A 21 year old beneficiary of a substantial trust fund requested the trustees to apply for his benefit a sum (equal to about one-seventh of the fund) to a family charitable foundation. He would be entitled to the capital of the fund on attaining 30, in default of which the capital went to his issue if any and subject thereto to his sister and her family in trust.
Held: It was open to the trustees to make the advance: i) the improvement of the material situation of the beneficiary is not confined to his direct financial situation but could include the discharge of certain moral or social obligations particularly in relation to provision for family and dependants. And ii) the court has always recognized that a wealthy person has a moral obligation to make appropriate charitable donations and that: ‘a beneficiary under a settlement may indeed in many cases be reasonably entitled to regard himself as under a moral obligation to make donations towards charity. The nature and amount of those donations must depend upon all the circumstances, including the position in life of the beneficiary, the amount of the fund and the amount of his other resources. Once that proposition is accepted, it seems to me that it must lie within the scope of a power such as that contained in clause 8 of this settlement for the trustees to raise capital for the purpose of relieving the beneficiary of his moral obligation towards whatever charity he may have in mind. If the obligation is not to be met out of the capital of the trust fund, he would have to meet it out of his own pocket, if at all. Accordingly, the discharge of the obligation out of the capital of the trust fund does improve his material situation. The precise amount which the trustees can in any given case apply for this purpose must depend, I think, on the particular circumstances, and in this respect quantum is a necessary ingredient in the proper exercise of the power. It is difficult, for example, to see how the trustees under a power such as that in clause 8 could validly pay over the whole authorized two-thirds to charitable purposes. On the other hand, it is certainly not for the court to say precisely where the line is to be drawn.’ iii) rejecting the argument that direct material advantage could only be shown if, for example, the beneficiary was under such pressure, public or otherwise, that it would be detrimental to his material position if the donation were not made, that that was: ‘too narrow a view of what represents a benefit in a material sense to the beneficiary. Once the beneficiary regards the payment as a moral obligation, then it may be for his benefit to be relieved of it.’ Earlier he said: ‘Once he recognises this obligation the trustees may properly regard it as improving his material situation to discharge the obligation out of the trust fund, and as I have said, the proportion they propose to apply for this purpose is not excessive.’
Judges:
Pennycuick J
Citations:
[1966] 1 WLR 955, [1966] 2 All ER 272
Jurisdiction:
England and Wales
Cited by:
Cited – X v A and others ChD 29-Nov-2005
The wife sought confirmation that the trustees of a discretionary marriage settlement created by her husband could release sums which she intended to pay out for charitable purposes.
Held: The trust required money to be released for the . .
Cited – Jones and others v Firkin-Flood ChD 17-Oct-2008
The trustees had contracted to sell shares in a private company held within the estate. A family member now claimed that they were held in trust after a settlement of a possible challenge to the will based in lack of testamentary capacity and undue . .
Lists of cited by and citing cases may be incomplete.
Trusts, Charity
Updated: 10 May 2022; Ref: scu.237752