Charitable and Non-Charitable Purpose Trusts

These flashcards cover the legal principles, validity rules, and key case law related to charitable and non-charitable purpose trusts under English law and the SQE1 syllabus.

Purpose trusts

A form of express trust where property is used to achieve an objective or advance a cause, rather than directly distributing property to designated individuals.

Beneficiary principle

A general rule stating that trusts must have beneficiaries who can enforce them in court; purpose trusts without human beneficiaries are generally void as the court cannot control them.

Rule against inalienability of capital

A perpetuity rule requiring that non-charitable purpose trusts must not lock away capital for more than $21$ years, unless the trustees can spend all capital to end the trust at any time.

Section 53(1)(b) of the LPA 1925

The formal requirement stating that if a purpose trust declaration involves land, it must be evidenced in signed writing.

Re Shaw [1957]

A case where a trust for research into a 40-letter alphabet failed because it was for the benefit of a purpose rather than individuals, and thus the court could not control it.

Charitable purpose

One of thirteen purposes listed in $s\,3(1)$ of the Charities Act 2011, such as the relief of poverty, the advancement of education, or the advancement of religion.

Re Coulthurst [1951]

A case defining poverty in the context of charitable trusts as referring to persons who 'have to go short' in the ordinary meaning of that term, rather than absolute destitution.

Public benefit (identifiable benefits)

One aspect of the public benefit test requiring that the trust's purpose has clear benefits related to the charity's goals and that any detriments are outweighed by the primary benefit.

Personal nexus test

A test for public benefit in education trusts where a group linked by a relationship to a specific individual or company (e.g., family or common employment) is not considered a sufficient section of the public.

Oppenheim v Tobacco Securities Trust Co Ltd [1951]

A case where a trust for the education of employees' children failed the public benefit test because the beneficiaries were linked by a personal nexus of common employment.

Class within a class test

A restriction on charitable status where arbitrary limitations (e.g., residents of a certain area who are also of a specific denomination) may prevent a group from being a valid section of the public.

Exclusively charitable

A requirement for charitable status meaning the trust must not have non-charitable or political purposes, and profits must be ploughed back into the charitable purpose.

Political purposes

Purposes such as supporting a political party or campaigning for a change in the law or government policy, which generally prevent a trust from being charitable.

McGovern v Attorney General [1982]

A case where Amnesty International was denied charitable status for a trust because its purposes included campaigning for the release of prisoners and the abolition of torture, which were deemed political.

Re Denley trust

A valid non-charitable purpose trust where a tangible benefit to an ascertainable class of individuals gives them standing to enforce the trust, thereby overcoming the beneficiary principle.

Trusts of imperfect obligation

Anomalous purpose trusts that are valid but unenforceable, specifically limited to cases for the care of specific animals or the maintenance of graves and tombs.

Rule for poverty trusts public benefit

A generous exception where a trust to relieve poverty among 'my family' or 'my relatives' is considered charitable, despite the small number of beneficiaries.

Neville Estates v Madden [1962]

A case establishing that religious trusts satisfy the public benefit test if the congregation mixes with their fellow citizens in the world.