Purpose trusts in English law
Encyclopedia
A purpose trust in English law
is a trust created for the fulfilment of a purpose, not for the benefit of a person. With the exception of charitable trusts
, these are normally considered invalid by the courts; most often because they have no beneficiaries, and therefore nobody who can enforce the trust. As well as charitable trusts, there are several exceptions to the rules against purpose trusts. If the requirement to fulfil a purpose is a request, rather than an obligation, the trust is valid; a trust will also be found valid if, while being for a purpose, it involves beneficiaries in some respect. Purpose trusts can also be valid if they are for the erection or maintenance of tombs and memorials (assuming such memorials are not overly grandiose), the maintenance of animals, and arguably the saying of masses, although these must all obey the rule against perpetuities
and not continue for more than 21 years after the testator
's death.
are also for the benefit of an abstract purpose, charitable purposes for the public benefit are an exception to the standard rule regarding purpose trusts, which is that they are void. The invalidity of purpose trusts is commonly said to have been set in Morice v Bishop of Durham. In Leahy v Attorney-General for New South Wales
, Lord Simonds
set the principle that:
Alastair Hudson
, Professor of Equity and Law at Queen Mary, University of London
, argues that this is an example of the "strict" rule against purpose trusts. A looser application was found in Cocks v Manners, a case with almost identical facts, where the court decided that the trust was valid as a gift to every member of the order individually, with the Mother Superior acting as a trustee.
of what the trust's goal is; most purpose trusts are for vaguely worded requests, such as the "maintenance of good relations between nations [and] the preservation of the independence of newspapers" found in Re Astor. Secondly, there is a general principle that there must have ascertainable beneficiaries. This is because, as said in Morice, "Every trust (other than a charitable one) must have a definite object. There must be somebody, in whose favour the court can decree performance". If there are no beneficiaries, nobody can enforce the trust in the event that the trustees fail to carry out their duties. The third objection is that of perpetuity; a trust cannot exist for all time. The standard rule is that no trust can be drafted so that any interest lasts for longer than the life of the beneficiary, plus 21 years. In addition, no trust can be found valid if its interests last longer than this period. Purpose trusts, without beneficiaries, would cause unnecessary confusion if found valid because there is no marker to measure its existence by. Purpose trusts may also be held to be invalid as a matter of public policy, where the courts conclude that the purpose is "eccentric or capricious and the court regards it as useless".
In addition, the courts have recognised exceptions to the rules against purpose trusts. The erection and maintenance of tombs and monuments is a valid trust, as in Musset v Bingle; this will not be held valid if the gift violates the perpetuity rule, or if the scale of the monument is "capricious and wasteful". Trusts to maintain animals may also be valid, as in Pettingall v Pettingall. Again, this is limited to the 21 years after the donor's death permitted by trusts law. Historically, religious masses have been considered an exception to the rules against purpose trusts, but in Re Hetherington, the saying of a public mass was recognised as a valid charitable cause. This may mean that it is a superseded category, but there is still the issue of private masses.
English trusts law
English trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...
is a trust created for the fulfilment of a purpose, not for the benefit of a person. With the exception of charitable trusts
Charitable trusts in English law
Charitable trusts in English law are a form of express trust dedicated to charitable goals. There are a variety of advantages to charitable trust status, including exception from most forms of tax and freedom for the trustees not found in other types of English trust. To be a valid charitable...
, these are normally considered invalid by the courts; most often because they have no beneficiaries, and therefore nobody who can enforce the trust. As well as charitable trusts, there are several exceptions to the rules against purpose trusts. If the requirement to fulfil a purpose is a request, rather than an obligation, the trust is valid; a trust will also be found valid if, while being for a purpose, it involves beneficiaries in some respect. Purpose trusts can also be valid if they are for the erection or maintenance of tombs and memorials (assuming such memorials are not overly grandiose), the maintenance of animals, and arguably the saying of masses, although these must all obey the rule against perpetuities
Rule against perpetuities
The common law rule against perpetuities forbids some future interests that may not vest within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants"...
and not continue for more than 21 years after the testator
Testator
A testator is a person who has written and executed a last will and testament that is in effect at the time of his/her death. It is any "person who makes a will."-Related terms:...
's death.
