Charitable and Honorary Trusts

Question 1

In general, how does a charitable trust differ from a private trust?

Answer 1

Charitable trust:

1. must have a CHARITABLE purpose
2. must have INDEFINITE beneficiaries
3. may be PERPETUAL (RAP doesn’t apply)
4. cy pres doctrine applies

Question 2

What does it mean to have a charitable purpose?

Answer 2

Must benefit the public:

• relief of poverty
• advancement of knowledge, education, or religion
• promotion of health
• accomplishment of gov purposes (parks, museums)

NOTE –> the class to be benefited may be limited, but not so limited as to only benefit a few individuals that Settlor wants to benefit personally

Question 3

What does it mean that beneficiaries of a charitable trust must be indefinite?

Answer 3

Beneficiary can be –> a specific charitable entity (for example, Red Cross)

Beneficiary can’t be –> a group of people Settlor wants to specifically benefit

Question 4

Who has standing to ENFORCE charitable trusts?

Answer 4

In many states –> settlor and potential beneficiaries have NO standing to enforce charitable trusts. Only the Attorney General can.

Under UTC –> Settlor and QUALIFIED beneficiaries have standing to enforce charitable trusts (current beneficiaries and first line remainder man)

Question 5

What is the rule w regards to charitable trusts and RAP?

Answer 5

Charitable trusts may be perpetual

RAP does not apply to –> shifting from one charity to another

RAP DOES apply –> shifting btwn private and charitable uses

Question 6

With regards to charitable trusts, what is the doctrine of CY PRES?

Answer 6

“cy pres” means “as near as possible”

• if charitable purpose is impracticable, court will select an alternative under doctrine of cy pres. Court must find:
  1. general charitable intent, and
  2. ascertain her primary purpose

NOTE –> cy pres can apply to outright charitable gifts as well as to charitable trusts

Question 7

What is an “honorary trust”?

Answer 7

• commonly established for benefit of pets or maintenance of burial places
• bc there is NO human beneficiary to enforce, the trustee is “on her honor” to carry out its terms

Courts uphold, as long as —> trustee is willing
If trustee is NOT willing –> becomes a resulting trust

May jdxns –> may void honorary trust if it violates RAP
UTC –>
- honorary trusts are enforceable up to 21 years by someone named in trust instrument or appointment by court
- recognizes honorary trusts for animal alive during settlor’s lifetime, which terminate when animal dies