WHAT TO KNOW ABOUT CHARITABLE TRUSTS
California residents who are looking to reduce their tax bill while helping an important cause could do both with a charitable trust. Legally, a charitable trust must focus on helping to solve a problem like reliving poverty or anything else beneficial to the community as a whole. As a general rule, the trustee has a fiduciary duty, which means that the person or entity overseeing it must always act in a beneficiary's best interest.
It is important to note that there may not be a need to specify a beneficiary in a charitable trust. Unlike a trust that is not established for charitable purposes, a charitable trust may last forever. Furthermore, it may be possible to amend or modify a charitable trust as opposed to letting it expire in the future. This is the Cy Pres doctrine, and it could come into play if an organization were to shut down.
The doctrine could also be applied if it were determined that it was impractical or wasteful to enforce its terms as constructed. Generally speaking, a court would likely rule that the trust would support a different organization with a similar purpose. For example, a trust that was supporting a charity aimed at ending poverty would support another such organization if the first one were to cease operation.
Creating a charitable trust is similar in many ways to creating other types of trusts. However, as there are rules that must generally be followed when creating one, it may be a good idea to do so with the help of an experienced estate planning attorney.
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