Topic 2 - Purpose Trusts

Question 1

What are the two main types of purpose trusts?

Answer 1

Charitable purpose trusts and non-charitable purpose trusts

Charitable purpose trusts are recognized for public benefit, while non-charitable purpose trusts are valid only in exceptional cases known as the ‘Endacott’ exceptions.

Question 2

Why are charitable purpose trusts not void for infringement of the beneficiary principle?

Answer 2

They are enforceable by the Attorney-General and the Charity Commission

The practical responsibility for enforcement lies with the Charity Commission.

Question 3

What is the legal status of charity?

Answer 3

Charity is a status, not a legal form or structure

Charitable organizations can be established through various legal structures, including charitable purpose trusts.

Question 4

List some key benefits of having charitable status.

Answer 4

• No requirement to comply with the beneficiary principle
• More flexible rules on certainty of objects
• No limit on duration
• Cy-près doctrine allows application for other charitable purposes
• Tax benefits

Question 5

What must a non-charitable purpose trust’s purpose fall within to be valid?

Answer 5

A recognized exception to the beneficiary principle

These exceptions apply only when a trust is created in a will as classified in the case of Re Endacott.

Question 6

What is a key difference between charitable and non-charitable purpose trusts regarding enforceability?

Answer 6

Charitable purpose trusts are legally enforceable, while non-charitable purpose trusts are ‘trusts of imperfect obligation’.

Question 7

What is the rule against remoteness of vesting?

Answer 7

It applies to trusts with beneficiaries or charitable purposes as their objects.

Question 8

What is the rule against inalienability?

Answer 8

It only applies to non-charitable purpose trusts.

Question 9

What is the standard for certainty of purpose in charitable purpose trusts?

Answer 9

There is a relaxed standard; intention to apply property for a charitable purpose is sufficient.

Question 10

What happens if there is uncertainty in charitable purpose trusts?

Answer 10

The court will strive to resolve uncertainty and hold the trust valid if charitable intent is established.

Question 11

What is the significance of the case Re Astor’s Settlement Trusts [1952] Ch 534?

Answer 11

It illustrates that an attempted non-charitable purpose trust was found void due to uncertainty of purpose.

Question 12

What are the three criteria for a trust to have charitable status?

Answer 12

• Be for a charitable purpose
• Satisfy the public benefit test
• Be wholly and exclusively charitable

Question 13

What are the traditional ‘heads of charity’ outlined in the Charitable Uses Act 1601?

Answer 13

• The relief of poverty
• The advancement of education
• The advancement of religion
• Other purposes beneficial to the community

Question 14

What is the definition of poverty according to Charity Commission guidance?

Answer 14

Poverty means ‘going short’ and does not require destitution.

Question 15

Which trust was void in Re Gwyon and why?

Answer 15

A trust for providing clothing to boys was void because it did not require the boys to be poor.

Question 16

What does the advancement of education include according to Charity Commission guidance?

Answer 16

Training, research, and broader education in the development of individual capabilities.

Question 17

What is the definition of ‘religion’ under the Charities Act 2011?

Answer 17

Includes belief in more than one god or a religion that does not involve a belief in a god.

Question 18

What must charitable trusts under the head of advancement of religion do?

Answer 18

They must positively ‘advance’ the religion.

Question 19

What is the role of the Charity Commission in relation to charitable purpose trusts?

Answer 19

They provide a ‘scheme’ to specify the charitable purposes the property should be applied to.

Question 20

Fill in the blank: The _______ doctrine allows trust property to be applied for other charitable purposes if the specific trust fails.

Answer 20

cy-près

Question 21

True or False: Non-charitable purpose trusts can last indefinitely.

Answer 21

False

Question 22

What is the implication of the case law on the advancement of education?

Answer 22

It is not entirely consistent on what constitutes education.

Question 23

How can poverty be inferred according to case law?

Answer 23

For example, the provision of a soup kitchen implicitly indicates alleviation of poverty.

Question 24

What is the public benefit test in relation to charitable purposes?

Answer 24

A requirement that the purpose must benefit the public, not just a private individual.

Question 25

What is a significant case regarding the advancement of religion?

Answer 25

R v Registrar General of Births, Deaths and Marriages, which recognized Scientology as a religion.

Question 26

What must charitable trusts do in relation to religion?

Answer 26

Positively 'advance' the religion ## Footnote Advancement of religion means to promote it, spread its message, and sustain religious belief.

Question 27

How can the advancement of religion be achieved?

Answer 27

By way of religious services, pastoral or missionary work.

Question 28

What types of trusts fall under the advancement of religion?

Answer 28

* Support of a religious order (e.g., monastery or convent) * Public masses celebrating the dead * Repair of churchyards or burial grounds

Question 29

Define the advancement of health in charitable terms.

Answer 29

Includes prevention or relief of sickness, disease, or human suffering, and promotion of health.

Question 30

What does the Charity Commission say about advancing health?

Answer 30

Takes a broad view including complementary, alternative, or holistic methods with evidence for claimed benefits.

Question 31

What activities are included under the saving of lives?

Answer 31

* Rescue services (e.g., lifeboat associations, mountain rescue, cave rescue)

Question 32

What does Section 3(2)(c) of the Charities Act 2011 include?

Answer 32

* Rural and urban regeneration * Promotion of civic responsibility * Volunteering * Effectiveness of charities

Question 33

What is necessary for art to be considered charitable according to Charity Commission guidance?

Answer 33

The art needs to be of 'merit', often requiring expert evidence.

