for upkeep of testator’s favourite horse upheld despite lack of ascertainable human beneficiary (Pettingall v Pettingall)
& falls within perpetuity rules (best to have objective time frame - too subjective to define by specific animal’s life)
If a purpose trust is not for a charitable purpose & is not one of the Re Endacott exceptions, will it be valid?
No, unless it is within Re Denley
What is Re Denley?
Left land ‘to be maintained & used for the purpose of a recreation or sports ground primarily for the benefit of employees’
Must be:
- Sufficiently tangible benefit
- Ascertainable individuals
What conditions must be satisfied for a private purpose trust to fall within Re Denley?
Sufficiently tangible benefit
(if benefit so indirect / intangible that it would not give those who stand to benefit the right to apply to get the trust terms enforced, will NOT pass)
and
For the benefit of ascertainable individuals
(ie. possible for those who are going to benefit from the trust to apply to the court to enforce it)
