Express trusts may be divided into further categories mainly the two types are private and public trusts. Express trusts can be classed as private as they are created for the benefit of an individual or a class of individuals whereas a public trust is aimed at promoting public benefit or welfare. The appropriate trust for Aberlard to impose would be a private trust in that Aberlard’s objective is to give the furniture to his children which would be classed as a private gift to his children. The second part of Aberlard’s initial request is in regards to his antique furniture being used to set up a museum in order to honour his memory the trust which would be most appropriate to fulfil Aberlard’s wishes would be a charitable trust however if a charitable trust were to fail then it would fall under a non charitable purpose trust.
A charitable trust is one created for charitable purposes in order to benefit society or sufficiently a large part of the community being that a charitable trust is a public purpose trust. Mainly there are two categories in which a charitable trust can fall into a charitable trust or a non charitable trust. In the case of Income Tax Commissioners v Pemselwhere Lord Macnaghten stated three specific categories of charitable benefits: the relief of poverty, the advancement of education, and the advancement of religion and also went onto mention ‘other purposes beneficial to the community not falling under any of the proceeding heads’. An example of a charitable trust can be examined in the case of Re Niyazis Wills Trust.
Referring to the Charities Act 2006 which upholds the same folds as Pemsel’s case, in which S2 (2) of the Charities Act 2006 entails the purposes that would be deemed as charitable. The following sub sects would include arts, culture, heritage, science and education. In order for Aberlard’s trust to be regarded as charitable his trust must meet the above requirements for it to be valid. As Aberlard wishes to set up a museum solely to honour his memory his objective would generally not qualify as a charitable trust because setting up a trust just to honour his memory would not confer any public benefit. However the clear option open to Aberlard would be a non charitable trust as, this type of trust holds no beneficiaries and exists in accordance of a failed charitable trust.
An example of a non charitable trust was established in Re Pinionin which the courts held if a gift is given to fund a public museum it may be charitable providing the charitableness is not questioned by anyone as then it becomes essential to know the quality of the exhibits. Another example of a non charitable case is Gilmour v Coats.
Moving onto the second part of Aberlard’s trust in regarding his country estate to be held by his wife Heloise, as the nominal legal owner of the property for the benefit of his children. He also requests to withhold the fact that they are beneficiaries of his estate. To achieve this Aberlard’s most appropriate option would be a Secret trust. Effectively there are two types of secret trusts available to Aberlard, either a ‘half -secret trust’ or a ‘fully-secret trust’. On the performance of a half secret trust the settlor creates a will leaving the property to the trustee and stipulating that the latter shall hold it on trust, but does not secrete the terms in the will, as they are communicated in private discussion with the trustee. For example if A were to leave £50,000 to B in his will on trust, without disclosing that C was the ultimate beneficiary, a half secret would have been created in this situation. An example of a half secret trust can be witnessed in the case of Ottaway v Norman.
Whereas a fully secret trust is where the settlor bequeaths property to a specific person in his will who agrees to hold the property left to him on a trust for a third party. In differentiation between a half secret trust and a fully secret trust is that neither the fact of the trust nor the identity of the beneficiary are revealed in a fully secret trust whereas in a half secret the facts of the trust obligation appear on the face of the will, although its terms, and especially the identity of the intended beneficiary remains secret. The trust which is most suitable in regards of Aberlard’s wishes would be a fully secret trust as he wishes his children to be in total ignorance of the trust. Whereas a half secret trust would not accommodate this request because the obligations of the trust would be revealed on the face of the will. However it should be emphasised that Aberlard must also communicate the fully secret trust to Heloise (legatee) outside of the will, an example of this can be seen in Wallgrave v Tebbs.
In order for Aberlard to grant Heloise, the right to exclude any child from the estate if she deems the child to be unworthy of inheriting the estate. The trust which Aberlard would need to set up would be that of a Discretionary Trust. A discretionary trust is where the owner of the property can grant power to allocate funds amongst a defined group of individuals, in Aberlard’s case it would be his children. The definition of discretionary trusts was defined in the case of Warner J in Mettoy Pension Trustees Ltd v Evans as:
‘cases where someone, usually but not necessarily the trustee, is under a duty to select from among a class of beneficiaries those who are to receive, and the proportions in which they are to receive, income or capital of the trust property’.