Question 34

What was the outcome of the case Royal Choral Society v IRC?

Answer 34

The trust to promote choral works was established as charitable based on educational purposes.

Question 35

What distinguishes charitable monuments?

Answer 35

Must be of cultural or historical importance; monuments to private individuals are unlikely to be charitable.

Question 36

What is defined as 'sport' under Section 3(2)(d) of the Charities Act 2011?

Answer 36

Sports or games promoting health by involving physical or mental skill or exertion.

Question 37

What does environmental protection include under Section 3(1)(i)?

Answer 37

Protection and improvement of the environment, conservation of wildlife, and promotion of sustainable development.

Question 38

What are the two elements of the public benefit requirement?

Answer 38

* Identifiable benefit * Public or section of the public

Question 39

What must be shown for a trust to be charitable regarding public benefit?

Answer 39

The purpose must be beneficial to the public or a section of the public, not a private class.

Question 40

What is the significance of the case Oppenheim v Tobacco Securities Trust Co Ltd?

Answer 40

Defined that beneficiaries cannot be tied to their relationship with a specific individual.

Question 41

What does Section 3(1)(l) relate to?

Answer 41

The efficiency of public services such as armed forces, police, fire, and ambulance services.

Question 42

What is the requirement for a trust to be wholly and exclusively charitable?

Answer 42

All its purposes must be charitable.

Question 43

What happens if a trust has both charitable and non-charitable purposes?

Answer 43

The trust may be void unless the non-charitable purpose is incidental or can be severed.

Question 44

Can charities pursue political objectives?

Answer 44

No, they cannot seek to change the law or promote political views.

Question 45

How does the public benefit test apply to the relief of poverty?

Answer 45

The class of beneficiaries can be defined by their relationship to a single person, unlike other charitable purposes.

Question 46

What is the distinction between a political purpose and political means?

Answer 46

Political purposes are non-charitable; political means can be used to achieve non-political objectives.

Question 47

What does the advancement of animal welfare include?

Answer 47

Providing for the welfare of animals and improving methods for slaughtering animals.

Question 48

What is required for trusts focused on specific animals?

Answer 48

They are generally not included unless upheld as non-charitable purpose trusts.

Question 49

What is a key requirement for the prevention or relief of poverty in charitable trusts?

Answer 49

The class of beneficiaries must not be defined by their relationship with a single person but must benefit a particular description of poor persons.

Question 50

In which case was it considered that trusts for 'poor relations' are altruistic enough to infer a public element?

Answer 50

Re Scarisbrick’s Will Trusts.

Question 51

What is a significant issue regarding fee-paying schools and the public benefit requirement?

Answer 51

Charities can charge fees but must not exclude the poor from benefiting from the charitable purpose.

Question 52

What must trustees provide if fees for education are unaffordable for the poor?

Answer 52

They must make provisions such as scholarships or access to facilities.

Question 53

What was the presumption regarding charitable trusts for the advancement of religion before the Charities Act 2006?

Answer 53

There was a presumption that they were for the public benefit.

Question 54

What was the outcome of the case regarding cloistered nuns and public benefit?

Answer 54

No public benefit could be proved for a gift on trust to cloistered nuns.

Question 55

What distinguishes charitable trusts pursuing human rights from those with political objectives?

Answer 55

Charitable trusts must pursue political activity as a means to achieve a charitable end.

Question 56

What does the cy-près doctrine allow in relation to charitable trusts?

Answer 56

It allows surplus funds from a failed charitable purpose trust to be applied to another charitable purpose.

Question 57

Under section 62 of the Charities Act 2011, what are the five grounds for altering the original purpose of a charitable gift?

Answer 57

* The original purpose has been fulfilled or cannot be carried out * The original purpose is workable but does not utilize all property * Combining property from similar trusts for effective use * The original purpose is no longer relevant * The purpose has ceased to be charitable or effective.

Question 58

What must a trust demonstrate to apply cy-près if there is an initial failure?

Answer 58

A general charitable intention.

Question 59

What is one key case related to general charitable intention and cy-près application?

Answer 59

Biscoe v Jackson (1887) 35 Ch 460.

Question 60

What did the court find in Re Good’s Will Trusts regarding a specific trust for rest homes?

Answer 60

It was too specific and did not demonstrate a general charitable intention.

Question 61

What are the three recognized exceptions to the beneficiary principle for non-charitable purpose trusts from Re Endacott?

Answer 61

* Trusts for the maintenance of particular animals * Trusts for the erection and maintenance of monuments and graves * Trusts for the saying of private masses.

Question 62

Can a trust for the care of a particular animal be charitable?

Answer 62

No, it would not pass the public benefit test.

Question 63

What is a requirement for trusts for monuments and graves to be considered charitable?

Answer 63

They must be of cultural or historical importance.

Question 64

What is the implication of a trust for conducting private masses with respect to its charitable status?

Answer 64

It will not pass the public benefit test and therefore is not charitable.

Question 65

What did Lord Evershed conclude regarding the purpose of a trust in Re Endacott?

Answer 65

The purpose was too uncertain to be charitable and did not fall within a recognized class of non-charitable purpose trusts.

Question 66

What are non-charitable purpose trusts sometimes referred to as?

Answer 66

Trusts of imperfect obligation.

Question 67

What is a practical point to consider regarding non-charitable purpose trusts?

Answer 67

Check that the appointed trustee is willing to carry out the terms of the trust.

Question 68

What must a non-charitable purpose trust include to comply with perpetuity requirements?

Answer 68

An express perpetuity clause.