Charitable Trust Disputes
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What Is a Charitable Trust?
A charitable trust is a type of trust that is created for a “charitable purpose.” This generally includes any type of aim or purpose that benefits the public, such as promoting education, advancing health care, assisting the poor, and assisting with government works like museums or parks.
With a charitable trust, the charity acts as a trustee, overseeing the funds and monitoring their distributions to recipients. The beneficiaries in a charitable trust are actually indefinite and are not intended to benefit solely a few select persons. The charity will be responsible for investing the property, handling funds, and other activities. They may offer the donor a portion of the proceeds. Also, contributions to charitable trusts are generally tax-exempt according to IRS rules.
What Are Some Common Charitable Trust Disputes?
While charitable trusts are intended for the benefit of the public, they can still be subject to a number of different trust disputes or legal issues. Like with any type of trust, the trustee must act in a way that serves the interests of the trust aims, rather than their own person goals or needs. Thus, one of the more common disputes over charitable trusts is where the trustee begins using funds for their own needs, against the aims of the trust itself.
Some other types of charitable trust disputes include:
- Disputes over the purpose of the trust, as the trusts needs to be for a “charitable purpose” that benefits the public
- Trustee mismanagement , including violating trustee responsibilities, using the trust funds for personal purposes, and misappropriating funds
- Failure to invest the trust funds according to “sound business judgment”
- Violations of federal, state, or local trust laws, such as failing to report trust activity in order to dodge tax reporting
How Are Charitable Trust Disputes Resolved?
Depending on the nature of the legal issue, as well as the exact type of trust, a charitable trust dispute may be resolved in a number of different ways. These can include:
- Removing/replacing the trustee
- Redrafting the trust document
- Payment of damages
- Criminal consequences
In some cases, courts can issue alternative remedies. For instance, courts will sometimes declare a charitable trust invalid if the purpose does not match the definition for a charitable trust. Again, these types of remedies depend on the type of issue involved, as well as state trust laws.
Do I Need a Lawyer for Help with Charitable Trust Disputes?
Disputes over a charitable trust can often involve complex legal issues. You may need to hire a trusts and estates lawyer if you need help with any type of charitable trust dispute. Your attorney can help go over the trust documents to ensure that your interests are clearly spelled out. Also, if you need to file legal paperwork with the court, or if you need to make an appearance, your attorney can assist you with those needs as well.
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Last Modified: 02-04-2015 10:14 AM PST
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