Charitable Trusts

FORMATION: Same rules as

(1) Beneficiary Diff. -- Generally, (2) Charitable Purpose &. Public Benefit (3) Rule Against
pertai to regular trust, except.
charitable purp. req repalces this. Two prongs: (1) Valid charitable purpose; Perpetuties
(1) Beneficiary differences; (2)
The beneficiaries must, gen. be and (2) ultimate use of funds (ie can't send DOES NOT APPLY to
req' valid charitable purpose &
indefinite class. $50 home with every 5th grader "for Charitable Trusts. Note, a
public benefit; and (3) RAP
[Presence of private class may education" if trustee has no power to ensure failed charitable trust
immune.
disrupt as private trust] educational use) becomes subject to RAP.

If small group of
beneficiaries, charitable (a) Enumerated: [Poverty relief; advancement of education, religion, or health; Gov't or Muncipal Purpose];
ONLY IFF: (1) chosen from OR
Others
an eligible indefinite group; (b)Catch-All: Accomplisment of other purpose must be beneficial to the community. [NO POLITICAL Test Intent.
OR (2) benefit of class is PARTIES] Res.
sufficiently in the public Note: Mere benevolence ? charity (ie can't Note: Public Benefit/ Use Prong: Mere enrichment is Writing.
interest (ie 9/11 firefigher just say chariable trust b/c giving money not sufficient use UNLESS the receipients are poor/in
fund). away to people) . need.

Modification of Charitable Trusts: (a) Cy Pres & (b) Deviation.

Cy Pres Doctrine: Under certain cirs, court may redirect the application of trust Administrative Deviation: Same as private trusts. Permits
property to ANOTHER charitable prupose which approximates the settlor's intention breach of instructions by trustee. [IF possible, many courts
as closely as Possible. Trad: New use "as near as possible" have preference for deviation before Cy Pres] UTC 412

Traditional: If exact charitable Modern (UTC/Rest.): Includes traditional, but See Revocation for more.
purpose becomes illegal, also if the charitable purpose is wasteful Basics:
impossible, or impracticable. Court may permit trustee to deviate from instructions
(Did not include waste). if the court is convinced that SETTLOR would have
Rest: "If trust prop UTC: Generable consented to the change b/c of:
Limited to General Intent: While
so exceeds what is Charitable Intent (1) Purpose of trust fulfilled;
'exact' purpose needed, cannot
needed for partic Presumption. (2) purpose illegal; (3) purpose imposible;
be exclusive, specific intent.
charitable purpose (4) circs unknown by settlor, compliancew with terms
(If settlor says for this purp and
(surplus funds) -Presumption of defeat trustee's ability to acocmplis purpose.
no other; no cy pres.)
that continuted general charitable
Works: If Set. says expienditure of all intent, thus no
DOES NOT:
"To incorp village of funds would be 'secondary intent'
Sole gift "to
Raleigh for a wasteful for that issue.
x charity for
hospital" purpose --> COURT APPLICATION: Discriminatory Trusts.
use in Wake
Hosp = secondary MIGHT broaden -Standard for new use
county."
intent, non-exclsv. purp (ie. same loosened, now General Rule: It is not unconstitutional for a court
Exclusive
Can be used for function, but include "consistent with" to enforce racial restriction (which would be
no cy pres.
hospital nearby. new community) settlor's intention. unconstitutional) if a private body--and not a gov't
org--is the trustee.

Restrictions on New Purpose: (1) cannot merely "think this is better'; (2) impracticability requires However, Majority of courts will apply cy pres and
more than mere inefficiency or ineffective philanthropy [ie horse and buggy accident survivors NOT ENFORCE the racially restrictive trust term.
-> car accident surivors; NOT 'the gardens would be prettier funded elsewhere']; (3) Restrictions (Ironic, because teh trustees probably seriously
may ONLY be removed if they have become INCOMPATIBLE with the Set's dominant purpose. wouldn't have intended this).

(1) Gift-Over Clause: Specifies where the charitable purpose (2) Reverter Clause: Property returns to settlor's estate if
Avoiding should migrate. purpose ceases.
Modification: C/L: Controled over cy pres. Tax implications: If your estate maintains a future interest,
Modern: Just factor in settlor's intent for cy pres may not take tax break on the donation.

Enforcement : B/c no beneificiaries issue of who enforces

the rights. [STANDING]

IRS also known to meddle and enforce fraudulent

(i) Traditional View: Standing to (1) atty trusts as tax evasion devices.
general; (2) person w/ special interest; (ii) Modern Rule UTC 405: Standing to
and (3) co-trustees. SETTLOR, in addition to traditional enforcers.

"Special Interest" Entitlement Prong: Excludes ppl merely

-Person who is entitled to
recieve a benefit under the
trust beyond that gained
by public @ large.
!!!Does NOT include
SETTLOR!!! (unless he has
special interst)
eligible w/n trustee's discretion . Does Interest Survive Death? JUR. SPLIT.
SCOPE of Standing Follows Entitlement:
May only sue to enforce extent of your
right--not trust terms generally. [ie Arts
Developing C/L: Donor's
center may only sue for failure to UTC: Donor's standing right
standing passes to fiduciary of
disburse promised funds, NOT unrelated does not survive him.
his estate
conflicts of interest of co-trustees]