Secret Trusts

Front 1

Re Snowden

Back 1

Standard of proof: the onus is on the person claiming that a trust exists. The standard of proof for establishing the trust is the normal civil standard, namely proof on a balance of probabilities.

Front 2

Moss v Cooper

Back 2

Silence may count as acceptance

Wood V-C “Acquiescence either by words of
consent or by silence”.

Reliance on Acceptance: gift is left unrevoked

Front 3

Stickland v Aldridge

Back 3

Reliance on acceptance: failure to make a will on the strength of an undertaking of the deceased's next of kin

Front 4

Wallgrave v Tebbs

Back 4

With a fully secret trust, communication must take place before death, whether before of after the signing of the will (if any)

Front 5

Re Boyes

Back 5

property was left to the testator’s solicitor, who had agreed to hold the property on the terms he would receive. The testator did not, as promised, give instructions to the solicitor on how the property was to be held. Details of the intended trust were found after the testator’s death in two unattested documents.

The Court of Appeal held that there was a resulting trust to the testator’s estate as the trust had not been properly communicated.

per Kay J: “The essence of all these decisions is that the devisee or legatee accepts a particular trust which thereupon becomes binding upon him, and which it would be a fraud in him not to carry into effect”.

Front 6

Re Colin Cooper

Back 6

The testator left £5,000 to 2 people and communicated the terms of the trust to them. By a later codicil, he increased the sum to £10,000. The addition was not communicated to the intended trustees.

Held: the first £5,000 was subject to the trusts; the other £5,000 was held on resulting trust. This was a half secret trust case, the fact (but not the terms) of a trust appearing on the face of the will, but the principle applies equally to fully secret trusts.

Front 7

*Re Keen

Back 7

There will be sufficient communication if the terms are given to the intended trustee, during the testator’s lifetime, enclosed in a sealed envelope, to be opened after the testator has died, as lons as the trustee is aware that the envelope contains the terms of the trust and accepts it on that basis

per Lord Wright MR, “a ship which sails under sealed orders, is sailing under orders though the exact terms are not ascertained by the captain until later”

However, consistency with the will is essential. Trust will fail if inconstancies are present.

Front 8

Re Stead (FST)

Back 8

Confirmed that if the gift is to joint tenants, as opposed to tenants in common, all are bound if communication took place before the execution of the will (but not if it took place after)

Front 9

Ottaway v Norman

Back 9

(Carrying out the secret trust - inter vivos transfer of property)

The testator left his freehold bungalow to his housekeeper. It was agreed between them that she would devise the bungalow by her will to the testator’s son, which she failed to do.

The court held that the son was entitled to the bungalow on the basis that the obligation was imposed and accepted and the means of carrying out the obligation was immaterial.

Brightman J: "The basis of the doctrine of a secret trust is the obligation imposed on the conscience of the primary donee and it does not seem to me that there is any materiality in the machinery by which the donor intends that obligation shall be carried out . . ."

Front 10

*Blackwell v Blackwell (HoL case)

Back 10

Firmly established the validity of HSTs

Took a wide view of fraud, including within it failing to give effect to the testator's wishes. , “the trustee is not at liberty to suppress the evidence of the trust and
thus destroy the whole object of its creation, in fraud on the beneficiaries.” - Lord Buckmaster

The House of Lords also took the view that the trust was outside (dehors) the will and thus outside the ambit of the Wills Act.

said, obiter, that the trustee of a fully secret trust will not be allowed to defeat the testator’s purpose by renouncing the legacy.

Front 11

Re Bateman’s Will Trusts (HST)

Back 11

testator’s will stated that income was to be paid “to such persons and in such proportions as shall be stated by me in a sealed letter . . . addressed to my trustees.” Trust was invalid.

It would seem from this that, whenever the trust is communicated, it will fail if the will allows for future communication.

Front 12

Kasperbauer v Griffith

Back 12

Requirements for a valid secret trust:
1) intention by the testator or a person prepared to die intestate to create a trust binding an inheritor of his property
2) communication of the trust to the intended trustee; and
3) acceptance of the trust by the trustee

Must be clear that the person setting up the trust intended to impose a binding legal obligation on the trustee, not merely a moral or family obligation: in this case, the testator's statement that his wife "knows what she has to do" with the house was held to be too vague

Front 13

Margulies v Margulies

Back 13

a father’s ambiguous statements about the claimant’s older brother “knowing his wishes” and “giving what’s appropriate” were held not to create a binding legal obligation.

