Trusts 7 Purpose Trusts

Saunders v Vautier

Allows beneficiaries with vested interest to bring a trust to an end and take control of the property

Perpetuity RUles

Rule against Remoteness of Vest and against Inalienability

Rule against Remoteness of Vesting

* Applies to trusts with people or charities as their objects
* A person or charity must obtain a vested interest in the trust property with the recognised “perpetuity period”

Rule against Inalienability

* Applies to non-charitable purpose trusts
* Assets cannot be tied up on trust for longer than the common law perpetuity period of specified life in being plus 21 years

s5(1) Perpetuities and Accumulations Act 2009

Remoteness of vesting period is 125 years but can be reduced

s7 PAA 2009

“Wait and See” Rule for Remoteness of Vesting means that the trust can subsist until it is clear the interest cannot vest within the perpetuity period

s8 PAA 2009

Class Closing Rules - Can save a trust by excluding objects that may cause it to fail as their interest would vest outside the perpetuity period

Charitable Purpose Trusts

recognised despite the absence of ascertainable beneficiaries because they are for the public benefit 

Non-Charitable Purpose Trusts

recognised as valid in specific, exceptional cases called the Endacott Exceptions

Requirements for Charitable Purpose Trusts

Be for a charitable purpose + satisfy a public benefit test + be wholly and exclusively charitable

Re Astor’s Settlement Trusts

An attempted non-charitable purpose trust was found to be void in part because the intended purposes were too uncertain

Charities Act 2011

Governs charitable purpose trusts

12 Heads of Charity

1. Prevention/ relief of poverty
2. Advancement of Education
3. advancement of religion 


4. advancement of health or the saving of lives 


5. advancement of citizenship or community development 


6. advancement of the arts, culture, heritage or science 


7. advancement of amateur sport 


8. advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity 


9. advancement of environmental protection or improvement  


10. relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage 


11. advancement of animal welfare 


12. promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services 

Re Coulthurst

Poverty means “going short”

Re Gardom

Poverty does not have to mean destitution

RE Young

Poverty is a relative concept and judged against a person’s status in life i.e. distressed gentlefolk

Biscoe v Jackson

Poverty can be inferred ie a soup kitchen

Re Sanders’ WT

Working class does not indicate a poor person

Re Gott

Scholarships can be seen as advancing education

AG v Margaret and Regius Professors in Cambridge

Funding of lectureships can be seen as advancing education

London Hospital Medical College v IRC

Ancillary organisation in an educational institution can be seen as advancing educaiton

Incorporate Council of Law Reporting for England and Wales v AG

Dissemination of knowledge in publications can be seen as advancing education

Re Shaw

An increase in knowledge is not the same as advancing education

s3(2)(a) Charities Act 2011

Religion can involve a belief in one, more than one or no god

R v Registrar General of Births, Deaths and Marriages

Scientology held to be a religion despite no God

United Grand Lodge of Ancient Free and Accepted Masons of England v Holborn Borough Council

the religion must be advanced to be charitable

Re Banfield

Supporting a religious order ie a monastery is advancing religion

section 3(2)(c) Charities Act 2011

Community development includes rural and urban regeneration and promoting civic responsibility

Charitable Art

Must be of merit, the assessment of which may require expert evidence

S3(2)(d) Charities Act 2011

Sport includes any activity which promotes health by involving physical or mental skill or exertion

S3(1)(h) Charities Act 2011

Advancement of human rights etc must not stray into political objectives

s3(1)(i) Charities Act 2011

Environmental protection includes the improvement of the environment

s3(2)(e) Charities Act 2011

Relief of those in need because of youth, age, ill health, disability, financial hardship or other disadvantage

Joseph Rowentree Memorial Trust Holding Association v Attorney General

Relief for those in need does not require poverty

Public Benefit Requirement

The benefit must be identifiable and benefit the public or a section of the public

Re Hummeltenberg

The settlor’s belief that a charity is beneficial is not relevant, it is assessed objectively

Satisfying the test for a section of the public

* Possible beneficiaries must not be negligible in number
* They must not be distinguished by their relationship to another individual

Oppenheim v Tobacco Securities Trust Co Ltd

A company that employed over 100,000 staff could not form a charitable trust for them as their relationship was defined by a particular individual

Charities can focus on certain beneficiaries provided that…

* They have proper reasons for doing so. 
* The poor are not excluded from benefit. 
* It will focus on or are sufficient section of the public for the charity's purpose.

McGovern v Attorney General

A trust set up by Amnesty International intended to reverse government policy and so was held not to be charitable

Re Scarisbrick’s Will Trusts

trusts for poor relations are of so altruistic a character that the public element may be inferred

The Cy-Pres Doctrine

provides that where a charitable purpose trust fails, any surplus funds will be applied to another charitable purpose by way of a scheme established by the Charity Commission or court

s62 Charities Act 2011

Provides the five grounds for Cy-Pres Doctrine

Grounds for Cy-Pres Doctrine

1. Original Purpose fulfilled or cannot be carried out
2. surplus funds
3. combining trust property is more effective
4. original purpose no longer relevant or suitable
5. Purpose has been provided for, is no longer charitable in law or is no longer a suitable or effective method of using the property

Endacott Exceptions

1. Trusts for the maintenance of particular animals
2. Trusts for the erection and maintenance of monuments and graves
3. Trusts for the saying or private masses