Pg 25

Question 1

If a trust is created to benefit specific individuals like relatives of the settlor, is that a charitable trust?

Answer 1

No, but for charitable trusts, the purpose does not have to affect everyone equally, and it doesn’t have to affect large numbers of people. The charitable purpose can have a narrow impact as long as it is for the public benefit.

Question 2

What are some examples of charitable trusts?

Answer 2

• a trust to educate poor kids. This is OK even if it is just one class in one elementary school that only has 20 kids. It doesn’t matter that it’s a small subset as long as it still promotes education
  – a trust for the humane treatment of animals benefits the health of some people and is beneficial to the community
  – a trust that gives the settlor’s old college one scholarship per year to a basket weaver
  – trust for the upkeep of a cemetery

Question 3

Why would a trust that benefits the settlor’s kids not be considered a charitable trust?

Answer 3

Because it doesn’t benefit the public at large or any meaningful subset of the public, it only benefits select individuals.

Question 4

What is the list of UTC valid charitable purposes that if a purpose falls into is automatically considered to be charitable for a charitable trust?

Answer 4

– the relief of POVERTY
– the advancement of EDUCATION
– the promotion of RELIGION
– the promotion of HEALTH
– GOV or municipal purposes
– catchall for any purpose that is BENEFICIAL to the community

Question 5

Is it possible for a settlor to select a favored group like a small community or even one person if it is enough of a social benefit and is still a charitable purpose for a charitable trust? Ie” prize for someone that has done something useful.

Answer 5

Yes

Question 6

What are examples of government or municipal purposes that count as a charitable purpose for a charitable trust?

Answer 6

• funding EMS
• public pool
• improve the structure and methods of government
• bring about a change in law

Question 7

What does eleemosynary mean?

Answer 7

Relating to or devoted to a charity. This means basically any good and noble thing that supports a charity

Question 8

Many states have statutory lists of charitable purposes that would be enough to support a charitable trust, what purposes are usually on the list?

Answer 8

• charitable
• benevolent
• eleemosynary
• education
• civic
• patriotic
• political
• religious
• social
• literary
• athletic
• scientific
• research

Question 9

What is the Cy Pres doctrine for modification?

Answer 9

Because trusts can last so long, and many things can change in that time, if the original purpose can’t be carried out any longer because it became impractical, illegal, or impossible, Cy Pres means “as close as possible“ and allows a different trust purpose to be substituted that comes close to the original one as long as there’s a finding of general charitable intent. This applies to charitable trusts. If the new purpose is a reasonable approximation of the designed purpose, and is reasonably similar, that is OK.

Question 10

What are the elements of Cy Pres?

Answer 10

• court must find that the settlor had a general charitable intent. He would want his property to be dedicated to another charitable purpose instead of reverting back to his estate. Look at the trust language to figure this out
  – the court must find a substitute purpose that comes as close as possible to the settlor’s original one.

Question 11

Modernly, under Cy Pres, what is the presumption with regard to charitable intent and finding a substitute purpose?

Answer 11

• It is assumed that the settlor had a charitable intent unless there is contrary evidence
• the court only needs to find a substitute purpose that is a reasonable approximation of the original purpose, not the closest approximation

Question 12

In 1955 a settlor created a trust so that the Catholic Church could build a hospital to eradicate Polio on his death. In the 1980s Polio was eradicated, and then the settlor died in 2017. What happens at this point since there’s no longer a need for a Polio hospital?

Answer 12

Under Cy Pres, because there’s no contrary intent, it is presumed that the settlor had a general charitable intent, so instead there could be a research centre erected for Ebola

Question 13

What are the caveats under Cy Pres if there is no useful purpose for a charitable trust?

Answer 13

• if property is given to maintain an institution but a similar one already exists that makes the testator’s plan of NO USEFUL PURPOSE, then Cy Pres is applied
• if the amount that was given is INSUFFICIENT to do the intended purpose in a socially useful way, then Cy Pres is applied
  – if the amount of the property in a trust EXCEEDS what is needed for the charitable purpose, so that there can be continued use of all of the property for a purpose that is not wasteful and there’s also surplus, the court can broaden the purpose and direct the surplus to a similar purpose elsewhere.

Question 14

What type of trust does Cy Pres belong to?

Answer 14

Charitable trust

Question 15

Who can enforce a charitable trust?

Answer 15

The state attorney general, because charitable trusts benefit the public.

Question 16

Can the settlor of a charitable trust enforce the trust?

Answer 16

• CL: NO, because when he set up the trust to benefit the public, he relinquished his interest in what happens to the property
  – modern: YES, since attorney generals are very busy and they can’t always discover breaches by the trustees of charitable trusts, settlors of charitable trusts can also enforce them, as well as other interested parties like the charitable entity named in the trust.

Question 17

Can a trustee enforce a charitable trust?

Answer 17

No because he does not have an interest in the res

Question 18

In most states, who can bring a suit to enforce a charitable trust?

Answer 18

– the attorney general
– any other public officer
– a co-trustee
– anyone with a special interest in enforcing the trust
– modernly: a majority of states allow the settlor to enforce the trust

Question 19

When an attorney general is looking at which cases to pursue with regard to enforcing charitable trusts, what are the things he considers?

Answer 19

• the amounts involved
  – the size of the organization
  – the impact on the public
• the egregiousness of the conduct

Question 20

Who are people that would not have standing to enforce a charitable trust?

Answer 20

• residents and taxpayers
• those with no special interest
• heirs of the settlor
• personal representatives
• next of kin