Charitable Trusts Flashcards
What is a distinguishing characteristic of a charitable trust?
Designed to support and extend charity
Charitable trusts aim to fulfill charitable purposes rather than benefit specific individuals.
Can a charitable trust have ascertainable beneficiaries?
NO, unless they are qualified charitable organizations
Private trusts must have ascertainable beneficiaries.
Is a charitable trust subject to the Rule Against Perpetuities?
NO
Private trusts are subject to this rule.
When does a charitable trust end?
Does not necessarily end when the purpose is accomplished or impracticable
A private trust is more likely to end when its purpose is fulfilled.
What major categories of charitable purposes exist?
- Relief of poverty
- Advancement of education
- Advancement of religion
- Promotion of health
- Performance of governmental and municipal purposes
- Other purposes beneficial to the community
A charitable purpose must be exclusive to the trust’s objective.
What distinguishes a charitable purpose from a benevolent purpose?
Merely helping others does not qualify as a charitable trust
For example, transferring property to family members for financial ease does not qualify.
What is the cy pres doctrine?
Allows the court to direct the application of trust property to another charitable purpose that approximates the settlor’s intention
It applies when the settlor’s specific charitable purpose becomes impossible or impracticable.
When can cy pres be applied?
- The specific charitable purpose becomes impossible, impracticable, or illegal
- The settlor had a general charitable intent
A lack of general charitable intent is indicated if a gift-over is provided.
What is an honorary trust?
A trust that does not qualify as a charitable trust, lacking definite beneficiaries capable of enforcing it
These trusts can provide for the care of animals or gravesites.
What happens to an honorary trust upon the death of an animal?
The trust terminates upon the death of the animal or the last surviving animal
Such trusts may violate traditional trust creation rules.
What is the trustee’s obligation in an honorary trust?
Moral or honorary obligation to follow the terms of the trust
Courts may allow such trusts to exist despite traditional rules.
Is a non-charitable gift-over valid in the context of charitable trusts?
NO, it likely fails as violating the Rule Against Perpetuities
This is an example of a type of charitable lead trust.
Fill in the blank: A charitable trust must have a _______.
[charitable purpose]
True or False: A charitable trust can have a definite number of beneficiaries.
False
Beneficiaries must be indefinite, chosen from a large group.
What happens if the original beneficiary of a charitable trust is gone?
The court may apply cy pres to effectuate the settlor’s intent
This allows substitution with another charity that aligns with the original purpose.
