Charitable or public trusts are frequently designated by the technical term ?charities.? These are trusts created for the benefit of the public at large or of some indefinite class of persons constituting some portion or class of the public; or, trusts that limit the use of the property to some public use.

Unless statutes provide otherwise, no special formalities are required for the establishment of a charitable trust. No particular words are required. Not even the words trust or trustee need to be used. Charitable trusts are generally established under testamentary dispositions.

The capacity to receive and hold trust property differs in various jurisdictions. State law must be examined in order to ascertain the possible existence of any statutory restriction.

The rule against perpetuities and the doctrine of illegal restraint against alienation is applicable in connection with charitable trusts.

The capacity to dispose of trust property varies in accordance with the jurisdiction. Therefore, state law must be examined. First, obtain a copy of the trust agreement to ascertain the wishes of the trustee. If the trust tries to accomplish a purpose not explicitly set forth in the trust, the state attorney general may step in and set aside the transaction.

The general rule is that the donor must have expressly authorized any sale or encumbrance of the property. In the absence of any power to dispose of trust property and the prohibition of the trustor, judicial proceedings must be instituted to obtain judicial approval of the sale or encumbrance depending upon the state statute. The attorney general or representative of the state and the public will be either a proper party or an indispensable party to such lawsuit.

If the specific purpose of a charitable trust becomes infeasible, a court may reform the trust under the equitable doctrine of "cy pres"; Old French for "as near as possible." The court will determine the settlor's primary purpose and then formulate an alternative use to another charitable beneficiary whose work approximates, as closely as possible, the settlor's primary purpose. For example, a trust to treat children with whooping cough and diphtheria could be reformed to a trust for the March of Dimes since the trustor's primary purpose was to benefit sick children. The "cy pres doctrine" applies to outright gifts as well as trusts. Some states have a "cy pres perpetuities reform statute" so that if a will or trust violates the rule against perpetuities, the instrument will be reformed to carry out the settlor's general intent so far as possible.