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Non Charitable Purpose Trust

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Date : 08/09/2012

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Uploaded by : Zaki
Uploaded on : 08/09/2012
Subject : Law

Non-Charitable Purpose Trust

What is this

. A purpose trust is a type of trust which has no beneficiaries, but instead exists for advancing some non-charitable purpose of some kind.

. A trust which is set up to achieve a non - charitable purpose rather than to benefit a human beneficiary.

. Trusts for charitable purposes are also technically purpose trusts, but they are usually referred to simply as charitable trusts. People referring to purpose trusts are usually taken to be referring to non-charitable purpose trusts.

Objections to Non-Charitable Purpose Trust

Trusts which fail the test of charitable status usually fail as non-charitable purpose trusts. This was held in Re Shaw [1957] 1 WLR 579, concerning the will of George Bernard Shaw - a provision to develop a new 40 letter alphabet was struck down as not being charitable, as defined by law, and the provision failed as a non-charitable purpose trust. For definitive statement : Morice v Bishop of Durham (1805) 10 Ves 522 "Every trust must have an object; there must be somebody in whose favour the court can decree specific performance." Re Astor's STs [1952] Ch 534 Trust for preservation of independent newspapers void for want of a human beneficiary to enforce.

Normally beneficiaries are present to enforce their rights or receive benefits, and in Charitable trust, The Attorney-General is there to look after the interest. Trusts in favour of non-human beneficiaries/non- charitable purposes - there is no-one to enforce. Where the objects of a trust are a purpose rather than an individual or individuals, there is much greater risk that a trust would not be enforceable due to lack of certainty. Cases such as Morice v Bishop of Durham (1804) 9 Ves Jr 399 and Re Astor [1952] Ch 534 re-affirm the court`s disinclination to enforce trusts that are not specific and detailed. Similarly Re Endacott [1960] Ch 232 CA: "some useful memorial to myself". Failed for uncertainty.

Perpetuity By Perpetuity we mean something which last forever, there is no end to it. Any trust purporting to be perpetual will fail But - trusts expressly limited to 21 years or even a vague restriction then it will not fail. Re Hooper [1932] 1 Ch 38 "so long as they can legally do so" Also Pirbright v Salwey [1896] WN 86 "so long as the law allows".

Settlor can expressly state the trust is limited to a nominated life in being and 21 years or just 21 years ( Re Hooper). If no stipulation as to the period then the trust is void unless it must necessarily determine within the perpetuity period 21 years in most cases. If trust might exceed period then will be void.

Public Policy

Capricious, or fanciful "useless" purposes are void as a matter of public policy

See Brown v Burdett (1882) 21 Ch.D 667 bricking up windows in house - "useless, undisposed of property"

See also Scottish cases, e.g. McCaig v University of Glasgow (1907) S.C. 231 money for memorials to family - "a sheer waste of money"

Are they trusts at all? They should therefore be void. Many have been held valid as trusts but are unenforceable. Hence they are known as trusts of imperfect obligation.

Five Exceptions to Above

A Considerable Case ;

Re Endacott [1959] EWCA Civ 5 is an English trusts law case, concerning the policy of the "beneficiary principle. It held that outside of trusts for animals, graves and saying private masses (and hunting foxes, till the Hunting Act 2004[4]) no trusts can be made for purposes that are non-charitable. Mr Albert Endacott wrote in his will that he would give his son some houses and a factory, and then all the rest to the North Tawton Devon Parish Council 'for the purpose of providing some useful memorial to myself' unless his wife was still alive, in which case the interest should be paid to her. Lord Evershed MR held that the trust was invalid

1. Trusts for the erection or maintenance of monuments or graves e.g. Re Hooper (graves and monuments) Mussett v Bingle (monument). Monuments must be modest.

2. Trusts for the saying of masses e.g. Bourne v Kean [1919] AC 815 HL.

3. Trusts for the maintenance of particular animals e.g. Re Dean, Pettingall v Pettingall.

4. Trusts for the benefit of unincorporated Associations.

5. Fox Hunting.

Key Points To Remember

1. A non charitable purpose trust is a type of trust which has no beneficiaries, but instead exists for advancing some non-charitable purpose of some kind.

2. There objections to these trust for no beneficiaries, uncertain, perpetuity etc.

3. There some trust which are valid and regarded as exceptions, as mentioned above.

By this stage you must Understand ; What is a purpose trust (non-charitable)

Self Assessment Question ; Why a purpose trust is non charitable.

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