Cy pres is a legal doctrine used by the courts to alter the terms of a charitable trust. When a person creates a charitable trust, the express charitable purpose of the trust may become impossible to fulfill. Instead of terminating the trust, the courts will then alter the purpose of the trust to allow it to continue, while keeping it as closely in accordance to the original intention of the settlor as possible.
In the United States, cy pres only applies to charitable trusts where the original purpose of the trust has become illegal, impossible, or unfeasible, and the trust itself does not specify what is to be done in such a situation. The court then will then attempt to alter the terms in an effort to further the overall purpose of the trust. If this cannot be done, it will effectively cancel the trust.
- Example: A wealthy investment banker dies, and, in his will, creates a trust to provide $1,000,000 per year to a bird sanctuary located down the street. The payments are made for several years, until a lightning strike hits the sanctuary and burns it to the ground. The owners decide to relocate to a new location several miles away.
Since the trust was very specific in the location of the sanctuary to be paid, the relocated bird sanctuary would not have access to the funds because of its new location. The courts, however, could determine the banker’s intent in setting up the charitable trust, and decide that the location was irrelevant to his decision to create the trust. The court would then use the cy pres doctrine to alter the terms of the trust by removing the location requirement so that its true purpose of helping the birds could continue.
This is obviously a rather straight forward example, and going to court might not even be necessary if the executors of the trust thought that there was no question as to the deceased intent. However, the use of the cy pres doctrine is not always so clear cut.
- Example: In the same situation as above, say that instead of helping the birds, the only reason the deceased left money to the sanctuary was because his nephew was the manager. The deceased himself had no love of birds, and perhaps he was an avid bird hunter. When the lightning burned down the sanctuary, it also killed the nephew.
Now, if the court was called in, it would have to look into the evidence at hand, and may very well conclude that the only purpose of the trust was to care for the nephew, now dead. After assessing all the evidence, it might decide that the money is better spent on the nephew’s family, or not spent at all, instead of spent on the new bird sanctuary.
Sometimes, the charitable intent of the donor has become impossible due to changes in the law. In Evans v. Abney, perhaps the most famous case regarding the cy pres doctrine, a trust created by a late senator created a public park that was segregated by race. Once such segregation became illegal, the court was forced to determine whether it could employ the cy pres doctrine to strike the illegal elements from the trust, and thus keep the park open for everyone.
The court held that it could not use cy pres to alter the trust for the park because the segregationist portion of the trust was an intrinsic part of the late senator’s intent. The park was, therefore, shut down to everyone. This shows how seriously the courts will look toward the intent of the testator.
Although not usually referred to as the cy pres doctrine when it applies to non-charitable trusts, the law does allow courts to modify the terms of any trust if, as in the above situation, there is an unforeseen problem, and modifying the terms will further the purposes of the trust.
If you want to set up a trust, you should consult with an estate attorney before doing so. A lawyer near you will know how to draft the right trust for you, and be there to help fulfill your trust’s purposes if needed under the cy pres doctrine.