Non-Charitable Purpose Trusts

Introduction

Most trusts exist to benefit **people** — identifiable beneficiaries who can go to court to enforce them. But a settlor may instead want trust property used to achieve a **purpose** or objective. Where that purpose is not charitable, the trust is a **non-charitable purpose trust** (sometimes called a **private purpose trust**). This chapter explains why such trusts are **generally void** under the **beneficiary principle**, the duration limit imposed by the **rule against inalienability of capital**, and the narrow **anomalous exceptions** (tombs and monuments, private masses, and the maintenance of specific animals) that the courts tolerate as a concession to human sentiment. It also covers the **Re Denley** route, by which a purpose trust that indirectly benefits ascertainable persons can satisfy the beneficiary principle.

Assessment focus

For SQE1 FLK1, you must be able to **classify** a disposition in a realistic client or estate scenario and state whether it is **valid or void**. The examiner tests the **beneficiary principle** (Re Astor's ST), the **Re Denley** exception (indirect benefit to ascertainable persons), the **anomalous exceptions** (Re Endacott), and — a frequent trap — the **duration rule for non-charitable purpose trusts**. Note carefully that the applicable rule is the **rule against inalienability (the 21-year rule)**, NOT the **125-year perpetuity period** in the Perpetuities and Accumulations Act 2009; the 2009 Act's statutory period does **not** apply to the inalienability rule. Single best answer questions are set in client scenarios — be ready to **apply**, not merely recall. This is a closed-book assessment.

Study tips

1) Memorise the **beneficiary principle**: a trust generally needs a beneficiary who can enforce it (Re Astor's ST). 2) Learn the **Re Denley** exception — a purpose trust that **directly or indirectly benefits ascertainable persons** can be valid. 3) Learn the **three anomalous exceptions** from **Re Endacott**: (i) tombs / monuments / graves; (ii) private masses; (iii) maintenance of specific animals. 4) **Duration trap** — non-charitable purpose trusts are subject to the **rule against inalienability**: valid only if limited to **21 years** (or a relevant human life + 21 years), or if the trustees can spend all capital at any time. The **125-year period in the PAA 2009 does NOT apply** to these trusts. 5) Contrast with **charitable trusts**, which are exempt from the inalienability rule and may last indefinitely.