Table of Contents
What is the most important exception to the beneficiary principle?
There are two exceptions to the rule. The first one is specific animals as seen in the case of Re Dean (1889) 41 Ch. D 552. The second exception is when the trust is created to build or maintain a tomb or a monument as in the case of Re Hooper [1932] 1 Ch 38.
What are the two functions of the beneficiary principle?
The beneficiary principle thus supports the rule against inalienability by ensuring that there should be an identifiable beneficiary who will eventually take the legal title in the trust property and use the trust property in the wider economy.
What is a non charitable purpose?
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.
What are default beneficiaries?
A default beneficiary in a trust, or a taker-in-default, is a beneficiary who receives a distribution of income or capital because of the trustee’s failure to make distributions.
Is the beneficiary principle still relevant?
The beneficiary principle, as defined by Hudson, is still an important requirement of the law of trusts.
What is the mischief of the beneficiary principle?
(1) The strong version of the beneficiary principle says that a non-charitable trust cannot exist unless there are one or more identified individuals who have a beneficial interest in the trust property.
Why has the beneficiary principle been adopted?
In Morice v Bishop of Durham [1804] EWHC Ch J80 the Court of Appeal held that non-charitable purposes were void for want of objects. In this case the rationale behind the beneficiary principle was explained. The court stated that without certain objects, the trustees are not subjected to any obligations.
How long can a non-charitable trust last?
21 years
Non-Charitable Purpose Trusts These trusts of imperfect obligation cannot last any longer than 21 years. The usual perpetuity period of 125 years does not apply to these trusts.
What is non-charitable expenditure?
‘Non-charitable expenditure’ is expenditure incurred by a charity which is not incurred for charitable purposes exclusively. If non-charitable expenditure is incurred there will be a potential tax liability for the charity.
What is a default beneficiary of a trust?
The first type of beneficiary is the default beneficiary. These beneficiaries are entitled to any income from the trust as it arises. In practice, if the life policy is the only asset in the trust there will not be any income. The second type of beneficiary is the discretionary beneficiary.
What can invalidate a trust?
If you can prove that the decedent created the trust under coercion, undue influence, or pressure from someone (usually a close family member, caregiver, or supposed beneficiary), a qualified probate court can invalidate the trust.
Why are non-charitable purpose trusts invalid?
As such, the general principle is that such non-charitable purpose trusts are void. They are trusts of imperfect obligation, imperfect in that they lack a beneficiary capable of enforcing the obligations *B.A., LL.
Should non-charitable purpose trusts be valid?
Validity of Non-Charitable Purpose Trusts Direct or indirect benefit to individuals: Non-charitable purpose trusts may be valid where the purpose can be regarded as directly or indirectly benefiting ascertainable individuals.
What are charitable activities?
Charitable activities are all the resources expended by the charity in the delivery of goods and services, including its programme and project work that is directed at the achievement of its charitable aims and objectives.
How much of a charity’s money goes to the cause?
Giving 99% of the money you receive to the cause is exceptional — even in a world where most funds do go towards the cause: About seven in 10 charities give 75% or more to the cause and nine in 10 give 60% or more to the cause, Charity Navigator has found.
Can you have one beneficiary in a discretionary trust?
Because trustees of a discretionary trust can choose which beneficiaries receive the trust assets, it is possible for them to decide that one or more beneficiaries should receive nothing.
What supersedes a trust?
Wills may also name guardians for any minor children. Like trusts, wills can also be changed at any given time by the individual. But which one holds greater legal value? Since revocable trusts become operative before an individual’s will takes effect at death, the trust takes precedence over the will.
What makes an irrevocable trust invalid?
In most cases, what makes a trust invalid is a problem with its creation. For instance, a trust might be legally considered invalid if it: Was created through intimidation or force. Was created by a person of unsound mind.
Do purpose trusts have beneficiaries?
A purpose trust is a type of trust which has no beneficiaries, but instead exists for advancing some non-charitable purpose of some kind.