3 - Legal Restraints on Accumulation Applicable On Creation

Summary

The restraints applicable on creation of a charity arise from perpetuities rules or from accumulation provisions that cause a failure to satisfy the common law or statutory definitions of charity. Perpetuities restraints are especially relevant to the matter of which generation gets to decide the intergenerational distribution of benefits and the chapter therefore outlines the perpetuities rules, including as amended or abolished by statute. Australian, Canadian, New Zealand, United States and United Kingdom examples are provided, with the examples set out in three broad categories: express statutory time limits on accumulation under charitable trusts along the line of the Thellusson Act, statutory rephrasing of common law accumulation rules and abolition of accumulation restraints. The chapter concludes by surveying separate rules to the perpetuities constraints that go to the validity of a charitable trust or incorporated charity and that can be affected by accumulation provisions. This discussion draws primarily on cases and legislation from Australia, the United Kingdom and New Zealand.