Lineback by Hutchens v. Stout

"Hutchens v Stout" 79 N.C. App. 292, 339 S.E.2d 103 was a case before the North Carolina Court of Appeals in 1986.

Facts

The beneficiary was on welfare. The government wanted to force the trustee to make distributions to the beneficiary (which would cut the beneficiariy's welfare and save the government money). However, since the trustee had absolute discretion, the trustee could choose not to make a distribution to the beneficiary. (Note: Recent legislation makes it easier for the government to compel the trustee to make a distribution).

Charitable trusts

These are exceptions to the rule that there must be a beneficiary. They are for the relief of the poor, for healthcare, to support education, for governmental purposes and to support religion.

Relevance of whether trust private or charitable

Benefit Rule 1

The Rule against perpetuities does not apply. A charitable trust can last forever.

Benefit Rule 2

Tax advantages. The grantor ("settlor") gets deductions for his estate and gift taxes.

A charitable trust , because it has a perpetual life, also provides the opportunity for the specific charitable purpose to be changed if it becomes no longer charitable, impractical or impossible. Here the courts may have power to alter the trusts, which is something which would not happen in a private trusts.

"Cy preis" (the doctrine of above)

Who enforces the charitable trusts?Was the trust In "Re Huebner's Estate" valid? (Bogert, 200). There the settlor granted Paul Gill an extra $2,000 and wanted him to use the money to help support a boy or girl to learn music or art. On the one hand, education is a valid target of a charitable trust, but here the court found that the charitable trust must be a public benefit (or at least benefit a class of people without name or number). The problem here was that this trust was to help a named person.

Would it be possible to alter the trust and say that the money would support someone in medical school as long as they promised to go to a rural town and set up a practice there? R. Hansen believes that this is a valid gift, or most likely a valid gift because it would benefit the rurual town.

ource

Bogert, "Law of Trusts", 7th edition