Charities Trusts Law Essay

Law Essay Question 1: The Charities Bill 2004 will have no significant effect on the meaning and ambit of the "definition" of charitable trusts - all charitable trusts are nothing more than concessions to human sentiment anyway'. In light of the above statement, critically discuss to what extent the Charities Bill 2004 will affect the law on charities.

The Charities Bill 2004 (CB) main area of change has been in the categories of charitable trust which goes down to the heart of definition, but as Quint argues there is no guidance for the courts in what exactly a charitable trust is rather there are twelve categories for this type of trust to be part of. The following discussion is going to explore the categories of that the CB contains and determines whether the Bill will bring significant change in the definition of a charitable trust or just adds further confusion to the issue.

The Bill does deal with the meaning of charity whereby a charity is an organization that must have exclusively charitable purposes and must fall within in one of the twelve categories listed in the CB. The first category is the prevention or relief of poverty; whereby poor is defined as people in need and the actions of the charity is to relieve these people of their destitution. The second category is the advancement of education which is a charitable organization, i.e. non-profit that provides education to persons in both a formal and informal setting where the development of skills is the key. The third category is the advancement of religion where a religion was defined as in the decision of the Registration by the Church of Scientology:

  • *Do adherents have a belief in a supreme being?
  • *Do adherents worship the supreme being?
  • *Does the organisation advance the religion?
  • *Is the organisation established for the benefit of the public?

The fourth category of charity is the advancement of health, i.e. any organization that is for the betterment of human kind, i.e. programmes that give therapeutic treatment or research for medicines and cures. The fifth category is the advancement of citizenship or community development, i.e. community centres and programmes or immigration services to integrate new immigrants in to British society. Also it can include programmes to ensure the reformation of criminal offenders. The sixth category is the advancement of arts, history and science, i.e. museums etc. The seventh category is advancing amateur sport, i.e. community football teams. The eighth category is important for supporters of Amnesty International where the advancement of human rights, conflict resolution and reconciliation is a category; whereby groups like this excluded because they are political in nature. The advancement of environmental protection now brings in the ambit of Greenpeace and the WWF into their own category, which is the ninth category of charities. The tenth category, animal welfare has its own ambit, which is important for animal rights campaigners, especially against the charitable organizations of health advancement that test on animals. The eleventh category deals with those who need aid due to age, ill health, disability etc, which includes children’s, mental health and old aged charities. Finally, the twelfth category deals with any charitable organization working for another purpose, leaving flexibility in the legal system for new charities to deal with new problems.

Therefore these heads do clear up what a charity is and help aid the courts in determining whether there is a charity for a charitable trust. Yet the definition of what exactly a charitable trust is not dealt with therefore leaving it up to the old law; however most of the criticism of charitable trust law was that the categories of the trust type were not flexible enough, leaving out groups such as Amnesty International. This new Bill remedies this and clears the roads for the courts in determining the meaning of what is a charity. As Quint points out there is one main deficiency with the Bill with respect to defining a charitable trust which it does not deal with the requirement of public benefit:

The draft Bill does not contain any guidance on the factors which should be taken into account in assessing whether a charity fulfils the public benefit requirement, either on seeking registration or later. It leaves this to the general law. A number of large charities have argued that the Bill should include such guidance, if not a strict definition of what benefits the public, in order to reduce uncertainty and enable charities (and proposed charities) to plan their work.

Does this mean that any minute benefits suffice or does the benefit have to be sufficient to be classed as a charity? This will cause further problems in the court, especially with problem of public schools such as Eton classing themselves as charities but they only benefit exclusive sectors of society. Therefore in this respect the new CB is deficient in helping define what a charitable trust is; however it has clarified the categories and included categories that have long been excluded, i.e. human rights and groups such as Amnesty International.

Bibliography:

  • J. Edwardes, 2004, Twelve Heads are Better than Four, NLJ 154(7137)
  • R. Edwards & N. Stockwell (2002) Trusts and Equity, Harlow England, Longman
  • J. Martin (2001) Hanbury and Martin: Modern Equity (16th Edition), London, Sweet & Maxwell
  • Francesca Quint, 2004, Schools and the Reform of Charity Law: The Draft Charity Bill, Edu LJ 5(151)

Law Essay Question 2: When considering an application for variation of a trust, the court has to make a distinction between a variation of the trustees' powers and a variation of the beneficial interests.' Critically analyze this statement with reference to the various means by which the court can consent to a variation.

This discussion will go over the requirements of a trust and then discuss when the courts will vary a trust. It will consider if there is a difference when the court is considering a variation to a trustee’s powers and the beneficial interests or should they be treated equally? The power for the court to vary trusts comes from the Variation of Trusts Act 1958 where it was a statutory insurance that the court could ensure beneficiaries received the proceeds of a trust where under the present trust there is some confusion over the rights of the beneficiary.

In respect to variation of a trust this usually lies within the requirement of certainty; whereby the court will make a trust certain as long as the intention of the testator seems to benefit an individual/class of individuals is present. The testator must make his intentions clear when creating his trust; he must make it clear which property is subject to the trust; and finally he must identify the beneficiary of the trust. In Wright v Atkynsit was determined that the words must be imperative, but there does not have to be created with the word trust or obligation but sufficient intention must be apparent from conduct and words. The court will always aim to impose a trust as long as the intention of the testator is present, i.e. if a variation is necessary then the courts will ensure it In relation to the subject of the trust this also must be clearly stated, whereby the exact size and amount of the subject matter is clear, e.g. the bulk of my estate is not clear enough, whereas a reasonable income was clear enough for the courts to determine from the living costs of the individual, i.e. they will vary the beneficial interest to make it clear. Therefore the court will determine the subject matter as long as there is enough clarity made by the testator. Finally the trust must clearly state the beneficiaries of the trust, i.e. it must be a clear set of beneficiaries, if not the trust is void. To ensure that a trust is successfully completed then the trustees must know all the beneficiaries of the trust, i.e. this is known as the list principle - a list of beneficiaries can be made. In Re Eden it was determined that it is not necessary that all potential beneficiaries are known, but whether it is not possible to determine the range of potential beneficiaries on the date that the trust comes into being, i.e. it will allow trustees the power to determine who the class of beneficiaries are. Also in Re Benjamin it was determined if a beneficiary was unavailable that all the property of the trust would be divided amongst the existing beneficiaries and the remaining amount is kept in trust until finding the missing beneficiary; however “this kind of order cannot save a gift where the class is not identified with sufficient precision, but only benefits a class which is precisely defined but where members cannot be found.”

This variation may be in respect to the powers of the trustees to determine who are potential beneficiaries as in Re Eden or to name individuals as beneficiaries as in Charalambous v Charalambous where the original trust held both individuals as beneficiaries when married but after a divorce the questions of the beneficiaries of the trust was shrouded in mist and the court varied the trust to hold both as beneficiaries. Therefore the determination whether it is a variation of the trustee’s powers or beneficial interests is important to determine whether the original trust is being upheld and the intention of the trust originator. The variation that the courts consent to is usually in the interests of the original intention of the trust and the Variation of Trust Act 1958 gives statutory power in respect to beneficial interests.

Bibliography:

  • R. Edwards & N. Stockwell (2002) Trusts and Equity, Harlow England, Longman
  • J. Martin (2001) Hanbury and Martin: Modern Equity (16th Edition), London, Sweet & Maxwell
  • Trusts and Estates, 2004, From The Courts -- Variation Of Settlements And Conflicts Of Laws, T&E 18(9)

Source: Essay UK - http://lecloschateldon.com/free-essays/law/charities-trusts-organisation.php


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