A further argument that the father left these statements deliberately vague for tax reasons was also rejected by the court.

Front 14

Re Maddock (CoA case)

Back 14

It was said obiter that the trust will fail if the secret trustee predeceases the testator or disclaims the gift (in relation to FST)

Front 15

McCormick v Grogan

Back 15

Justification for enforcing secret trusts: fraud theory

It is clearly possible for an intended trustee fraudulently to keep the property, where there is nothing in the will to indicate that he holds on trust. Equity, however, will not permit him to use the requirements of the Wills Act to keep the property, but will ensure that he holds it on trust

However, in this instance the wording was “I do not wish you to act strictly on the foregoing instructions,
but leave it to your own good judgement to do as you think I would, if living…”
So, testator did not intend to create an enforceable trust

Front 16

Re Gardner (No 2)

Back 16

This is an odd case. Usually, a gift will lapse if the death of the beneficiary predeceases the testator. However, a gift to a secret predeceasing beneficiary was held not to lapse in Re Gardner (No 2)

Romer J erroneously assumed that B acquired a proprietary interest as if the secret trustee, T, on accepting the testator’s directions, had declared a trust for B of whatever the testator was bequeathing to T for B. Such a trust of a hope is, however, ineffective as it is not a trust of existing property. His decision ought not to be followed.

The court held that the beneficiary’s interest arose as soon as the trusts were communicated and accepted, as the interest was created by agreement, not by the will. Accordingly, the beneficiary’s share did not lapse.


This decision is regarded as very dubious indeed because, until the testator’s death, the trust is incompletely constituted, the beneficiary only having a hope that the trust will take effect when the testator dies, hopefully solvent and not having changed his mind by leaving the property to someone else.

Front 17

Re Young

Back 17

Danckwerts J held that the beneficiary under a half
secret trust could benefit on the basis that the beneficiary takes by virtue of arrangements made outside the terms of the will and so which should be unaffected by the Wills Act.

a secret trust benefited the testator’s
chauffeur, who had witnessed the will. S 15 Wills Act provides that a
witness to a will cannot benefit under that will.
The court held that the chauffeur was entitled under an oral trust declared
inter vivos. Danckwerts J said:
“a beneficiary under a secret trust does not take under the will, and … he is not, therefore, affected by s15 of the Wills Act 1837”

But is it not the case that the beneficiary does take by virtue of a testamentary disposition since the testator is free to change his mind up to his death and the property forms part of the testator’s estate available for payment of debts and taxes and to satisfy claims under the Inheritance (Provision for Family & Dependants) Act 1975?

This is a liberal decision, ignoring the function of s 15 being to ensure that there is an impartial witness with nothing to gain or lose by his testimony.

Front 18

Re Baillie

Back 18

suggested that a half secret trust of land (so that the devisee could not retain the land for himself) was not enforceable without written evidence (although this case was decided before the validity of half secret trusts was firmly established in Blackwell v Blackwell).

Front 19

S9 Wills Act 1837

Back 19

To create a valid gift/trust to take effect on death, s9 Wills Act 1937 must be complied with

Front 20

S15 Wills Act 1837

Back 20

a gift to a beneficiary who witnesses the will
fails

Front 21

S53(1)(b) Law of Property Act 1925

Back 21

Land writing

Front 22

S53(2) Law of Property Act 1925

Back 22

constructive trusts of land are exempt from the formalities required by s53(1)(b) LPA 1925

Front 23

The three certainties

Back 23

Secret trusts must satisfy the three certainties of intention, subject matter and objects.

It must be clear that the person setting up the trust intended to impose a binding legal obligation on the trustee, not merely a moral or family obligation.

Front 24

Fully secret trust

Back 24

There is apparently an absolute gift to the recipient. Unless a valid secret trust is established, the person inheriting will take the property beneficially.

