Purpose Trusts

Morice v Bishop of Durham (1804)

If there are no beneficiaries, there is no trust, beneficiary principle

Re Astor’s Settlement Trusts (1952)

Failed as there was no guidance on purposes and too much uncertainty for trustees

Perpetuities

• Issues about money being held for too long, current limit is 21 years

• Trusts must last no longer than 21 years and trustees should be able to spend all of the capital at any time should the trust need ending

Brown v Burdett (1882)

If the purpose of the trust is not seen as useful, it will not be allowed

Advantages of charitable purpose trust status

• Beneficiary principle

  • Not subject to it as they are enforced by the Attorney General and governed by the Charity Commission (registration needed)

• Certainty

  • Also not subject to this, no matter how vague

• Perpetuities

  • Not subject to this rule either

• Lapse

  • If a Charity no longer exists at the testator’s death, money is redirected to a similar charity

• Tax benefits

  • Major reductions on inheritance tax, Gift Aid scheme

Charitable purposes, s3(1) of the Charities Act 2011

• Poverty, education, health, citizenship, arts, culture, heritage, science, amateur sport, human rights, social justice, public services, military, animal welfare…

• Re Coulthurst (1951), prevention/relief of poverty does not only mean financial assistance

• Education goes beyond the classroom, but charity subject must have educational value

• Religion includes monotheism, polytheism, and lack of faith, so long as there is a public connection (Scientology excluded)

• Health involves combating illness and promoting healthy lifestyles

• Citizenship refers to community development

• Arts, culture, heritage and science charities must hv=ave genuine merit

• Amateur sport comes under “healthy recreation”

• Human rights and social justice can be at home

• Public services can refer to those currently serving or wider history

McGovern v AG (1982)

Political purposes not allowed

Hanchett-Stanford v AG (2009)

Refers to objectives that can only be achieved through law changes

Baldry v Feintuck (1972)

Political activities must be in tandem with main charitable purpose

Exclusively charitable

• If any part of a trust’s purpose is not charitable, it will not have charitable status

• McGovern, protecting political prisoners and advocating for the abolition of torture prevented Amnesty Intenrnational from being a registered charity

• All funds must be used for charitable purposes

Public benefit

• S4 of Charities Act 2001 requirement

• s4(2) of Charities Act 2011, public benefit must be proven

• No definition in the statute, but Law Commission has guidance based on case law

Benefit aspect

• Must be beneficial and harms must not outweigh benefits

• National Anti-Vivisection Society v IRC (1948), denied status because of harmful research and political aims

Public aspect

• Must be large enough (even if limited to a small village), cannot be incidental personal benefit

• Restrictions based on location or charitable need are acceptable

• Restrictions must not be unreasonable

IRC v Baddeley (1955)

Restriction based on both location and religion too limiting

Re Compton (1945), Oppenheim v Tobacco Securities Trust (1951)

Can’t be restricted based on personal nexus (family or employer)

Independent Schools Council v Charities Commission for England and Wales (2011)

Private schools could only be charities if there were direct benefits for less affluent students

Re Astor’s Settlement Trust (1952)

Trusts for the care of certain animals and graves and funeral monuments are exceptions to the beneficiary principle

Re Denley’s Trust Deed (1968)

Directly for the benefit of employees from a certain company, so deemed valid

Roxburgh J in Re Astor

Non-charitable purpose must be in terms “which embody definite concepts, and the means by which trustees are to try to attain them must also be prescribed with a sufficient degree of certainty.”