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Charitable Trusts Act 1957

Miscellaneous provisions

61B: Inclusion of non-charitable and invalid purposes not to invalidate a trust

You could also call this:

“Trusts with both good and not-so-good purposes can still be valid”

This law is about trusts that include both charitable and non-charitable purposes. You might wonder what happens if someone sets up a trust that’s meant to do good things, but also includes some purposes that aren’t allowed. Here’s what you need to know:

The law calls this kind of trust an “imperfect trust provision”. It’s a trust that allows money or property to be used for both charitable purposes (which are good and legal) and non-charitable purposes (which might not be allowed).

Even if a trust includes some purposes that aren’t allowed, the law says it’s still valid. This means the trust isn’t automatically cancelled just because it has some non-charitable purposes mixed in with the charitable ones.

When a court looks at an imperfect trust provision, they treat it as if it were only for charitable purposes. They ignore any parts that aren’t charitable or aren’t allowed.

This law applies to all trusts like this, no matter when they were created. But there are two exceptions for older trusts (created before 26 October 1935):

  1. If a court already said the trust wasn’t valid before 1 January 1957.
  2. If the trust’s property or money was given to other people because the trust wasn’t valid, and this happened before 1 January 1957.

So, if you’re involved with a trust, even if it has some purposes that aren’t strictly charitable, it might still be okay under this law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM309998.

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Part 5 Miscellaneous provisions

61BInclusion of non-charitable and invalid purposes not to invalidate a trust

  1. In this section the term imperfect trust provision means any trust under which some non-charitable and invalid as well as some charitable purpose or purposes is or are or could be deemed to be included in any of the purposes to or for which an application of the trust property or any part thereof is by the trust directed or allowed; and includes any provision declaring the objects for which property is to be held or applied, and so describing those objects that, consistently with the terms of the provision, the property could be used exclusively for charitable purposes, but could nevertheless (if the law permitted and the property was not used as aforesaid) be used for purposes which are non-charitable and invalid.

  2. No trust shall be held to be invalid by reason that the trust property is to be held or applied in accordance with an imperfect trust provision.

  3. Every trust under which property is to be held or applied in accordance with an imperfect trust provision shall be construed and given effect to in the same manner in all respects as if—

  4. the trust property could be used exclusively for charitable purposes; and
    1. no holding or application of the trust property or any part thereof to or for any such non-charitable and invalid purpose had been or could be deemed to have been so directed or allowed.

      1. This section shall apply to every trust under which property is to be held or applied in accordance with an imperfect trust provision, whether the trust is declared before or after the commencement of this section:

        provided that this section shall not apply to any trust declared by the will of any testator dying before, or to any other trust declared before, 26 October 1935 (being the date of the passing of the Trustee Amendment Act 1935), if before 1 January 1957 (being the date of the commencement of the Trustee Act 1956)—

      2. the trust has been declared to be invalid by any order or judgment made or given in any legal proceedings; or
        1. property subject to the imperfect trust provision or income therefrom has been paid or conveyed to, or applied for the benefit of, or set apart for, the persons entitled by reason of the invalidity of the trust.

          Notes
          • Section 61B: inserted, on , by section 4(1) of the Charitable Trusts Amendment Act 1963 (1963 No 21).