If there is no communication by the deceased to the fully secret trustee or no acceptance by the fully secret trustee, then the legatee’s conscience is clear and there is no question of using the statute as an instrument of fraud, so he may take the legacy absolutely

Front 25

Communication - timing (FST)

Back 25

With a fully secret trust, communication must take place before death, whether before of after the signing of the will (if any)

Front 26

What must be communicated (FST + HST)

Back 26

1) existence of the trust
- once the trust is communicated the legatee cannot take beneficially as his conscience is bound

2) Terms of the trust
- must be communicated inter vivos (during the time of the living)
- if trust is communicated, but not the terms, property is held on resulting trust for the deceased's estate

3) The property subject to the trust

Front 27

Method of communication (FST + HST)

Back 27

Communication can generally be oral or in writing (for land ___

It seems there will be sufficient communication if the terms are given to the intended trustee, during the testator’s lifetime, enclosed in a sealed envelope, to be opened after the testator has died

Front 28

Communication not made to all trustees (FST + HST)

Back 28

General rule: only those to whom communication is made are bound by the trust (since only their consciences are affected)
- those to whom no communication was made may take the property beneficially.

Exception: if the gift is to joint tenants, as opposed to tenants in common, all are bound if communication took place before the execution of the will (but not if it took place after)
- where communication occurred after execution, only those to whom communication was made bound by the trust

Front 29

Re Gardom

Back 29

if the will permits communication to be made to only one of the intended half secret trustees when such communication is effective if made before or at the time of executing the will (??)

Front 30

Acceptance (FST +HST)

Back 30

Acceptance of the trust is necessary in order to bind the secret trustee

It can be express or inferred and silence may count as acquiescence (Moss v Cooper)

What is vital is that the testator must reasonably believe that the trust has been accepted.

Front 31

Reliance on Acceptance (FST + HST)

Back 31

e.g:
- gift is made
- gift is less unrevoked (Moss v Cooper)
- will is not made (Strickland v Aldridge)

Front 32

Carrying out Secret Trust

Back 32

In most cases, obligation to make some inter vivos transfer of property

Ottoway v Normam, doctrine was held to apply equally to an obligation to make a will in favour of the secret beneficiary

Front 33

Half secret trust - if invalid

Back 33

If there is a clear intention to create a trust but the half secret trust is not valid, there will be a resulting trust for the testator’s estate.

Front 34

FST - fraud theory

Back 34

The original justification for enforcing fully secret trusts was prevention of fraud: it would be fraudulent if the secret trustee kept the property for himself.

Front 35

Justification for enforcing HSTs; dehors the will theory

Back 35

The requirements of the Wills Act cannot be used as an instrument to defraud the beneficiary, so have to find some other justification for enforcing them.

Validity not fully established until 1929 with HoL Blackwell v Blackwell decision

The House of Lords also took the view that the trust was outside (dehors) the will and thus outside the ambit of the Wills Act.

It would appear that communication and acceptance create the trust inter vivos. The will does not create the trust, it is merely the device for constituting it by transferring the property to the trustees. The trust is thus ‘dehors’ or outside the will.

However, this theory doesn't align with the fact that half secret trusts do not allow communication after the date of the will.

Front 36

Communication - Timing (HST)

Back 36

Unlike FST, communication of the trust and its terms must take place before or contemporaneously with the execution of the will; this is to ensure that the requirements of the Wills Act can not be circumvented by merely "naming a trustee and leaving the purposes of the trust to be supplied afterwards" (Viscount Sumner, Blackwell v Blackwell obiter)

In Re Keen Lord Wright MR said that this
“would involve a power to change a testamentary disposition by an unexecuted codicil and would violate s 9 of the Wills Act”.

This has been criticised, but followed

Front 37

Difference in communication rules

Back 37

difference in the communication rules between fully and half secret trusts is hard to justify and has been criticised. It is suggested that the courts may have been (inappropriately) influenced by the rules for incorporating documents into the will by reference, simply because the trust is mentioned on the face of the will.

Front 38

Consistency with the will is essential

Back 38

The Court of Appeal held that the trust in Re Keen failed because:
a) the will referred to a future communication, which was inconsistent with a communication already made, so the trust would fail for inconsistency with the will;
b) there was a reference to future communication, which was not permissible.

Front 39

Secret trustee or beneficiary as witness to will

Back 39

s 15 Wills Act 1837 provides that a witness to a will cannot benefit under it

HST: no issue, as the will is clear that they are a trustee

FST: As the gift appears to be an outright beneficial gift, it would appear c that he loses the gift and no trust property will come to him to be available for the secret beneficiary. It is submitted, however, that, as the intended trustee does not take the legacy beneficially and is alive to prove this, s 15 Wills Act should not defeat the trust.

