People create trusts to distribute their accumulated wealth after retirement or death according to their wishes. However, there are two kinds of trusts, public and private, and both have different functions. A public trust is formed to perform philanthropic activities in the public, but a private trust, per se, is not a public charity but is established to benefit a few people.

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Private Trust

A private trust is created when the settlor who makes it wants to distribute the wealth among their selected beneficiaries. The beneficiary or beneficiaries can take legal action against the appointed trustee if it doesn’t enforce the trust’s mandate. This lapse can also happen due to the trustee’s death or severe illness. However, if the settlor didn’t specify the trust’s beneficiaries, they cannot question the trustee’s conduct or omissions.

Hence, a private trust is set up to secure the settlor’sassets and distribute them among the rightful heirs, and it can include or exclude heirs deemed unsuitable by the settlor.

Public Trust

Unlike private trusts, public trusts do not require specific beneficiaries. The state attorney general can enforce it on behalf of the public, provided the trust does not have “definite” beneficiaries or “designated class” to receive the trust’s benefits. On the other hand, if a public trust has designated beneficiaries, the class must be “large enough” to justify the state attorney general’s actions or involvement rather than a private person.

A public trust can be established in memory of a single individual but may have many beneficiaries. For example, the trust may fund the construction of a public swimming pool in memory of a kid who drowned in a lake. Therefore, the trust will be considered public as the swimming pool might have many members of the public as its patrons.

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Conclusion

Those who do not have surviving heirs or spouses who can receive their properties can opt for a public charitable trust, which will donate their funds to a public cause. However, if the settlor has significant assets involving large amounts of money but legal heirs are deemed unworthy or do not share a good personal rapport can also opt for a public charitable trust. It will allow the trustee to choose the beneficiaries for a social cause, such as children, senior citizens, destitute women or physically impaired people who need help.