Definition
A purpose trust is a trust created for the fulfilment of a purpose, not for the benefit of a person. While charitable trustsCharitable trusts in English law
Charitable trusts in English law are a form of express trust dedicated to charitable goals. There are a variety of advantages to charitable trust status, including exception from most forms of tax and freedom for the trustees not found in other types of English trust. To be a valid charitable...
are also for the benefit of an abstract purpose, charitable purposes for the public benefit are an exception to the standard rule regarding purpose trusts, which is that they are void. The invalidity of purpose trusts is commonly said to have been set in Morice v Bishop of Durham. In Leahy v Attorney-General for New South Wales
Leahy v Attorney-General for New South Wales
Leahy v Attorney-General for New South Wales was an Australian court case involving a charitable trust, heard by the High Court of Australia in 1959....
, Lord Simonds
Gavin Simonds, 1st Viscount Simonds
Gavin Turnbull Simonds, 1st Viscount Simonds PC, KC was a British judge, politician and Lord High Chancellor of Great Britain.-Background and education:...
set the principle that:
Alastair Hudson
Alastair Hudson
Alastair Hudson is an English barrister and legal academic. He is a National Teaching Fellow, a Fellow of the Higher Education Academy, and a Fellow of the Royal Society of Arts...
, Professor of Equity and Law at Queen Mary, University of London
Queen Mary, University of London
Queen Mary, University of London is a public research university located in London, United Kingdom and a constituent college of the federal University of London...
, argues that this is an example of the "strict" rule against purpose trusts. A looser application was found in Cocks v Manners, a case with almost identical facts, where the court decided that the trust was valid as a gift to every member of the order individually, with the Mother Superior acting as a trustee.
Objections
There are a variety of objections to the idea of purpose trusts being valid. Firstly, English trusts law requires there be certaintyThree certainties
The three certainties refer to a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object...
of what the trust's goal is; most purpose trusts are for vaguely worded requests, such as the "maintenance of good relations between nations [and] the preservation of the independence of newspapers" found in Re Astor. Secondly, there is a general principle that there must have ascertainable beneficiaries. This is because, as said in Morice, "Every trust (other than a charitable one) must have a definite object. There must be somebody, in whose favour the court can decree performance". If there are no beneficiaries, nobody can enforce the trust in the event that the trustees fail to carry out their duties. The third objection is that of perpetuity; a trust cannot exist for all time. The standard rule is that no trust can be drafted so that any interest lasts for longer than the life of the beneficiary, plus 21 years. In addition, no trust can be found valid if its interests last longer than this period. Purpose trusts, without beneficiaries, would cause unnecessary confusion if found valid because there is no marker to measure its existence by. Purpose trusts may also be held to be invalid as a matter of public policy, where the courts conclude that the purpose is "eccentric or capricious and the court regards it as useless".
Evasions and exceptions
There are several ways to evade the rules against purpose trusts. In Re Denley, land was given in trust to provide a sports ground "primarily for the benefit of the employees of [a certain] company and secondarily for the benefit of such other persons as the trustees shall allow to use the same". Although for the benefit of a purpose, the wording identified a class of beneficiaries, which allowed the courts to find it valid. One way to evade the rule, therefore, is to create a trust that benefits a group of people but is confined to a purpose. The judgment of Lloyd LJ, given in R v District Auditor, ex parte West Yorkshire Metropolitan County Council, seems to indicate that the test of certainty for Denley trusts is the same as for discretionary trusts. A second way of evading the rules is found in Re Tyler, where money was donated to a charity, with a request to maintain the donor's family vault; if this vault was not maintained, the money would go elsewhere. Because there was no obligation to maintain the vault, it was not considered a purpose trust.In addition, the courts have recognised exceptions to the rules against purpose trusts. The erection and maintenance of tombs and monuments is a valid trust, as in Musset v Bingle; this will not be held valid if the gift violates the perpetuity rule, or if the scale of the monument is "capricious and wasteful". Trusts to maintain animals may also be valid, as in Pettingall v Pettingall. Again, this is limited to the 21 years after the donor's death permitted by trusts law. Historically, religious masses have been considered an exception to the rules against purpose trusts, but in Re Hetherington, the saying of a public mass was recognised as a valid charitable cause. This may mean that it is a superseded category, but there is still the issue of private masses.