Front 40

Cannot renegade on agreement - creates constructive trust (FST)

Back 40

. It is his reneging on this agreement after the
testator’s death that is fraudulent or unconscionable conduct justifying
compelling him to give effect to the agreement through the imposition of a
constructive trust. There is support for this in judge and counsel ignoring s
53(1)(b) Law of Property Act in Ottaway v Norman (above) and in
Kasperbauer v Griffith [2000] WTLR 333, where the Court of Appeal took the
view (agreeing with Nourse J in Re Cleaver [1981] 1 WLR 931 at 9470 that a
constructive trust would be imposed to compel a secret trustee to hold trust
property as had been agreed with the testator. However, as no trust was found
in that case, this is only obiter dicta.

Front 41

Gillet v Holt

Back 41

Robert Walker LJ: "Equity intervenes to prevent the unconscionable conduct of the secret trustee resiling from his agreement."

Front 42

Conservative and Unionist Central Office v Burrell

Back 42

Lawton LJ, unincorporated associations are: “two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings each having mutual duties and obligations, in an organisation which has rules which identify in whom control of it and its funds rests and on what terms and which can be joined or left at will”.

Central Office of the Conservative party was held not to meet this definition, on the grounds that it lacked the mutual duties and obligations usually required for an unincorporated association

Front 43

Re Koeppler’s Will Trust

Back 43

Slade LJ defined UIs as “an association of persons bound together by identifiable rules and having an identifiable membership”

Front 44

Leahy v AG for New South Wales*

Back 44

The problem is that, unlike a company, an unincorporated association has no separate legal personality. In law a company is treated as a ‘legal person’. It can enter into contracts, sue and hold property in its own name. An unincorporated association does not have the same status and is little more than a group of individuals who share a common interest. An unincorporated association cannot enter into contracts or hold property in its own name, though particular members can conclude contracts or hold property as trustees for the members.

an Australian testator left his farm on trust for the nuns and brothers of various non-charitable religious orders.

Viscount Simonds identified three reasons why the testator was unlikely to have intended a gift to the individual members of those orders:
1. The wording of the gift – it was expressed to be held “on trust” for the selected orders, the capital apparently intended to be kept intact so that the income or use of the property would always be available for the benefit of members of the orders.
2. The nature of the beneficiaries – the members were numerous and spread all over the world. This suggested a legacy to each one wasn’t intended.
3. The subject matter of the gift – a 730 acre farm. Presumably each member was not intended to have their own small plot of land on this farm.

Testator was held to have intended a trust rather than a gift and the contractual analysis would not have been available because the nuns and brothers could not claim the property for themselves on dissolution.

Front 45

Re Recher’s Will Trusts*

Back 45

The judge simply said that the testatrix would not
have intended the members of the society to divide the “bounty” amongst themselves.

the contractual approach can be used regardless of whether the club is ‘inward looking’ (for the personal benefit of its own members) or ‘outward looking’ (for the benefit of others).

Front 46

Re Grant’s Will Trusts

Back 46

Interpreting a legacy to go to individual club members - each pocket a share - as the intention of the testator is "relatively uncommon"

Front 47

Cocks v Manners

Back 47

gift to a particular convent was upheld in favour of the individual nuns (UI - Members each "pocket a share")

Front 48

Re Denley’s Trust Deed*

Back 48

to be filled

Front 49

Re Lipinski’s Will Trusts

Back 49

to be filled

Front 50

Artistic Upholstery Ltd v Art Forma (Furniture) Ltd

Back 50

Upholding gifts to unincorporated associations through contractual analysis is “the prevailing view”

Front 51

Hanchett-Stamford v HM Attorney General

Back 51

Upholding gifts to unincorporated associations through contractual analysis is the approach to be applied “in normal circumstances”

Front 52

Re Horley Town FC

Back 52

Collins J held that a football ground left for “the purposes of the club” took effect as a gift to the members subject to the club rules. While the ground was to be used for the football club for a specified perpetuity period, clause 3 of the trust deed made it clear that if the ground was sold, as happened, the proceeds could be spent as if income, no capital having to be set aside to be kept intact.

