Charitable & Honorary Trusts

Question 1

Main differences between a private trust and a charitable trust

Answer 1

Charitable trust must have:
- Indefinite beneficiaries
- It may be perpetual
- Cy pres doctrine applies
- General charitable purpose
- Not bound by RAP

Question 2

What are charitable purposes?

Answer 2

Must benefit THE PUBLIC: the class may be limited, but may not be so narrow as to only benefit a few individuals whom the settlor wishes to aid personally.

Charitable purposes include:
* Poverty
* Education
* Religion
* Health
* Governmental purposes (e.g., parks, museums, and playgrounds)

The charitable purpose may be expressed in very general terms- it will be implied when the settlor’s charitable purpose is clear.

Question 3

CY PRES

Answer 3

When a charitable purpose selected by the settlor is accomplished or becomes impracticable, the court may select an alternative under the doctrine of Cy Pres

The court must find a general charitable intent on the part of the settlor and ascertain their primary purpose. Therefore, if the purpose of the trust is to give only to one specific charity, no general intent and Cy Pres inapplicable

Question 4

Who Enforces Charitable Trusts

Answer 4

The state attorney general.

However, under the UTC the settlor and qualified beneficiaries have standing to enforce the trust.

Question 5

HONORARY TRUSTS

Answer 5

A trust that is not for a charitable purpose and has no private beneficiaries (e.g., a trust for the benefit of pets or for the maintenance of burial places)

Courts uphold honorary trusts as long as the named trustee is willing to perform their duties, otherwise a resulting trust is imposed.

But, RAP applies

Question 6

Honorary Trusts and RAP

Answer 6

Many jurisdictions will void an honorary trust on the basis of the Rule Against Perpetuities if its duration may be more than a (human) life in being plus 21 years.

UTC: Honorary trusts are enforceable up to 21 years by someone named in the trust instrument or appointed by the court.