W&T: Trusts: Charitable trusts & Trustee powers

Question 1

generally, charitable trusts are those that

Answer 1

(1) have charitable purpose (education, religion, health, community)
(2) give to indefinite beneficiaries
(3) have perpetual existence, and
(4) the Cy press doctrine will apply

Question 2

Cy Pres

Answer 2

if the settlor’s exact charitable purpose cannot be carried out, the court may direct the application of the trust to another charity that approximates the settlor’s intention (only applies if not barred by will/trust and where the trust was valid already)

Question 3

Beneficiaries

Answer 3

have no standing to sue unless they comprise a small group of special interests. Also AG has the authroity to sue to enforce charitable trusts

Question 4

Trustee’s statutory powers

Answer 4

do not include the power to abandon/destroy property; pay illegal debts; continue a business; borrow from the trust; or make extraordinary repairs. The do include ability to: acquire assets and invest; maintain insurance and make ordinary repairs; vote shares of stock; and settle claims against the trust

Question 5

Duty of loyalty

Answer 5

the trustee owes a duty of utmost good faith and loyal to each beneficiary. Trustee is prohibited from self dealing

Question 6

Affirmative duties

Answer 6

trustee has duty to preserve and enhance using the care of a reasonably prudent businessperson (unless he is additional skills). He must be a prudent investor.