Front 53

Re Drummond

Back 53

to be filled

Front 54

Carne v Long

Back 54

to be filled

Front 55

Re Shaw

Back 55

to be filled

Front 56

Re Hobourn Aero Components Air Raid Distress Fund

Back 56

to be filled

Front 57

Re Printers' and Transferrers' Amalgamated Trades Protection Society

Back 57

to be filled

Front 58

Re Bucks Constabulary Widow and Orphans Fund Friendly Society (no. 2)

Back 58

to be filled

Front 59

Re West Sussex Constabulary’s Widow, Children and Benevolent (1930) Fund Trusts

Back 59

to be filled

Front 60

Re GKN Bolts and Nuts Ltd (Automative Division) Birmingham Works, Sports and Social Club

Back 60

to be filled

Front 61

Re Sick and Funeral Society of St. John's Sunday School

Back 61

to be filled

Front 62

Cunnack v Edwards

Back 62

to be filled

Front 63

S7 Perpetuities and Accumulations Act 2009

Back 63

to be filled

Front 64

S8 Perpetuities and Accumulations Act 2009

Back 64

to be filled

Front 65

S18 Perpetuities and Accumulations Act 2009

Back 65

to be filled

Front 66

Challinor, E (critical commentary)

dehors the will

Back 66

I submit that a closer analysis of this temptingly neat theory reveals it to be flawed. The theory claims that secret trusts are governed by the law of trusts and not that of probate, and yet these trusts involve a departure from the usual rules pertaining to trusts. For in upholding secret trusts, the courts are allowing trusts to bind after-acquired property, and under the normal rules of trusts it is impossible to declare an immediate trust of future property, or a trust which binds such property as and when it is received.

Front 67

Challinor, E (critical commentary)

fraud theory

Back 67

However, there does exist a huge flaw in extending the theory this far; it amounts to no more than a bald assertion that a testator's wishes should be respected even if he has put them into effect in a manner that is not acceptable (that is, not in compliance with Equity and Trusts s.9 of the Wills Act).

Front 68

Challinor, E (critical commentary)

general comment on secret trusts

Back 68

The role of equity seems, in this area, to have been expanded too far.

They serve a very limited social purpose and fraud would be better prevented by an insistence upon compliance with the requirements of the Wills Act.

Front 69

Beneficiary principle

Back 69

For a trust to be valid, there must be someone to enforce its terms; This is the beneficiary principle, which says that a trust must have ascertainable beneficiaries, though it is possible to accumulate income for 125 years before the capital with the accumulated (capitalised) income has to be distributed amongst the then ascertained beneficiaries.

An ascertainable beneficiary either means an actual person or a legal person, such as a company. However, if the trust is charitable, there is no need for an ascertainable beneficiary since enforcement will be carried out by the Attorney General instead.

Front 70

Morice v Bishop of Durham

Back 70

Beneficiary principle:
Grant MR: "“Every [non-charitable] trust must have a definite object. There must be somebody in whose favour the court can decree performance”

Front 71

Re Astor’s Settlement Trusts

Back 71

Roxburgh J explained that the need for a beneficiary arose from the obligatory nature of a trust. A trustee could not be subject to an obligation unless there was somebody who could enforce an equivalent equitable right

In this case, the trust failed because of the lack of ascertainable beneficiary; purpose of the trust was:
“. . . the maintenance of good understanding, sympathy and co-operation between nations, the preservation of the independence and integrity of newspapers; the protection of newspapers from being absorbed by combines or being tied by finance or otherwise to special . . . views"

Exceptions to PPT are “concessions to human weakness or sentiment”. (Roxburgh J)

Exceptions to the beneficiary principle are sometimes known as "trusts of imperfect obligation" and they only work if trustees are willing to carry them out as if they were simply fiduciary powers: "no case has been found in the reports in which the courts have ever directly enforced a non-charitable purpose against a trustee”.

Front 72

Problem with private purpose trusts

Back 72

Generally there is a lack of ascertainable beneficiary

Private trusts can also fail if they lack certainty of object (i.e purpose)

Front 73

Leahy v AG for New South Wales

Back 73

Invalid PPT

Front 74

Philippe v Cameron

Back 74

Invalid PPT

Front 75

Re Endacott

Back 75

Exceptions to the beneficiary principle for testamentary trusts:
1. erection and maintenance of monuments and graves;
2. saying of private masses;
3. maintenance of particular animals;
4. miscellaneous cases.

