Lecture 5: Non- Charitable Purpose trusts: Chapter 4 4.2 and 4.3 – pages 168 to 208
The general rule of the beneficiary principle- a trust generally needs human beneficiaries
unless it’s a charitable trust for a trust for purposes.
The beneficiary principle is a requirement that there must be an ascertainable beneficiary or
beneficiaries for a trust to be valid.
A purpose trust is a type of trust which has no beneficiaries, but instead exists for advancing
some non-charitable purpose of some kind.
It is a trust which is set up to achieve a non-charitable purpose rather than to benefit a
human beneficiary.
The beneficiary principle requires that a valid trust must have a beneficiary (Morice v Bishop
of Durham)
The beneficiary p
However, there are exceptions to this:
Monuments: the upkeep of monuments and graves
Animals: the upkeep of individual animals
Masses: the saying of private masses (religious services in church)
- They are trusts of imperfect obligations because the trustee does not have to carry
out the obligations and there are no human beneficiaries to enforce it. The courts
have taken a strict approach to this type of purpose trusts because there is no
human beneficiary.
Requirements of a non-charitable purpose trust:
- They are general barriers to the enforcement of purpose trusts which will limit their
application
Perpetuity rules:
- Any purposes trust which is held to be valid must comply with the rules of perpetuity
- The two rules relevant to purpose trusts are:
Remoteness of vesting
Old rules: Apply to wills made and instruments of trust established before the
commencement date of April 2010.
The property must not vest in the beneficiary outside of the perpetuity period, which is a life
in being plus 21 years. The old common law rule was that if this could fail then the trust was
void from the start.
Section 15 Perpetuities and Accumulations Act 1964 – which provides that the trustee can
‘wait and see’ if the property will vest within 80 years.
, New rules: The Perpetuities and Accumulations Acts of 1964 applies as of 2010 and extends
the period to 125 years, to trusts made after 6 April 2010.
Inalienability: a settlor cannot rule from the grave. To prevent this, a private purpose trust
cannot continue forever, unlike a charitable trust. So a trust for purpose must not last
longer than a human life in being plus 21 years.
The perpetuity period does not have to be legally defined. However, it must be clear that it
is within that period. In Re Hooper, the period was limited by the words, ‘so long as the
trustees can legally do so.’ This was held to be a valid declaration of the perpetuity period.
Capriciousness
A purpose trust can be set aside by the courts if the purpose is capricious.
- In Re Shaw’s WT, the money left for the development of a new 40 letter alphabet served
no valid purpose, and thus the trust was set aside. This principle would apply to all trusts,
but is particularly relevant to a pure purpose trust.
The anomalous exceptions
Monuments:
A trust for the upkeep will be charitable. However, a trust for the upkeep of an individual
monument or grave which is not part of the fabric of a church is not charitable. This is
because the individual grave has no public benefit, whereas the upkeep of the church does.
The bequest itself must be sufficiently certain in its purpose. In Re Endacott a residual gift to
a Parish Council to provide a ‘useful memorial to myself’ was not valid as it was too broad. It
was unclear what was meant by a ‘useful’ memorial.
The perpetuity period was an issue in Musset v Bingle. A bequest to erect a monument to
the testator’s first husband was valid, but a second bequest for its upkeep was void. It did
not fail for perpetuity in relation to the erection of the monument as it was assumed that
the monument would be erected within the period. However, no period was stipulated for
the period of maintenance.
Animals
Trusts for the support and upkeep of animals in general may be charitable and enforceable,
such as a trust to benefit the RSPCA. However, trusts for the upkeep of particular animals
can only be enforceable as a non-charitable purpose trust. In Re Dean, a trust for the
upkeep of horses and hounds was held to be valid. The perpetuity period was 50 years, ‘if
they live that long’, and was held to be valid. It was presumed that this was because the
animals were unlikely to live that long, but perpetuity was not addressed in that case.
Masses
The general rule of the beneficiary principle- a trust generally needs human beneficiaries
unless it’s a charitable trust for a trust for purposes.
The beneficiary principle is a requirement that there must be an ascertainable beneficiary or
beneficiaries for a trust to be valid.
A purpose trust is a type of trust which has no beneficiaries, but instead exists for advancing
some non-charitable purpose of some kind.
It is a trust which is set up to achieve a non-charitable purpose rather than to benefit a
human beneficiary.
The beneficiary principle requires that a valid trust must have a beneficiary (Morice v Bishop
of Durham)
The beneficiary p
However, there are exceptions to this:
Monuments: the upkeep of monuments and graves
Animals: the upkeep of individual animals
Masses: the saying of private masses (religious services in church)
- They are trusts of imperfect obligations because the trustee does not have to carry
out the obligations and there are no human beneficiaries to enforce it. The courts
have taken a strict approach to this type of purpose trusts because there is no
human beneficiary.
Requirements of a non-charitable purpose trust:
- They are general barriers to the enforcement of purpose trusts which will limit their
application
Perpetuity rules:
- Any purposes trust which is held to be valid must comply with the rules of perpetuity
- The two rules relevant to purpose trusts are:
Remoteness of vesting
Old rules: Apply to wills made and instruments of trust established before the
commencement date of April 2010.
The property must not vest in the beneficiary outside of the perpetuity period, which is a life
in being plus 21 years. The old common law rule was that if this could fail then the trust was
void from the start.
Section 15 Perpetuities and Accumulations Act 1964 – which provides that the trustee can
‘wait and see’ if the property will vest within 80 years.
, New rules: The Perpetuities and Accumulations Acts of 1964 applies as of 2010 and extends
the period to 125 years, to trusts made after 6 April 2010.
Inalienability: a settlor cannot rule from the grave. To prevent this, a private purpose trust
cannot continue forever, unlike a charitable trust. So a trust for purpose must not last
longer than a human life in being plus 21 years.
The perpetuity period does not have to be legally defined. However, it must be clear that it
is within that period. In Re Hooper, the period was limited by the words, ‘so long as the
trustees can legally do so.’ This was held to be a valid declaration of the perpetuity period.
Capriciousness
A purpose trust can be set aside by the courts if the purpose is capricious.
- In Re Shaw’s WT, the money left for the development of a new 40 letter alphabet served
no valid purpose, and thus the trust was set aside. This principle would apply to all trusts,
but is particularly relevant to a pure purpose trust.
The anomalous exceptions
Monuments:
A trust for the upkeep will be charitable. However, a trust for the upkeep of an individual
monument or grave which is not part of the fabric of a church is not charitable. This is
because the individual grave has no public benefit, whereas the upkeep of the church does.
The bequest itself must be sufficiently certain in its purpose. In Re Endacott a residual gift to
a Parish Council to provide a ‘useful memorial to myself’ was not valid as it was too broad. It
was unclear what was meant by a ‘useful’ memorial.
The perpetuity period was an issue in Musset v Bingle. A bequest to erect a monument to
the testator’s first husband was valid, but a second bequest for its upkeep was void. It did
not fail for perpetuity in relation to the erection of the monument as it was assumed that
the monument would be erected within the period. However, no period was stipulated for
the period of maintenance.
Animals
Trusts for the support and upkeep of animals in general may be charitable and enforceable,
such as a trust to benefit the RSPCA. However, trusts for the upkeep of particular animals
can only be enforceable as a non-charitable purpose trust. In Re Dean, a trust for the
upkeep of horses and hounds was held to be valid. The perpetuity period was 50 years, ‘if
they live that long’, and was held to be valid. It was presumed that this was because the
animals were unlikely to live that long, but perpetuity was not addressed in that case.
Masses
