Charitable/Resulting/Constructive Trusts

Question 1

What distinct rules apply to charitable trusts?

Answer 1

1. Must have indefinite beneficiaries
2. May be perpetual
3. Cy pres doctrine applies.

Question 2

What is a charitable trust?

Answer 2

A trust that has a purpose considered to benefit the public (e.g., poverty, education, health).

Question 3

What is the cy pres doctrine as applied to charitable trusts?

Answer 3

When a charitable purpose is impracticable, unlawful, impossible, or wasteful, the court may select an alternative that is as near as possible to the settlor’s primary purpose.

Applies when the settlor manifested a general charitable intent.

Under the UTC, general charitable intent is presumed and application of cy pres is mandatory.

Question 4

Are charitable trusts bound by RAP?

Answer 4

No. They can be perpetual.

Question 5

What are the three types of resulting trusts?

Answer 5

1. Purchase money resulting trusts
2. Resulting trusts arising on failure of an express trust
3. Resulting trusts arising frogman incomplete disposition of trust assets

Question 6

Who is the beneficiary of a resulting trust?

Answer 6

The settlor, or the settlor’s successors in interest if the settlor is dead.

Question 7

When does a resulting trust on failure of express trust arise?

Answer 7

1. The trust is void or unenforceable,
2. The beneficiary is dead or cannot be located, or
3. A charitable trust fails because cy pres is inapplicable.

Question 8

When is a resulting trust NOT implied on failure of an express trust?

Answer 8

1. The trust instrument specifically or implicitly provides for disposition of property when trust fails or is completed.
2. The settlor was given consideration for their original transfer in trust.
3. The settlor created the trust for an illegal purpose; or
4. Cy pres is applicable in cases of charitable trusts.

Question 9

What is a constructive trust?

Answer 9

An equitable remedy to prevent unjust enrichment resulting from wrongful conduct.

The holder of legal title turns into a trustee – their only duty is to convey the property to the person who would have owned it but for the wrongful conduct.

Question 10

Does a constructive trust arise from breach of a promise?

Answer 10

No. Except if:

• Fraudulent promise
• Breach of promise by one in a confidential relationship
• Breach of promise by the decedent’s devisee or heir to hold property for the benefit of a third person
• Breach of promise by the decedent to devise property to one rendering services in reliance thereon
• Breach of promise to the debtor by the buyer at the foreclosure sale to hold the property for the debtor, causing the debtor to forgo bidding at the sale