However, these are described as "“troublesome, anomalous and aberrant”

In Re Endacott the testator left approximately £20,000 to his local Parish Council “for the purpose of providing some useful memorial to myself”. The Court of Appeal held that the trust failed on the beneficiary principle and on grounds of uncertainty.

Harman LJ said that the exceptions were cases which stand by themselves and “ought not to be increased in number, nor indeed followed, except where the one is exactly like another”. A trust for an unspecified and unidentified memorial was too wide and too uncertain to fit within the existing exceptions.

Front 76

Mussett v Bingle

Back 76

testator established a rather strange trust of £300 to be used for the erection of a monument to the first husband of the testator’s wife. The court upheld this as a valid private purpose trust. A further trust of £200 for the maintenance of the monument was held to be void, but only on grounds of perpetuity - maintenance could be carried on indefinitely, and it could not be said with certainty that this trust would definitely come to an end within the perpetuity period of 21 years.

Front 77

Trusts for monuments and graves may be charitable...

Back 77

...on religious grounds, if the monument is located inside or is attached to the fabric of a church building or if the grave is in the churchyard and the trust is for the churchyard in general (Re Douglas)

Front 78

Re Hooper

Back 78

testator gave a sum of money for the upkeep of a tablet and a window in a church and for maintaining certain family graves and monuments outside the church. The trust for the tablet and the window was upheld as a charitable trust, since it was part of the fabric of the church. The trust for the family graves and monuments outside the church was also upheld, but as a private purpose trust

Front 79

Trusts for saying private masses

Back 79

can be charitable on religious grounds, but only if the masses are said in public

Front 80

Gilmour v Coats

Back 80

a group of cloistered nuns were denied charitable
status, the court emphasising the need for a public benefit

Front 81

Bourne v Keane

Back 81

saying of masses in private was upheld as a valid testamentary private purpose trust

Front 82

Trusts for animals

Back 82

Trusts for animals can be charitable, but only if for animals in general (such as the RSPCA) or particular species. A trust for an individual animal will not be charitable, however, it may be upheld as a valid private purpose trust.

Front 83

Pettingall v Pettingall

Back 83

a trust of £50 each year for the upkeep of the testator’s favourite black mare was upheld despite the lack of an ascertainable human beneficiary

Front 84

Re Dean

Back 84

the judge upheld a testator’s trust of £750 per annum to feed his horses and hounds for 50 years if they should live that long. The judge dismissed the argument that there were no ascertainable beneficiaries, saying it was “a perfectly good trust, although I do not see who could ask the court to enforce it”. However, perpetuity issues were not clearly discussed and this case is somewhat dubious on perpetuity grounds (should really not have gone on past 21 years)

Front 85

Re Thompson

Back 85

Miscellaneous PPT:
court upheld a testamentary trust of £1,000 for the
promotion and furtherance of fox-hunting. This particular type of trust may no longer be possible, now that fox-hunting has been banned by legislation

trustee agreed to give an undertaking to the court to carry out the terms of the trust, with the residuary legatee being given liberty to apply to the court if the trustees broke their undertaking

Front 86

Perpetuity

Back 86

Where capital (with its changing pool of investments) is to be kept intact as endowment capital (though, normally, with powers to appoint capital out of the trust fund) so that only the income is to be distributed, the law imposes a limit on the duration of the trust. This ensures that (1) someone will at some future time become absolute legal beneficial owner of the former trust fund, so that safe trust capital will become available for bolder investment or entrepreneurial ventures and (2) that a settlor cannot have an excessive degree of control over his settled property from beyond the grave e.g. so that only descendants who become practising lawyers or dentists or who marry Catholics or British nationals can benefit as discretionary beneficiaries.

Front 87

Perpetuity rules: common and statute

Back 87

The common law had to be applied first and if a disposition was void at common law, the 1964 Act may have saved it.

This cleared up by Perpetuities and Accumulations Act 2009

Front 88

Perpetuity: rule against inalienability

Back 88

to be filled

Front 89

Perpetuity period (PPT)

Back 89

Under the Perpetuities and Accumulations Act 1964, which applies to wills and other trust instruments executed before 6 April 2010, the settlor could specify a fixed perpetuity period of up to 80 years. However, the wording of section 15(4) of the 1964 Act (which is not entirely clear) suggested that the 1964 Act only applied to trusts for people and did not affect the rule against inalienability or trusts for purposes.

