Delaware Unifies the Law of Charitable and Noncharitable Purpose Trusts

Abstract:     
Whereas benefactors typically create trusts that provide for one or more individuals, some instead create trusts to accomplish or to promote purposes. Historically, trust law divided purpose trusts into a trio of categories, based on the sort of purpose the benefactor had in mind. Trusts for harmful or capricious purposes were void per se as contrary to public policy. Trusts for purposes beneficial to society were given effect in perpetuity as charitable trusts. Trusts for purposes neither harmful nor affirmatively useful - such as those to care for a grave or a pet animal - were not enforced as full-fledged trusts, but the intended trustee nevertheless had a power to carry them out, only within the period of the rule against perpetuities, as "honorary trusts." Statutory rules in many jurisdictions have tinkered with this framework, by making trusts for some or all noncharitable purposes fully enforceable, while continuing to limit their duration, depending on the purpose. New legislation in Delaware is still more innovative. The new Delaware statutes pare back the category of purposes contrary to public policy, while effectively amalgamating charitable and noncharitable purposes into a single category. Under the new legislation, trusts in Delaware can serve any purpose that is not genuinely harmful, and may do so in perpetuity, applying subsidiary rules that have traditionally been confined to charitable trusts. This Article details and critiques Delware's latest trust initiative, exploring the legislation's technical strengths and weaknesses, while also examining the legislation within the context of trust policy, and within the context of inter-jurisdictional competition for trust business.

Keywords: Delaware, trusts, charitable, noncharitable, honorary, perpetuities, cy pres

JEL Classifications: K11, K19, K39

Accepted Paper Series