Purpose Trusts

• Author: EILEEN E. GILLESE
• Pages: 59-79

59

CHA PTER 4

PUR POSE TRUSTS

A. INTRODUC TION

The objects of an express trust may be persons or purpose s. A trust for

persons sets out the indiv iduals, by name or clas s, who are to enjoy the

trust property. A trust for purposes, on the other hand, sets out a task

that the creator of the trust wishes the trustee to perform through use

of the trust property. It can be dif f‌icult to distinguish trusts for pers ons

from those for purposes.

EXAMPLE: I leave $10,000 in trust for my children’s education. Is that a

trust for persons or for purposes?

The answer lies in the par amount intention of the settlor. If the para-

mount intention is to benef‌it the children, it is a trust for persons. If

the paramount intention is to provide education, then it is a t rust for

purposes. In the example given, the most likely construction would be

that the tru st was for persons (my children).

As we saw in Chapter 3, trust s for persons that satisfy the certain-

ties requirements and t hat are duly constituted and comply with the

formalities requirements are valid and enforceable. In this chapter, I

will explore how to create valid t rusts for charitable and non-charitable

purposes.

Examples of charit able trusts abound: collection boxes, annual ap-

peals, and speci al events such as the “Ride for Cancer” are all charities,

whether charitable trusts or foundations. Non-charitable purpose trusts

are something different: these trusts are i ntended to provide for some-

thing, rather th an someone, where that something has not been accorded

THE LAW OF TRUSTS60

charitable status. E xamples of non-charitable purpose trust s include the

provision of a trophy for an annual club tournament, money to feed a

beloved animal, and provi sion of sports and recreation facilities.

As we will see in S ection B of this chapter, the rules relati ng to the

creation of charities h ave been fashioned over a long period of time and

are relatively well def‌ined. This hi story does not mean that the rules

are particula rly sensible. Rather, the fact that charities have a long his-

tory means th at a large body of caselaw has bui lt up in the area, and

lawyers have a fairly clear sense of what is permissible and what may

be problematic.

On the other hand, non-char itable purpose trust s have gone in

and out of judicial fashion. It is only relatively recently that they have

become more acceptable in law. Therefore, the law relating to non-

charitable purpose trusts is les s clear than that of charities. The pri-

mary objection to non-char itable purpose tr usts was well put in Morice

v Bishop of Durham,1 where it was categorically pronounced that the

chancery courts would not enforce non-charitable purpose trust s be-

cause “There must be somebody, in whose favour the court can decree

pe r fo rm a nc e.” 2 This is known as t he “benef‌iciary principle,” or the

“enforceability objection.” It is based on the fact that the essence of a

trust is th at a trustee is obliged to perform the trust. There can be no

obligation on a trustee to perform unle ss there is a correlative right

in someone else to enforce the obligation. And, since the benef‌iciary

is a purpose and not an individual, there is no one who can bring an

action to compel the trustee to perform. This objection does not apply

to charitable tr usts, since public off‌icials are charged with the duty of

enforcing such trusts.

In Section C of this chapter, I examine the modern trend towards

validating non-char itable purpose trusts both at the common law and

through legislation. Note that even when the courts were very reluc-

tant to f‌ind non-charit able purpose tru sts to be valid, they upheld such

trusts in “exceptional c ases,” such as trusts for the maintenance of

graves, anima ls, and monuments.

In Section D, I look brief‌ly at the interrelationship between charit-

able and non-charitable purpose t rusts, followed in Section E by an

analysis of unincor porated associations. The reason for including a sec-

tion on unincorporated associations is that the problems associated

with non-charit able purpose trusts a re magnif‌ied when the purpose

1 (1804), 9 Ves Jun 399, 32 ER 656, aff’d (1805), 10 Ves Jun 521, 32 ER 947 (Ch)

[Morice cited to Ves Jun].

2 Ibid at 40 5.