Charitable and Honorary Trusts

Question 1

What are the three main ways that Charitable Trusts differ from Private Trusts?

Answer 1

1. A charitable trust must have indefinite beneficiaries,
2. Charitable trusts are not bound by Rule Against Perpetuities
3. The Cy Pres Doctrine applies

Question 2

What are the main charitable purposes that qualify for charitable trust use?

Answer 2

1. The relief of poverty
2. The advancement of education or religion
3. The promotion of health
4. The accomplishment of government purposes

Question 3

What is the Cy Pres Doctrine?

Answer 3

When a charitable purpose selected by the settlor is impracticable, unlawful, impossible to achieve, or wasteful, the court may select an alternative under the doctrine of cy pres, which means “as near as possible,” by ascertaining the settlor’s primary purpose.

• This doctrine applies to outright charitable gifts as well as to charitable trusts.

Question 4

What is the Traditional Charitable Intent Rule vs. the UTC Rule?

Answer 4

Traditional/Common Law — To apply cy pres, the court had to determine that the settlor had a general charitable intent (the settlor did not intend to limit their gift to a particular charity regardless of the circumstances)

UTC— Settlor’s general charitable intent is conclusively presumed

Question 5

What is an Honorary Trust?

Answer 5

An honorary or purpose trust is a trust that is not for a charitable purpose and has no private beneficiaries. Honorary trusts are commonly established for the benefit of pets or for the maintenance of burial places.

Common Law — Trustee is “on their honor” to carry out the terms because there is no human beneficiary to enforce an honor trust

UTC — The trust is enforceable by someone named in the trust instrument or appointed by the court. The trust property may be applied only to carry out the terms of the trust.