What is a Charitable Trust?
A CHARITABLE TRUST EXISTS FOR CHARITABLE PURPOSES
The definition of a charitable trust may sound circular, but essentially, a “charitable trust” is created to provide support for a charity or a charitable purpose, rather than specific individuals. For this reason, the beneficiaries of a charitable trust cannot be specific, named individuals. Instead, the beneficiaries of a charitable trust must be:
- charitable organizations or institutions (e.g., the SPCA, a 501(c)(3) that runs a soup kitchen)
- a class of persons chosen from among the general public (e.g., “homeless persons”)
However, identifiable persons (e.g., “Sam, the homeless man who lives on the corner of PCH and Topanga Canyon Road”) are not permitted beneficiaries of a charitable trust.
If you wish to create a charitable trust, or believe you have created one, consult an experienced lawyer to ensure the trust is (or was) created properly. The trust, and the gifts you attempt to create, may fail if the trust is disqualified (which can happen, even though this is a favored type of trust under California law). Alternatively, if you believe someone you know was tricked or deceived into creating a charitable trust, due to improper influence, consult a lawyer immediately for an evaluation of their–and your–potential rights and claims.
CHARITABLE TRUSTS ARE FAIRLY RARE IN CALIFORNIA
Any California settlor can create a charitable trust. However, most do not. Most California settlors create revocable trusts or other forms of trusts designed to benefit a specific person or people (usually the settlors during their lifetimes, and then family members and/or friends of the settlors). However, some settlors choose to establish a trust that dedicates part or all of their wealth specifically for charitable purposes.
CHARITABLE TRUSTS ARE “LEGALLY FAVORED” ENTITIES
The law favors gifts for charitable purposes, and courts generally interpret the wording of charitable trusts in a manner designed to accomplish the settlor’s intent whenever possible. This means wording usually will be construed in favor of the trust being valid, and operative in accordance with the grantor/settlor’s stated wishes. This also means that attempts to challenge a charitable trust may be more difficult than challenges to other forms of trusts (although all trust contests are challenging legal proceedings, and should be attempted only on the advice, and with the assistance, of experienced legal counsel).
In addition, even if a court determines that the settlor’s original charitable purpose cannot be accomplished, the court has legal authority to order the trust estate used for a similar or related charitable purpose (rather than distributing it to private individuals). In these cases, the court will attempt to determine, and then follow, the donor settlor’s intent, in terms of the beneficial purpose(s) the settlor intended the trust estate to further or accomplish.
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Disclaimer: THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY, AND DOES NOT CONSTITUTE LEGAL ADVICE OR CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN THE AUTHOR OR ROSS LAW AND ANY PERSON. Your legal rights and experiences may vary. Never use an online article (including this one) to evaluate your legal rights or claims. Consult an experienced attorney promptly to obtain a personalized evaluation of your claims, potential damages, and the various legal rights and options available to you.
You may lose or compromise your rights if you delay in consulting legal counsel. Most legal claims (and defenses), as well as legal and court procedures, are complicated and fact-dependent. If you believe you have a claim against someone who injured you, a lawyer who represented you in a previous lawsuit, or any other legal claim, consult an experienced lawyer immediately for an evaluation of your individual rights and claims.
