Charitable and Honorary Trusts

Question 1

Charitable Trusts - Distinctive Rules

Answer 1

Three Key Differences:
- charitable trust must have indefinite beneficiaries
- charitable trust may be perpetual
- cy pres doctrine applies

Question 2

Charitable Trust - Purpose Requirement

Answer 2

• must have a purpose considered to benefit the public

Charitable purposes include:
- relief of poverty
- advancement of education or religion
- promotion of health
- accomplishment of gov purposes (ex: parks, museums, playgrounds)

Question 3

Charitable Trusts - Language to Create

Answer 3

• no special language as long as intent clear
• charitable purpose may be expressed in very general terms
• charitable trust will be implied when settlor’s charitable purpose is clear

Question 4

Charitable Trust - Altruism Req

Answer 4

• needs to be significantly altruistic in supplying benefits
  -> class to be benefited can be limited, BUT can’t be so narrow that settlor is claiming charitable trust while actually only benefitting certain personal connections
• trust can be charitable even if some family will be benefitted though

Question 5

Charitable Trust - Beneficiaries

Answer 5

• must be indefinite
• court can select a charitable purpose or beneficiary if none specified in the instrument, so long as the selection is consistent with the settlor’s ascertainable intention
• beneficiary could theoretically be another charitable institution though (since ultimate beneficiaries would be indefinite)

Question 6

Cy Pres

Answer 6

• when charitable purpose selected by settlor is impracticable, unlawful, impossible to achieve, or wasteful, court may select an alternative under the doctrine of cy pres by ascertaining settlor’s primary purpose
• applies to outright charitable gifts as well as charitable trusts

Question 7

Cy Pres - Settlor’s General Charitable Intent

Answer 7

• traditionally, to apply cy pres, court had to determine that the settlor had a general charitable intent (didn’t intend to limit gift to a particular charity regardless of the circumstances)
• BUT under UTC, settlor’s general charitable intent is conclusively presumed
  -> unless trust terms expressly provide otherwise, application of cy pres doctrine is mandatory + court must reform the trust
• court has discretion to determine settlor’s primary charitable intent

Question 8

Charitable Trusts and Rule Against Perpetuities

Answer 8

• charitable trusts are NOT bound by Rule Against Perpetuities
• RAP doesn’t apply to shifting of the beneficial interest in a trust from one charity to another on the happening of a condition
• RAP does apply though to shifts between private and charitable uses

Question 9

Enforcing Charitable Trusts

Answer 9

• suit to enforce a charitable trust can be brought by the settlor, a qualified beneficiary, or the state’s attorney
  -> note some states require that settlor have an interest in enforcing beyond merely being settlor

Question 10

Honorary Trusts or Purpose Trusts

Answer 10

• honorary or purpose trust = a trust that is not for a charitable purpose + has no private beneficiaries
• honorary trusts are commonly established for benefit of pets or maintenance of burial places
• under common law, b/c no beneficiary to enforce, trustee was “on honor” to carry out its terms, BUT UTC has someone named in trust instrument or appointed by court to enforce
• trust property may be applied only to carry out the terms of the trust
  -> any excess property is distributed to the settlor or their successors unless governing instrument provides otherwise

Question 11

Honorary Trust - Duration

Answer 11

• many jurs void honorary trust (other than trust for care of animals) on basis of RAP if duration may be more than human life in being plus 21 yrs
• UTC expressly provides though that an honorary trust (not for care of animals) may not be enforced for more than 21 yrs

Question 12

Trust for Care of Animal

Answer 12

• trust for care of an animal alive during settlor’s life is valid
• trust terminates when the animal dies