As the name suggests, purpose trusts are those that are set up for a specific purpose and not for the benefit of human beneficiaries. The trust may or may not be charitable.
While purpose trusts traditionally failed in England and Wales for lack of certainty, the Isle of Man introduced the Purpose Trusts Act 1996 specifically to allow purpose trusts with non-charitable purposes. The purpose itself must be legal, reasonable, possible and certain.
An 'Enforcer' must be appointed to ensure that the trustees fulfill their obligations and the trust does indeed discharge its purpose.
Purpose trusts are often used in securitisations and other transactions where there is a need for the assets to be held independently of the investors. They are often used to hold shares in private trust companies. They may also be used where a donor wishes for the trust's assets to be given to non-human beneficiaries that are not charitable, such as the encouragement of scouting and girl guiding in the local area or political purposes.
For more information please feel free to contact [email protected] or call 00 44 (0)1624 612888.