TRUSTS, PUBLIC AND PRIVATE – I

Trusts, Public and Private – I

An express trust is either public or private. A public trust, also known as a charitable trust, is an express trust created for a charitable purpose. If an express trust is not a charitable trust, it is deemed to be a private trust. A private trust is an express trust created to benefit a few persons. This article discusses some aspects of public and private trusts.

Charitable Purpose

The fundamental distinction between public trusts and private trusts is whether or not the trust in question was created for a charitable purpose. If the purpose of the trust is to benefit, improve, or uplift society as a whole, the purpose is charitable.

There are many examples of charitable purpose:

    1. The advancement of art is a charitable purpose, as where the trust supports an art museum.
    1. The advancement of education is a charitable purpose, as where the trust supports a school.
    1. The advancement of religion is a charitable purpose, as where the trust supports a church.
    1. The improvement of government is a charitable purpose, as where the trust supports a public park.
    1. The improvement of health care is a charitable purpose, as where the trust supports a hospital.
  1. The relief of poverty is a charitable purpose, as where the trust supports a low-interest loan fund.

A Famous Charitable Gift

One of the world’s most famous charitable gifts was made in 1829. In his will, James Smithson left his entire estate in trust to the United States of America. Mr. Smithson left his entire estate “to found at Washington, under the name of the Smithsonian Institution, as establishment for the increase and diffusion of knowledge among men. After accepting Mr. Smithson’s charitable gift in 1846, Congress created the Smithsonian Institution.

A Charity

A not-for-profit organization founded for a charitable purpose or purposes is known as a charity. Gifts to a particular organization qualify for a charitable deduction under the federal Internal Revenue Code if the particular organization first applies for and is granted tax-exempt status by the U.S. Internal Revenue Service under an appropriate provision of the Internal Revenue Code.