Charitable Trusts

Introduction 1. Charitable EXPRESS trusts a. TWO substantive distinctions from private EXPRESS trusts: i. Beneficiaries: must be charitable organization or indefinite beneficiaries 1. Follows the CL: enforced by the state attorney general OR a. A charitable org designated as bene under the trust. 2. Change from CL: settlors of charitable trusts given standing to enforce trusts they create ii. Purpose: must have the same requirements as a private express trust of: 1. Legal purpose, and 2. Capable of being fulfilled, PLUS 3. It must have a charitable purpose: a. Relief of poverty b. Advancement of arts/sciences/education/religion c. Promo of health/govt/municipal purposes i. Just like the UTC, but with some stylistic changes: 1. FTC EXPLICITLY includes arts & sciences on the list ii. UTC also followed the same language as: 1. Re 3 Trusts 28 2. Re 2 Trusts 368 iii. FTC & UTC same trusts without designated benes: 1. CT gets to pick the purpose or bene if settlor doesnt ONLY if it can ascertain settlors intent and must be consistent with settlors intent 2. Its the CY Pres doctrine iv. FTC: CTs action would take place at trusts inception 2. Charitable Trust or Gift? a. If the trust vehicle is for charitable giving, the next issue is whether settlor should create an inter vivos OR testamentary charitable trust? INTERVIVOS TESTMENTARY Avoids probate and is more private S Settlor keeps control of property until gets to watch her gift be enjoyed while death alive Financial-split interest provides an income stream to the donor or others. If irrevocable, income tax savings in Gets transfer tax savings only addition to transfer tax savings b. When is it simply an outright gift, NOT a charitable trust? when theres no trust intent! i. Persan case

1. Donations were made for a specific purpose, but NO trust was proved: a. Gift to a charity for a specific project/purpose doesnt create a charitable trust b. It must be express c. Resulting trust burden of proof is clear, strong, unequivocal, beyond a reasonable doubt i. Donor had created many trusts before, but not for this giftonly donated property via deed 2. To create a CT in land, need: a. Writing b. Signed i. Unless constructive trustwhich doesnt apply here p. 553 ii. AHA case Fundamentals: 1. U can do whatever u want with your money, as long as its legal; no judge can interfere with your decision 2. Trust cant be terminated before the expiration of the term that it establishes a. Duration rule: where there clear and unambiguous provision in the trust ! as to duration, it governs. 3. Standing and enforcement a. Again, FTC departs from CL with: settlors have standing to enforce, and SAG, among others i. Who are the among others? 1. Delaware case a. Does SAG have standing? Yes, but who else? i. Trustee v. Co trustees ii. Persons/organizations with special interest in enforcing the trust: 1. Special interestone beyond general interest possessed by the public at large, like: a. Special status not enjoyed by public at large. 4. RAP and Charity to Charity Exception a. Unlike private express trusts, settlor can set an indefinite duration i. Purely CT No RAP! provides benefits in perpetuity perpetual trust 1. If trust has both private and charitable benes RAP exception n/a! b. Charity to charity exception: a future interest in a charity is NOT vulnerable to the RAP if the preceding interest was also held by a charity. i. Notes: OK if settlor creates a trust: income to charity for 10 years for a particular purpose, then principal to charity outright for ANY charitable functions.

5. CY PRES DOCTRINE COMMON LAW Narrow The CTs allow modification of the terms of a CT using CY PRES if TWO conditions are met:

It has become impossible Impractical or Illegal (1) To carry out the particular purpose AND (2) the settlor manifested a more general charitable intent with regard to the trust.

UTC 413 FLORIDA 736.0413 Broadened Use CY PRES to Mod or term of trust by directing that the trust property by applied or Distributed In whole or in part In a manner consistent with settlors charitable purposes, where settlors original means (1) unlawful impracticable impossible to achieve or wasteful

Presumption of general charitable intent? YES

Presumption of general charitable intent? NO

a. CY PRES n/a if settlor provides an alternate disposition of the trust: i. Jewish Guild/Blind case p. 560

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