Florida residents who are interested in leaving some or all of their assets to their favorite charity may want to consider using a charitable trust. Rather than naming a specific beneficiary, a charitable trust’s purpose may include contributing to the advancement of religion or education, alleviating poverty, the promotion of governmental, municipal or health issues or any other purposes that can be beneficial to a community.
In addition to certain drafting issues and tax treatment, it is important to be aware of the three other differences between non-charitable and charitable trusts. While charitable trusts are required to have a charitable purpose, they do not require a definite beneficiary, as the beneficiary is understood to be the general public. Also, charitable trusts can last indefinitely, at least in theory. This means that the Rule Against Perpetuities, which is meant to circumvent estate planning that limits the use of a property for an indefinite amount of time, does not apply to charitable trusts.
Another important distinction between charitable and non-charitable trusts is the application of the cy pres doctrine, which stipulates that if a charitable trust document does not specify what should take place if circumstances change, the charitable purpose restriction could be amended by the court. For example, if the purpose of the trust was to fund an educational organization that no longer exists, the court may modify the trust’s purpose by specifying that the trust’s funds should be applied to another educational organization.
Individuals who are interested in how charitable trusts can help them with their philanthropic interests may want to consult with an estate planning attorney. The attorney may explain how certain assets can be preserved and then distributed to ensure that a client’s favorite charity is able to reap the benefits.