Marsh v. Frost National Bank, 129 S.W.3d 174 (Tex. App.—Corpus Christi-Edinburg 2004, pet. denied).
Testator’s will contained a provision requiring the executor to sell
certain property, invest the proceeds, and later to turn the property
over to the United States President, Vice-President, and Speaker of the
House as trustees. The money is be invested until it is sufficient to
create a trust with $1,000,000 for every American who is 18 years old or
older with no one being denied a share due to race, religion, marital
status, sexual preference, or the amount of wealth.. Testator
anticipated this would take 346 years.
Executor filed this action to obtain a construction of this gift. Heirs
argued that Testator attempted to create a private trust which failed
because it violated the Rule Against Perpetuities. The Attorney General
intervened under Property Code § 123.002 and argued that Testator
established a charitable trust. The trial court found that the trust was
charitable.
The appellate court reversed. After recognizing that whether a given
purpose is charitable is a question of law for the court to decide, the
court began its analysis by looking at the traditional categories of
charitable purposes as set out in Restatement Second of Trusts § 368:
(a) the relief of poverty;
(b) the advancement of education;
(c) the advancement of religion;
(d) the promotion of health;
(e) governmental or municipal purposes;
(f) other purposes the accomplishment of which is beneficial to the
community.
The court reasoned that the only category in which Testator’s purpose
potentially might fall is the last category.
The court concluded that Testator’s purpose was not charitable because
it did not go beyond merely providing financial enrichment to individual
members of the community. The court explained that the purpose must
promote the social interest of the community as a whole. A trust to
distribute money without regard to the donees’ financial needs or how
the donees must use the money does not show that Testator had the
requisite intent to benefit the public despite Testator’s generosity and
benevolence.
The court recognized that there is a strong presumption in favor of
charitable trusts and that they should be construed liberally to uphold
their validity. But, in this case, there was no charitable intent and
thus it would be inappropriate to apply liberal construction rules to
create a charitable intent where none exists.
Because the trust is not charitable, the court agreed that it violated
the Rule Against Perpetuities as stated in Trust Code § 112.036.
Accordingly, Property Code § 5.043 is triggered which authorizes the
court to reform or construe the trust according to the doctrine of cy
pres to give effect to the general intent of Testator within the limits
of RAP. Testator’s general intent was to create a trust to financially
enrich the American public. The court remanded the case to the trial
court to determine the feasibility of reforming Testator’s bequest.
Moral: A person desiring to establish a charitable trust must make
certain that his or her purpose will be deemed charitable by a court.
The person’s belief that the purpose is charitable is not sufficient.