Charitable Purpose Trusts
Charitable purpose trusts
Advantages of the charitable purpose trust
Certainty of Objects Courts are more relaxed in the approach for the need of there to be certainty of objects in a charitable trusts. While non-charitable trusts must have objects, which are certain, gifts made exclusively for charitable purposes are valid even though the exact purposes may not have been identified. Thus a gift to trustees ‘for charity’ will be valid.
The Perpetuity Rule Charitable trusts are valid even though they may last for an infinite period of time. They are also exempt from the rule against inalienability. However, charitable gifts, like private gifts are subject to the rule against remote vesting.
The Cy Pres Rule In a situation where a private trust has failed either wholly or partly, there will be a resulting trust for the settlor or his estate. Where property is given for charitable purposes and these cannot be carried out in the precise manner intended, then it will simply go to a charitable purpose that is deemed to be similar. Thus, the Cy pres doctrine is an alternative to the resulting trust principle.
Fiscal Privileges a variety of tax relief’s are enjoyed by both charitable bodies and members of the public who donate funds for charitable purposes. Charities are exempt from income tax on investment and corporation tax. They are also exempt from the capital gains tax, stamp duty tax and national insurance surcharge Finance Act 1977.
2.1 Is the trust for the public benefit?
Oppenheim – Lord Simmonds – test with two limbs:
1. Possible beneficiaries must not be numerically negligible
2. Quality which distinguishes beneficiaries from other members of community must not arise from their relationship with a particular individual or company
(propositus)
Thompson v FCT – Dixon J distinguishes between groups which arise because of personal ties and groups which arise from a common calling (public/private distinction)
2.2 Does trust fall within category
Advantages of the charitable purpose trust
Certainty of Objects Courts are more relaxed in the approach for the need of there to be certainty of objects in a charitable trusts. While non-charitable trusts must have objects, which are certain, gifts made exclusively for charitable purposes are valid even though the exact purposes may not have been identified. Thus a gift to trustees ‘for charity’ will be valid.
The Perpetuity Rule Charitable trusts are valid even though they may last for an infinite period of time. They are also exempt from the rule against inalienability. However, charitable gifts, like private gifts are subject to the rule against remote vesting.
The Cy Pres Rule In a situation where a private trust has failed either wholly or partly, there will be a resulting trust for the settlor or his estate. Where property is given for charitable purposes and these cannot be carried out in the precise manner intended, then it will simply go to a charitable purpose that is deemed to be similar. Thus, the Cy pres doctrine is an alternative to the resulting trust principle.
Fiscal Privileges a variety of tax relief’s are enjoyed by both charitable bodies and members of the public who donate funds for charitable purposes. Charities are exempt from income tax on investment and corporation tax. They are also exempt from the capital gains tax, stamp duty tax and national insurance surcharge Finance Act 1977.
2.1 Is the trust for the public benefit?
Oppenheim – Lord Simmonds – test with two limbs:
1. Possible beneficiaries must not be numerically negligible
2. Quality which distinguishes beneficiaries from other members of community must not arise from their relationship with a particular individual or company
(propositus)
Thompson v FCT – Dixon J distinguishes between groups which arise because of personal ties and groups which arise from a common calling (public/private distinction)
2.2 Does trust fall within category