The Cy-Pres DoctrineIf a person sets up a charitable trust, it is generally safe for them to believe their money will go to the appropriate beneficiary. However, there are some instances in which this simply is not possible. For instance, establishing a trust for an organization or institution that disbands or closes shortly before the trust goes into effect would make the trust technically impossible to execute. Similarly, if a trust puts money towards a particular cause, but that cause radically changes, it may not be possible to carry out the trust according to the document's language.

As a result of these complications, courts are permitted to use a legal power known as the cy-pres doctrine. This power essentially grants the courts the right to adjust the recipient of the trust according to what seemed to be the creator of the trust's original intention. This keeps the trust from failing, protecting the aims of goodwill and charity the creator, or settlor, intended.

This may prove to be a complicated process depending on the specifics of the case. In some instances, an institution may simply lose ownership, but continue to operate towards its original goal under new management. In these cases, it is likely the court may decide to redirect the funds to that new head organization. Additionally, the court may attempt to find a similar, alternative recipient, closely resembling the original beneficiary.

In situations where the beneficiary is more vague, working towards a cause, the court may simply adjust the funds to help a related matter. For instance, if a trust was set up to help women gain the right to vote, it could not be executed namely because women already have that right. As a result, the court may decide that settlor would have approved of then using the money to help get more women to polling places on election day. The cy-pres doctrine permits this sort of change to legally occur.

To learn more about this and other concerns with trusts, contact an estate planning attorney.

If you have been considering establishing a charitable trust, but are not sure how, contact Garg & Associates, P.C.,today.

James Witherspoon