Charitable & Honorary Trusts

Question 1

Charitable trusts must have charitable purposes and are distinct from private trusts in three important ways, which are that they…

Answer 1

1. Must not benefit identifiable individuals;
2. May be perpetual; and
3. The Cy Pres Doctrine applies.

Question 2

A charitable trust (does/does not) need to designate a particular beneficiary or charitable purpose.

Answer 2

does not;

the trustee may be given discretion or the court may select.

Question 3

RAP does not apply to charitable trusts when…

Answer 3

the beneficial interest in a trust shifts from one charity to another on the occurrence of a condition.

Question 4

However, RAP does apply to charitable trusts if the shift is from…

Answer 4

a private trust to a charitable trust.

Question 5

Cy Pres means…

Answer 5

“as near as possible”

Question 6

The Cy Pres Doctrine states that…

Answer 6

When a charitable purpose selected by the settlor is unlawful, impracticable, impossible to achieve, or wasteful, the court will select an alternative by ascertaining the settlor’s primary intent.

Question 7

A charitable trust provision that would result in a distribution of the trust property to noncharitable beneficiaries prevails over the court’s power to apply cy pres only if…

Answer 7

1. The property is to revert to the settlor and the settlor is then living, or
2. Fewer than 21 years have elapsed since the trust was created.

Question 8

A suit to enforce a charitable trust can be brought by…

Answer 8

1. The settlor;
2. A qualified beneficiary; or
3. The Attorney General.

Question 9

Honorary trusts are…

Answer 9

not legally enforceable as formal trusts, because there are no beneficiaries with legal standing to enforce the trust. However, the court acknowledges these as valid as long as the trustee willingly accepts and performs the duties described.

[most often used for pets]

Question 10

Resulting and constructive trusts arise by…

Answer 10

operation of law.

Question 11

A resulting trust generally arises in one of these three situations:

Answer 11

1. An express trust fails;
2. A settlor conveys only a partial interest; or
3. When one party pays the purchase price for property and causes another to take title in their name (PMRT).

Question 12

If an express trust fails, and the settlor has not declared their intent, the beneficial interest in the property is in…

Answer 12

the settlor, or if deceased, to their successors.

Question 13

When a trust purpose is fully satisfied and some trust property remains, the property…

Answer 13

reverts to the settlor or their successors.

Question 14

If a purchase money resulting trust arises out of unrelated parties, the presumption is that…

Answer 14

the person supplying consideration intended for the grantee to hold the property in trust for them.

Question 15

If a purchase money resulting trust arises out of related parties, the presumption is that…

Answer 15

the property is a gift.

Question 16

A constructive trust is…

Answer 16

it is an equitable remedy imposed to prevent unjust enrichment as a result of:

1. fraud,
2. undue influence,
3. breach of fiduciary duty,
4. mistake.

[etc.]

Question 17

A constructive trustee’s duty is to…

Answer 17

convey the property to the person who would have owned it but for the wrongful conduct.

Question 18

A secret trust arises when…

Answer 18

a will makes a gift absolute on its face, but it is alleged that the gift was made in reliance on the recipient’s promise to hold the property for the benefit of another.

Question 19

How will a court deal with a secret trust?

Answer 19

Courts will allow the intended trust beneficiary to present extrinsic evidence of the agreement. If such is proven by clear and convincing evidence, the court will impose a constructive trust.

Question 20

When a will expressly makes a gift in trust but does not name the beneficiary…

Answer 20

Virginia courts will not impose a constructive trust. Instead, a resulting trust will arise in favor of the testator’s heirs.

[semi-secret trust]