Ohio residents who are creating an estate plan might be interested in setting up a charitable trust. There are several ways in which a charitable trust differs from other trusts. A charitable trust is not required to have a beneficiary but instead has a specific purpose that benefits the public. A charitable trust can also be perpetual. The Rule Against Perpetuities is intended to prevent the limited use of a piece of property, such as a family that wants to keep land in perpetuity, but it does not apply to charitable trusts.
In fact, laws governing charitable trusts are designed to increase the likelihood that the trust will last. The cy pres doctrine is aimed at helping charitable trusts continue by allowing courts to modify them if necessary. For example, a charitable trust set up to contribute to an education nonprofit that becomes defunct could be modified to contribute to a different education nonprofit. In one case, a trust that had been set up in 1899 for the benefit of orphans aged 6 to 10 was modified so that the upper age became 18.
A charitable trust in danger of failing may also be altered or terminated and its property distributed in a way that is consistent with the intent of its creator. Charitable trusts have a few other differences as well.
Both charitable and noncharitable trusts may have a number of benefits. One advantage of a trust is that it allows the assets in it to avoid probate, and this means that they are distributed more quickly and privately than they would be via a will. A trust may also manage how assets are distributed to individuals or reduce the value of an estate for tax purposes. An attorney can outline other benefits of a trust and how one can help a client’s situation.