To be a valid charitable trust it must satisfy requirements:
- Gift must be for purpose which falls ‘within the spirit and intendment’ of preamble to Statute of Elizabeth.
- Trust must promote public benefit accepted by courts (as what is considered charitable is a question of law not settlors intentions)
- Purposes must be wholly and exclusively charitable.
There’s no set definition of poverty, but generally a person who’s ‘unable to maintain a very modest standard of living for himself and any dependant’ (Mary Trustees v
Categories identified in Lord MacNaghten’s judgement in Commissioners for the Purpose of Income Tax v Pemsell:
- Trusts for the relief of poverty.
- Trusts for the advancement of education.
- Trusts for the advancement of religion.
- Trusts for other purposes beneficial to the community.
Must not include purposes that are NOT charitable i.e. political (Re Bushnell).
The promotion of sport is not a charitable purpose (Re Nottage), unless it can be regarded as a means of furthering a purpose which is charitable. As seen in Re Mariette provision of squash courts as an integral part of boys education and thus was placed under the second head of Lord MacNaghtens criteria in Pemsel; ‘advancement of education’. It’s a matter of construction of the purpose of the trust as a means of furthering a charitable purpose. But only if the court is willing to infer that the testator intends that purpose.
Provisions for prize maybe charitable f the game is itself said to be educational/charitable in some way (Re Dupress) although this can be difficult to prove and will tend to be borderline charitable. However under the Recreational Charities Act 1958 it is charitable to provide facilities for recreation or other leisure time occupation in the interests of social welfare provided the facilities improve the conditions of life for the people for whom they are intended and there’s a need of such facilities.
Vicars/Churchwardens and such promote a charitable purpose regarding the advancement of religion (Re Simpson), as long as the person work is limited to the charitable scope (Farley).
Environment and moral (preservation of … ) may be held to be charitable under the fourth head (Re Wedgwood). As long as it is of public benefit it is charitable. However if its purpose is considered political or aims to change the law, it will be denied charitable status as the court will be unable to judge if this is in the publics benefit (McGovern v AG) unless the political element is merely ancillary to the charitable purpose (IRC v Temperance).
Advantages of Charitable Trusts
- Exemption from the beneficiary principle.
- Exemptions from the rules of inalienability.
- Exemptions from certainty of objects rule.
- Tax benefits e.g. income tax, inheritance tax.
Differences between Charitable and Private Trusts
- Primary difference is charitable trusts aim to benefit society at large whereas private trusts is designed to benefit group of people or purposes which the law does not recognise as charitable.
- Private trusts are enforced by beneficiaries (Morice v Bishop of
- If a private trust fails it falls on resulting trust to the settlor or the settlor’s estate. If a charitable trust fails the property can sometimes be saved for charity by applying the cy-pres scheme, although a general charitable intentions (Re Wilson) as specified in the Charities Act 1993 s.13.
- Private trusts are subject to rules against perpetuities whereas charitable trusts are subject only to the rules of remoteness of vesting (
- Charitable trusts also enjoy certain tax benefit and relief i.e. income tax, capital gains tax and inheritance tax.
No comments:
Post a Comment