What Qualifies as a Charitable Purpose
Charitable trusts hold a unique place in trust law. A typical family trust names specific people. A charitable trust, by contrast, serves a broader public purpose.
Arizona law gives settlors wide latitude in defining that purpose. The categories are broad by design.
A charitable trust may be created for the relief of poverty, the advancement of education, religion or science, the promotion of health, governmental or municipal purposes or other purposes, the achievement of which is beneficial to the community, or for the support of one or more organizations that have the purposes prescribed in this section exclusively.
A.R.S. § 14-10405(A)Education, science, health, poverty relief, and community benefit all qualify. A charitable trust can also support a charitable organization that serves these purposes.
This means families can build charitable giving into their estate plan. The trust can reflect the values that matter most to them.
When the Court Steps In
Sometimes a settlor creates a charitable trust with a general goal. They may not name a specific organization or cause to benefit.
When that happens, the court can choose a purpose or beneficiary. The court bases its choice on the settlor's likely intent.
If the terms of a charitable trust do not indicate a particular charitable purpose or beneficiary, the court may select one or more charitable purposes or beneficiaries. The selection must be consistent with the settlor's intention to the extent it can be ascertained.
A.R.S. § 14-10405(B)The settlor also has standing to enforce a charitable trust. This means the trust creator can go to court if the trustee misuses the funds.
In some cases, the state may also notify the attorney general about mismanagement.
Why Charitable Trusts Matter for Families
A charitable trust lets families support causes they care about. It can also offer potential tax benefits.
For example, it can fund scholarships, support health programs, or give to a charity over many years. Families with significant assets can pair a charitable trust with a broader estate plan.
The trust terms should clearly state the charitable purpose. As a result, the trustee knows how to carry out the settlor's wishes.
Charitable trusts involve public interests, so they carry added oversight. Clear records and proper management help the trust fulfill its purpose over time.