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Perpetuity and the charitable trust

Nevada residents who are making an estate plan may be interested in creating a charitable trust. A charitable trust has a number of differences from other types of trusts. The first is that the charitable trust does not necessarily have to identify a beneficiary. It may simply name a purpose that broadly benefits the public.

A second difference is that a charitable trust can last in perpetuity. Because of this, the Rule of Perpetuities, which is designed to prevent a property's use from being perpetually restricted, does not apply to charitable trusts. Finally, the cy pres doctrine is intended to allow a trust to be altered by a court rather than fail.

An example of using this to preserve a trust might be if the trust is set up to donate to a specific education nonprofit. If that nonprofit fails, the doctrine allows a court to modify the document so that the trust benefits a different education nonprofit. Furthermore, if a trust's purpose can no longer be achieved because it is against the law, impractical or for other reason, the trust can be terminated or modified by the court as long as that change is consistent with the original charitable purpose. Charitable trusts have a few other differences as well including rules around drafting and taxation.

A person who is considering setting up a charitable trust, a special needs trust or another type of trust might want to talk to an attorney. Trusts are complex and powerful vehicles for achieving a number of goals including preserving family wealth, reducing estate tax, protecting assets from creditors and managing how assets might be distributed to a less responsible loved one. They also may be used to distribute assets more quickly and privately than a will.

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