Under the Perpetuities and Accumulations Act 2009, which applies to wills and other trust instruments executed on or after 6 April 2010, a fixed perpetuity period of 125 years is applied, regardless of whether a different perpetuity period is specified in the will (section 5). However, section 18 of the 2009 Act clearly confirms that the Act has no application to the rule of law which limits the duration of non-charitable purpose trusts.

The perpetuity period for private purpose trusts will therefore depend upon the common law. At common law, the perpetuity period is the lifetime of any relevant life in being (or lives in being) plus 21 years

Front 90

Lives in being

Back 90

The perpetuity period for a purpose trust taking effect on death will simply be 21 years, unless lives in being are specifically designated.

However, it has to be certain that the trust will definitely come to an end before the perpetuity period expires. As most purposes could theoretically be carried out forever, private purpose trusts will generally be void, because they offend the rule against inalienability, unless expressly limited to a duration of 21 years (or the lifetime of a specified life in being plus 21 years).

Front 91

Re Hooper

Back 91

Clever way to make sure perpetuity isn't an issue is to have the trust continue "for as long as the trustees can legally do so"

This type of wording was held to automatically bring the trust to an end on the expiry of the perpetuity period (i.e. 21 years)

Front 92

section 1 of the Parish Councils and Burial Authorities
(Miscellaneous Provisions) Act 1970

Back 92

a burial authority may agree, for the payment of a sum, to maintain a grave or monument for a period not exceeding 99 years

Front 93

Perpetuity - upkeep of animals

Back 93

The courts do not always make it clear how certain trusts for the upkeep of particular animals comply with the rule against inalienability. For instance, a trust to feed the testator’s horses and hounds for 50 years was upheld in Re Dean, despite this trust’s duration exceeding the usual perpetuity period of 21 years

Trust t to maintain an animal for the rest of its natural life will therefore generally be void because it cannot be said with certainty that the animal will definitely die, and that the trust will therefore definitely come to an end, within the perpetuity period of 21 years.

Front 94

Re Kelly

Back 94

animals cannot be used as lives in being - lives means human lives

Front 95

Re Denley purpose trusts

Back 95

A trust for a non-charitable purpose, which would otherwise be void because it falls outside the Re Endacott exceptions, may nevertheless be upheld if the trust is expressed to be for the benefit of ascertainable individuals

Trust deed gave trustees land to be held on trust as a sports ground primarily for the benefit of employees of a named company.

Goff J said that where a trust was directly or indirectly for the benefit of ascertained or ascertainable individuals, that trust fell outside the mischief of the beneficiary principle

Front 96

Re Grand's Will Trusts

Back 96

suggested that Denley was nothing more than an ordinary discretionary trust for the employees as a class of beneficiaries.

Front 97

Re Horley Town Football Club

Back 97

who referred to Re Denley as a discretionary trust to which the ‘is/is not test’ for certainty of objects from McPhail v Doulton applied

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Grender v Dresden

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a trust for the purpose of maintaining and funding private roads on a housing estate for the benefit of Estate Residents was upheld as a valid Re Denley trust for a definable class of persons. The trust had a clear purpose (funding road costs), definable members (the estate residents) and specified a perpetuity period with a royal lives clause

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UI: Gift for present members beneficially

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Members each "pocket a share"; gift to named association is treated as being a gift to individual members of the association

No obligation to use the gift for the association's purposes

best to regard this interpretation as the old and unsophisticated way of upholding gifts to unincorporated associations, an approach which has now largely been superseded by the contractual analysis

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UI: Gift to members subject to contract

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the contractual analysis also takes effect as a gift to the present members of the association, thus satisfying the beneficiary principle and avoiding any need to comply with the perpetuity rule because the capital and income can be freely consumed without distinguishing between them.

However, instead of each member pocketing a share of the ‘bounty’, the members hold that gift subject to the members’ contract. The ‘contract’ comprises the members’ mutual duties and obligations, as evidenced by the club rules.

The gift is therefore effectively treated as an addition (or ‘accretion’) to club funds, to be used and held in accordance with the rules of that club. When a member dies or resigns, his ‘share’ accrues to the other members of that association.

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Control over club assets

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for the contractual analysis to work, the members must
have control over the club’s assets under the club rules.
- need for "internal control"