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III. CHARITABLE AND HONORARY TRUSTS

A.         DISTINCTIVE RULES APPLY TO CHARITABLE TRUSTS


Charitable trusts,
        a) because of their substantial benefit to society,
        b) are granted
                i) some special exemptions
                        (a) from the rules
                                (i) that apply to private trusts.

In general, charitable trusts are liberally construed.

The rules
        a) governing charitable trusts

1) differ from those
        a) applicable to private express trusts

2) in three important particulars.



1.         Must Have Indefinite Beneficiaries

To be sustained
        a) as a charitable trust,

1) the trust,
        a) if not for a specified charitable agency,
        b) must be in favor of
                i) a reasonably large class of
                        (a) indefinite beneficiaries and
        c) cannot be for the benefit of
                i) identifiable individuals.

By contrast, a private trust must be
        a) for definite and ascertinable beneficiaries.

2.         Cy Pres Doctrine Applicable

Where it is impossible
        a) to give the settlor's intention effect
         (e.g., the designated charity goes out of existence),

1) the court may redirect the trust
        a) to a purpose
                i) "as near as possible" to the charitable endeavor
                        (a) initially designated by the settlor.

3.         May Be Perpetual

1) A charitable trust may last forever;
2) it is not subject to
        a) the Rule Against Perpetuities.

By contrast,

all interests
        a) in a private trust

1) must "vest��
        a) within the period of the Rule Against Perpetuities.

B.         TRUST MUST BE FOR CHARITABLE PURPOSES


The purpose of a charitable trust must be one
        a) that is considered
                i) to benefit the public.

Charitable purposes include
        a) the relief of poverty;
        b) the advancement of
                i) knowledge,
                ii) education, or
                iii) religion;
        c) the promotion of health; and
        d) the accomplishment of
                i) governmental purposes (e.g., parks, museums, playgrounds).

A purpose
        a) that limits the benefits of the trust
                i) to a particular class
                        (a) of the public (e.g., Chicago orphans)

1) may be charitable,
2) but the class may not be so narrowly defined
        a) that it designates only a few individuals
                i) upon whom the settlor wishes
                        (a) to confer private benefits.

A trust
        a) for the dissemination of ideas

1) may be charitable
2) even though the ultimate purpose may be
        a) to accomplish a change in present law
(e.g., a trust to promote the abolition of discrimination against women, tariffs, or capital punishment).

Examples:   1) A trust for disseminating the views of a particular political movement qualifies as educational and hence charitable because awareness of political act on is deemed to be beneficial to the public.

        However, a trust for the benefit of a political party is not charitable.

         A fine line is drawn here. For example, a trust for the Socialist Labor Party is not charitable, but a trust to advance the doctrines of socialism is charitable.

        2) A trust is charitable if its purpose benefits the community, even though some persons not needing charitable assistance will benefit.

        For example, if the trust is for widows of police officers slain on duty, it is irrelevant that wealthy widows will be entitled to share because the public as a whole is benefited by such protection for police officers' wives.

        However, a trust for widows of the presidents of the Elks would not be a charitable trust unless limited to needy widows, as the public as a whole is not benefited by such a trust.

        3) A trust is also charitable even though matching funds are required (e.g., $1 to the Red Cross for every $1 it raises from other sources).

Compare:   1) Where the beneficiary is a profit-making entity and the profits are not applied to charity,

         the trust is not charitable (e.g., if the beneficiary is a private school that pays out profits in dividends to investors, it is irrelevant that the gift also ptiomotes education).

        2) Where the beneficiary is not predominantly devoted to charitable objects, the trust is not charitable.

        Thus, where a gift was to a fraternal order (e.g., the Knights of Columbus),

        it did not qualify as charitable because, even though the group was involved in charitable endeavors, it was primarily devoted to advancing social and fraternal relations among its members (noncharitable objective).



or��der  
A group of organisms ranking above a family and below a class. See Table at taxonomy.


1.         General Terms Acceptable

The charitable purpose may be expressed
        a) in very general terms.

Thus, a direction
        a) to a trustee
        b) to apply funds
                i) for such
                        (a) "charitable" or
                        (b) "humanitarian" causes
                                (i) as he selects

1) is sufficient.

Where the trust was
        a) for
                i) "benevolent" or
                ii) "worthy"
                        (a) causes,

the English cases and some older cases held the trust void
        a) on the theory that
                i) "benevolent"
                        (a) meant proceeding
                                (i) from a good motive and
                        (b) did not limit the objects
                                (i) to charitable ones.

Many courts now interpret the words
        a) "charitable" and
        b) "benevolent"
                i) to be synonymous,

1) so that a trust for "benevolent purposes" will
        a) be limited
                i) to charitable objectives and
        b) be upheld.

Note, however, that:

if benevolence is not construed
        a) to mean charitable,

1) the trust will fail.


Example:   A trust to provide gifts of money each Christmas to children in the John Kerr School has been held void

        because it was not limited to charitable causes;

        had it been for needy children,

        it would have been valid. [Shena ndoah Valley National Bank v. Taylor, 63 S.E.2d 786 (Va. 1951)]



benevolent  (good motive) (just doing good)
1. intending or showing goodwill; kindly; friendly: a benevolent smile; a benevolent old man.
2. doing good or giving aid to others, rather than making profit; charitable: a benevolent organization.
[C15: from Latin benevolēns, from bene well + velle to wish]
beˈnevolently adv
charitable (doing good just to the needy)
1. generous in giving to the needy
2. kind or lenient in one's attitude towards others
3. concerned with or involving charity



2.         Effect of Gift Controlling Factor

It is
        a) the effect of the gift
                i) to the public or a portion thereof,
        b) not the motive
                i) of the settlor,
1) that controls.

Thus, if S establishes a trust
        a) to build public tennis courts
                i) on land adjacent to his home,

1) it is irrelevant
        a) that his motive was so
                i) he could use them.

Likewise, it is irrelevant
        a) that a school, park, scholarship, etc., created
                i) through a trust

             is required
                i) to be named after the donor (e.g., John Jones Memorial Park).

3.         Mixed Trust

Where the beneficiaries
        a) of a single trust

   are both
        a) charitable and
        b) noncharitable,

1) the trust is a "mixed trust," and
2) the special rules
        a) for charitable trusts

   do not apply.

However,

two separate trusts will be found
1) if there is some indication
        a) as to
                (i) how much of the corpus
                        (a) the settlor intended
                        (b) to be applied towards charitable purposes, or
                (ii) how Long
                        (a) the settlor intended the corpus
                        (b) to be applied towards charitable purposes.


Example:   T bequeaths $100,000 to trustees to distribute the income "to such educational institutions and worthy individuals as the trustees should select."

        This is a mixed trust and is not exempt from the Rule Against Perpetuities as charitable trusts are (see E., infra ).

         It is void because the trustees' discretionary power to distribute income to worthy individuals ca n be exercised beyond the period of the rule. (See Wills outl ine on Rule Against Perpetuities applied to powers of appointment.)

4.         Charitable Trust Implied When Charitable Purpose Clear

A gift "for the needy" implies that
        a) a trustee should be appointed
                i) to carry out the purpose.

A gift "to the Red Cross" implies that
        a) the organization takes the property
                i) as trustee
                ii) to apply it
                        (a) to the charitable purposes of the Red Cross.

If the charitable organization is an unincorporated association
        a) unable to take title,

1) a trustee will be appointed
        a) to administer the funds
                i) for the benefit of the organization.

Of course, the trustee itself need not be a charitable organization (e.g., "to Bank of America as trustee for indigent widows").

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