Charitable and Honorary Trusts Flashcards
In what three key ways do the rules governing charitable trusts differ from those applicable to private trusts?
(1) A charitable trust must have indefinite boundaries
(2) It may be perpetual
(3) The cy pres doctrine
What is the purpose requirement for charitable trusts?
A charitable trust must have a purpose considered to benefit the public (e.g., poverty relief, advancing religion or education, promoting health or accomplishing governmental purposes). It can be to benefit a limited class but not so narrow as to benefit only a small number of individuals.
What must the beneficiaries of a charitable trust be?
Indefinite. This does not mean that the charity cannot be specifically chosen because the individuals benefited by the specific charity will remain indefinite.
What if no charitable purpose or no beneficiary is stated in the trust instrument?
The court may choose a beneficiary or purpose so long as it is consistent with the settlor’s ascertainable intention
Who may sue to enforce a charitable trust?
The settlor, a qualified beneficiary or the state AG
What is the application of the Rule Against Perpetuities to charitable trusts?
Charitable trusts may be perpetual and the RAP also does not apply to the shifting of beneficial interest from one charity to another. It does apply to the shifting between private and charitable uses.
What is the cy pres doctrine?
When a charitable purpose selected by the settlor is impracticable, unlawful, impossible to achieve, or wasteful, a court can select an alternative. Cy pres means as near as possible and allows the court to choose a feasible replacement charitable purpose by ascertaining the settlor’s primary purpose.
What are honorary trusts?
Commonly established for the benefit of pets or the maintenance of burial places. Under common law, because of the absence of a beneficiary to enforce the trust, the trustee is “on her honor” to carry out the terms. Under the UTC, the trust is enforceable either by someone named in the trust instrument or appointed by the court.
How may the trust property of an honorary trust be applied?
The trust property in an honorary trust only applies to carry out the trust’s terms and any excess is distributed to the settlor or successors unless the governing instrument provides otherwise.
What is the duration of an honorary trust?
Most jurisdictions will void an honorary trust other than one for the care of an animal on the basis of the Rule Against Perpetuities. The UTC prevents honorary trusts (other than for the care of an animal) cannot be enforced for more than 21 years. A trust for the care of an animal terminates on the animal’s death.
