Charitable Trusts

A charitable trust is a trust which contains assets or property which is for the benefit of a charitable purpose.  Frequently, the charitable trust is referred to as a “public trust.”  This kind of trust must be established pursuant to the particular requirements of the state in which the charitable trust is set up.

Charitable Trust Requirements

Generally, the trust has to meet several requirements.  Initially, the trust must have something which is contributed as trust property.  In addition, the trust must have a trustee who will administer the trust itself.  Moreover, the person who is setting up the trust, also known as the settlor, must demonstrate the intention to create a charitable trust.  Thus, there must be a charitable purpose to benefit a charitable cause.  Some of these causes include assistance to people in health care, education or religion.  There must also be beneficiaries who receive the benefit of the trust. 

These people must be clearly identified by the trust.  There are restrictions on the trust.  For instance, the trust cannot be for profit if it is a charitable trust.  Furthermore, if the trust is a “split interest trust,” where both charitable and non-charitable objectives are served, there must be a residuary benefit to serve the charity of which the trust aims to assist.  For instance, a split interest trust exists where a private person receives a certain amount of money or assets from the trust, with the remainder being left to the charitable purpose.  Finally, if the charity ceases to exist at the time the trust is distributed, the trust will nevertheless be allocated to a similar charity by the court. This mechanism is known as the cy pres doctrine.

Legal Help

Charitable trusts do not primarily benefit private people.  The trust benefits a charitable purpose and therefore must meet the requirements of such purpose. In order to properly draft the charitable trust, one should consult with an estate attorney who can ensure that the trust fulfills all requirements while also meeting your particular wishes.