An individual or family will often times create a charitable trust when estate planning for the benefit of society or a reasonably large segment of society. The most recognized list of charitable trust purposes comes from the Restatement of Trusts: the relief of poverty, the advancement of education, the advancement of religion, the promotion of health, and two more generalized purposes, the accomplishment of a governmental or municipal purpose, or the accomplishment of an act beneficial to society. A persons intent to create a trust with a charitable purpose determines the validity of the charitable trust; a persons motive for creating the charitable trust is immaterial.
To satisfy the charitable trust purpose of benefiting a reasonably large segment of society, a charitable trust typically cannot have a definite beneficiary; rather, the charitable trusts beneficiaries must be indefinite. Thus, a trust created to send a persons children to college is not charitable, even though it has an educational purpose. If a persons intent to create a charitable trust is charitable and its beneficiaries are indefinite, the trust qualifies as charitable for property law purposes. Often, however, a person creates a charitable trust with advanced tax planning purposes in mind. Obviously, the IRS imposes its own particular requirements for a charitable trust to qualify for tax purposes. Thus, a trust that satisfies the property law charitable trust requirements is not charitable for tax purposes unless the tax law requirements are also satisfied.