ABSTRACT
A beneficiary acquires equitable proprietary rights in property held on an express trust. The beneficiary also acquires the right to require an account from the trustees and personal rights against the trustees in the event of a breach of trust. The principle in Saunders v Vautier provides that all of the beneficiaries acting together may direct the trustees how to deal with the trust property: this is taken to demonstrate the ultimate ownership of the trust property by the beneficiaries. The rights of the objects of discretionary trusts are more complex because they may have no vested rights until property has been appointed to them.
90The ‘beneficiary principle’ requires that there be some person in whose favour the court is able to exercise the trust. If there is no beneficiary, then the trust will not be valid. Therefore, a trust which is created to achieve some abstract purpose, without any person entitled to take an equitable interest in the trust property as beneficiary, will be invalid. Therefore, it is necessary to distinguish between trusts for the benefit of people (which will be valid) and trusts for the achievement of abstract purposes (which will be invalid). The exception to this rule is the charitable trust, discussed in Chapter 23.
Transfers of property to unincorporated associations are particularly challenging for the beneficiary principle because those associations are not legal persons and therefore the property must be held for them by a legal person, and that may appear to be an abstract purpose trust (which would be invalid). There are a number of different ways of structuring such a transfer to make it valid: whether as a trust for the benefit of identified people, or as an accretion to the association’s funds subject to contract, or as a transfer to the club’s officers subject to a mandate to use that property in accordance with the association’s purposes subject to contract, or as a gift to the members of the association. The case law analyses the distinctions between these various forms of transfer.
The Perpetuities and Accumulations Act 2009 now governs the maximum length of time for which a trust may exist. The statutory perpetuity period is now 125 years.
