Charitable & Honorary Trusts

If either charitable trusts or honorary trusts show up on the essay portion of the bar exam, you'll need to know how they differ from a private trust. There are three key differences to keep in mind specifically for charitable trusts: they must have indefinite beneficiaries, they may be perpetual, and the cy pres doctrine applies. 

Charitable Trusts: To determine if a trust is a charitable trust, focus on the purpose as stated by the settlor of the trust. A charitable trust must have a purpose considered to benefit the public. For example, charitable trusts might include a purpose for advancing education or promoting public health. The class to be benefited may be limited but cannot be so limited that only a select few individuals will be benefited. If only a select few individuals will be benefited, it begins to look more like a private trust and the rules related to charitable trusts may not apply. As stated above, the beneficiaries of a charitable trust must be indefinite; the court can select the beneficiaries if none are specified by the settlor but in all cases the intent of the settlor must be ascertained so that the court can choose a purpose or beneficiary that is in accord with that intent. Those who may enforce a charitable trust include the settlor, a qualified beneficiary, or the state's attorney general.

A charitable trust may be perpetual (so that no time limit applies) and the Rule Against Perpetuities (😱) does not apply to the shifting of the beneficial interest in a trust from one charity to another charity on the happening of a condition. The Rule does apply, however, if the shift is from a private trust to a charitable trust. There might be instances in which the charitable purpose chosen by the settlor is now impracticable, unlawful, or impossible to achieve. The cy pres doctrine will allow the court to select an alternative provided that the alternative is as near as possible to effectuating the settlor's intent. 

Honorary Trusts: Honorary trust are commonly established for the benefit of pets or for the maintenance of burial places. There's no human being (as a beneficiary) to enforce these trusts so the trustee is "on his/her honor" to carry out the terms. These trusts, may, however, be enforceable by someone named in the trust instrument or by someone appointed by the court. 

Unlike with the charitable trusts mentioned above, these trusts often are burdened by time limits. Many jurisdictions will void honorary trusts if they extend for too long (often measured by the Rule Against Perpetuities). The Uniform Trust Code specifically states that an honorary trust not for the care of animals may not be enforced for more than 21 years. 

As for those honorary trusts that are set up to care for animals/pets, those trusts terminate automatically when the animal/pet dies.