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Charitable trusts


Charitable trusts or public trusts are distinguished from private trusts in that they are aimed to benefit society at large or an appreciable portion of society. On the other hand a private trust is aimed to benefit defined persons or defined classes of persons. In general charitable trust are subject to the same rules as private trusts. However, because of their public nature they enjoy a number of advantages which are not shared by private trusts:


1. They are restricted to the rule against perpetuity.

2. They enjoy income tax exemptions over their investment incomes

3. They will not fail for uncertainty of objects if they are exclusively charitable and there is a paramount general intention of charity.

Through case law three requirements have emerged for the creation of charitable trusts:

1.      They must be of charitable nature

2.      They must be for the public benefit

3.      They must be exclusively charitable

Charitable nature

The definition of charity adopted by the courts has been drawn from the preamble of the Statutes of Elizabeth 1601, 43 Eliz 1 .4. In this preamble a list of charitable objects was set out as follows:

“The relief of aged, impotent and poor people, the maintenance of sick and maimed soldiers and marines, schools of learning, free schools and schools in universities, the repair of bridges, ports, havens causeways, churches, sea banks and highways, the education and preferment of orphans, the relief of stock or maintenance for houses of correction, the marriage of poor maids, the support, aid and help of young tradesmen, handicraftsmen, and persons decayed, the relief or redemption of prisoners or captives and the aid or care of any poor inhabitants concerning payment of fifteens, setting out of soldiers and other taxes.”

The statute was repealed in 1888 by the Mortmain and Charitable Uses Act 188 but the preamble was repeated under section 13(2) of the 1888 Act. The 1888 Act was also repealed in its entirely by the Charities Act of 1960 but the preamble remains a guide to the courts as to the legal meaning of charity. The spirit of the preamble has been used extensively to extend charitable objects by analogy into new situations. The continued relevance of the preamble was affirmed in the case of Scottish Burial Reform and Cremation Society v Glasgow City Corporation (1968) AC 138 in which cremation was held to be a charitable purpose. Lord Wilberforce in that case stated: “What must be regarded is not the wording of the preamble but the effect of decisions given by the courts as to its scope, decisions which have endeavoured to keep the law as to charities moving according as new social needs arise or old ones become obsolete or satisfied.”

Likewise in the case of the Incorporated Council for Law Reporting for England and Wales v Attorney General (1972) Ch 73. The Court of Appeal in affirming the charitable status of the council specifically held that the publication or dissemination of law reports was a purpose beneficial to the community being within the spirit and intendments of the preamble to the Statutes of Elizabeth. And in the case of Re Pemsel (1891) AC 531 Lord MacNaghten stated at page 583 as follows:

“Charity in its legal sense comprises four principal divisions:

1.      Trusts for the relief of poverty

2.      Trusts for the advancement of education

3.      Trusts for the advancement of religion

4.      Trusts for other purposes beneficial to the community not following under any of the preceding heads.

The trusts last referred to are not less charitable in the eyes of the law because incidentally they benefit the rich as well as the poor and indeed every charity that deserves the name must do so either directly or indirectly.”

 
 
 

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