Discretionary trusts are therefore very flexible in the distribution of property including permitting the owner of the property to delegate his property to others and also deciding how that property ought to be distributed. The best example of a discretionary trust was achieved in the case McPhail v Doulton, where Bertram Baden established a trust in 1941 to provide benefits for the staff of Matthew hall & co ltd and their relatives and dependants. Where it was Clause 9 (a) of the deed sated that: ‘The trustees shall apply the net income of the fund in making at their absolute discretion grants to or for the benefit of any of the officers and employees or ex-officers and ex-employees of the company or to any relative or dependants of any such person in such amounts…as they think fit’.From this it can be seen that Heloise would be under a duty to distribute property at Aberlard’s discretion.
There is also a certain period of time in which the trust must be vested which is known as the Perpetuity Period which prevents property from being tied up and kept outside the economy. An example of perpetuity period can be examined in Re Hooper. The perpetuity period is a period of time within which a contingent interest must vest within. In regards to Common Law this time period would be ‘lives in being plus 21 years any relevant period of development’. ‘Lives in being’ would mean to be the ones identified in the trust who are alive which would be the children of Aberlard. The discretionary trust would be problematic in terms of Aberlard’s wishes, as using the discretionary trust will loose the secrecy of the beneficiaries, but is always an option available to Aberlard.
The third and final bequest of Aberlard is that he wishes to designate £500,000 for the upkeep and welfare of the Dachshunds. In order to fulfil his objectives the trust which will achieve this would be a non charitable purpose trust, as Aberlard has no intention of creating a charitable trust. Purpose trusts are generally void and exist for the advancing of some non-charitable purpose as mentioned above. Aberlard may encounter some problems in perusing a non-charitable trust for the purpose of his dachshunds as trusts for the care of specific animals have been void, but can be valid as a non-charitable purpose trust. Again the perpetuity period would also apply here, Aberlard’s trust would be valid as long as it does not fall outside the perpetuity period and there must be reference to the perpetuity period. The courts in the case of Re Haines tool judicial notice that a cat could not live more than 21 years and the trust was therefore valid since it could not last for more than 21 years. A similar trust was also held valid in the case of Re Dean, where a trust was set up for 50 years to maintain his horses and hounds if they should live that long.
A different opinion was casted in the case of Re Kelly where Meredith J said, ‘There can be no doubt that ‘lives’ means lives in being of human beings, not animals or trustees in California’. The clear option open to Aberlard would be that of a non-charitable purpose trust provided the above conditions are satisfied.
Bibliography
Books used:
Pearce R & Stevens J “The Law of Trusts and Equitable Obligations” 3rd edition Butterworth’s (2002)
Todd and Watt's Cases and Materials on Equity and Trusts (6th Edition), Gary Watt, Oxford University Press, 2007
Trusts Law: Text and Materials (Law in Context) (4th Edition), Graham Moffat, Gerry Bean & John Dewar, Cambridge university press, September 2005
An Introduction to the Law of Trusts, Simon Gardner Oxford University Press, 2003
Trusts and Equity (3rd Edition),Gary Watt Oxford University Press, April 2008
Understanding Equity and Trusts 3 edition Alistair Hudson Routledge-Cavendish, June 2008
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Author: JE Pennner
Publisher: Oxford University Press
Date of Publication: August 2006
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Author: Robert Pearce & John Stevens
Publisher: Oxford University Press
Date of Publication: July 2006
Title: Todd and Watt's Cases and Materials on Equity and Trusts (6th Edition)
Author: Gary Watt
Publisher: Oxford University Press
Date of Publication: March 2007
Title: Trusts Law: Text and Materials (Law in Context) (4th Edition)
Author: Graham Moffat
Contributors: Gerry Bean & John Dewar
Publisher: Cambridge University Press
Date of Publication: Sep 2005
Title: The Law of Trusts (Hardcover)
Publisher: Oxford University Press
Author: Geraint Thomas & Alastair Hudson
Date of Publication: Nov 2004
Title: An Introduction to the Law of Trusts
Author: Simon Gardner
Publisher: Oxford University Press
Date of Publication: 2003
Title: Understanding Equity and Trusts 3 edition
Author: Alistair Hudson
Publisher: Routledge-Cavendish
Date of Publication: June 2008
Title: Trusts and Equity (3rd Edition)
Author: Gary Watt
Publisher: Oxford University Press
Date of Publication: April 2008
Websites Used
St Paul, First Letter to Timothy, Ch 6, v7
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Law of trusts and Equitable Obligations, 4th Edition Robert Pearce John Stevens
[1949] A.C. 426 [1949] 1 ALL ER 848
Wallgrave v Tebbs [1855] 2 K & J 313
Law of trusts and Equitable Obligations, 4th Edition Robert Pearce John Stevens
An Introduction to the Law of Trusts, Simon Gardner Oxford University Press, 2003
