Charitable and Non-Charitable
Purpose Trusts
Assessment support
TUTORIAL 3
Problem Question for exam!!
Exceptions to the beneficiary principle
Introduction
So far, we’ve looked at express private trusts – trusts created intentionally for the
benefit of a person/group of people
Now we’re moving on to look at express purpose trusts – trusts that have been
created for particular purposes (not for people)
Charitable and non-charitable purpose trusts is a separate topic with its own
question in the assessment
The problem with purpose trusts
“…there must be somebody, in whose favour the Court can decree performance”
(Morice v Bishop of Durham (1805) 10 Ves 522 (William Grant MR)
Express trusts must comply with the beneficiary principle – there must be
a living human beneficiary to enforce the trust
Examples: Morice v Bishop of Durham: a trust for ‘such objects of
benevolence and liberality as the Bishop of Durham in his own discretion
shall most approve of’ was void; Re Shaw [1957] 1 WLR 729: a trust for
introducing a new 40 letter phonetic alphabet was void
Where a trust does not comply with the beneficiary principle, the trust will be void
– the property will be held on resulting trust for the settlor OR will fall into residue
Lack of meaningful obligation where there’s no beneficiary
Charitable and Non-Charitable Purpose Trusts 1
, Uncertain or vague purposes
E.g. in Re Astor’s Settlement Trust [1952] Ch 534: trusts for varied
purposes including the maintenance of good understanding between nations
and the preservation of the independence and integrity of newspapers void
for 1) breaching beneficiary principle and 2) uncertain purposes
Could be resolved by better drafting!
They often do not comply with the perpetuity rules:
Express private trusts for people – property must vest within 125 years
(Perpetuities and Accumulations Act 2009)
Purpose trusts not subject to the same requirements – we’ll look at all we
need to know about perpetuities and purpose trusts in these lectures
Public policy concerns – capricious purposes e.g., Brown v Burdett (1882) LR 21
Ch D 667 CH D – trust for the purpose of boarding up the windows and doors of
a house for 20 years was void
The exceptions to the beneficiary principle
Charitable trusts – what are they?
Charity = institution for charitable purposes (s1 Charities Act 2011). A
charitable trust is one way of giving money to a charity (not all charities are
Charitable and Non-Charitable Purpose Trusts 2
, trusts, and you can create a charitable trust without giving the money to charity)
Charitable trusts are express public trusts – they are trusts for purposes that
benefit the public rather than individuals
Advantages of charitable trusts:
No need for ascertainable beneficiaries. They can be enforced by the
Attorney General/Charity Commission (an organisation with wide
responsibilities over charities)
Charitable trusts can last forever (though note that the property must vest in
the charity within 125 years)
Not subject to the rules on certainty of objects, but the purpose must be
certain and the purposes must be exclusively charitable (more on that in a
moment)
Tax advantages for charities
Requirements for validity
Charitable and Non-Charitable Purpose Trusts 3
Purpose Trusts
Assessment support
TUTORIAL 3
Problem Question for exam!!
Exceptions to the beneficiary principle
Introduction
So far, we’ve looked at express private trusts – trusts created intentionally for the
benefit of a person/group of people
Now we’re moving on to look at express purpose trusts – trusts that have been
created for particular purposes (not for people)
Charitable and non-charitable purpose trusts is a separate topic with its own
question in the assessment
The problem with purpose trusts
“…there must be somebody, in whose favour the Court can decree performance”
(Morice v Bishop of Durham (1805) 10 Ves 522 (William Grant MR)
Express trusts must comply with the beneficiary principle – there must be
a living human beneficiary to enforce the trust
Examples: Morice v Bishop of Durham: a trust for ‘such objects of
benevolence and liberality as the Bishop of Durham in his own discretion
shall most approve of’ was void; Re Shaw [1957] 1 WLR 729: a trust for
introducing a new 40 letter phonetic alphabet was void
Where a trust does not comply with the beneficiary principle, the trust will be void
– the property will be held on resulting trust for the settlor OR will fall into residue
Lack of meaningful obligation where there’s no beneficiary
Charitable and Non-Charitable Purpose Trusts 1
, Uncertain or vague purposes
E.g. in Re Astor’s Settlement Trust [1952] Ch 534: trusts for varied
purposes including the maintenance of good understanding between nations
and the preservation of the independence and integrity of newspapers void
for 1) breaching beneficiary principle and 2) uncertain purposes
Could be resolved by better drafting!
They often do not comply with the perpetuity rules:
Express private trusts for people – property must vest within 125 years
(Perpetuities and Accumulations Act 2009)
Purpose trusts not subject to the same requirements – we’ll look at all we
need to know about perpetuities and purpose trusts in these lectures
Public policy concerns – capricious purposes e.g., Brown v Burdett (1882) LR 21
Ch D 667 CH D – trust for the purpose of boarding up the windows and doors of
a house for 20 years was void
The exceptions to the beneficiary principle
Charitable trusts – what are they?
Charity = institution for charitable purposes (s1 Charities Act 2011). A
charitable trust is one way of giving money to a charity (not all charities are
Charitable and Non-Charitable Purpose Trusts 2
, trusts, and you can create a charitable trust without giving the money to charity)
Charitable trusts are express public trusts – they are trusts for purposes that
benefit the public rather than individuals
Advantages of charitable trusts:
No need for ascertainable beneficiaries. They can be enforced by the
Attorney General/Charity Commission (an organisation with wide
responsibilities over charities)
Charitable trusts can last forever (though note that the property must vest in
the charity within 125 years)
Not subject to the rules on certainty of objects, but the purpose must be
certain and the purposes must be exclusively charitable (more on that in a
moment)
Tax advantages for charities
Requirements for validity
Charitable and Non-Charitable Purpose Trusts 3
