Structures such as endowments evolve and businesses can change, which means trustees and charitable groups must adapt - and that includes how donors' goals are maintained. The author examines how matters operate in California.

The following article examines the details of trusts and how they operate in California – a state that is very much in view because of a proposed wealth tax in the state. However, the issues are far more than a particular tax proposal and touch on concerns about philanthropy, secure transfer and control of assets, and more. 

The author of this analysis is Robert Coleman (pictured below), partner, Musick, Peeler & Garrett LLP.

The editors are pleased to share these insights; the usual editorial disclaimers apply to views of guest writers. We welcome feedback and conversations. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

Robert Coleman

The word “irrevocable” implies inflexibility, the idea that a donor’s instructions, once committed to writing, become permanently fixed. In the charitable sphere, this sense of permanence is often embraced as a virtue: a guarantee that a donor’s generosity will continue to operate exactly as envisioned, long after the donor is gone. Yet the passage of time often reveals that instructions drafted for a particular era cannot always anticipate the needs of a later one.

The world changes, sometimes rapidly. Scholarship funds that once served a broad, vibrant population may confront demographic changes that the donor never imagined. A charitable trust structured around a particular profession, industry, or community connection may find that its defined beneficiary class no longer exists in meaningful numbers. Educational environments evolve. Industries shift. Geographic communities disperse. And with these shifts, a once workable restriction can become unworkable, wasteful, or even counterproductive.

These challenges are no longer outliers, rather they have become a defining theme in modern philanthropic administration. Trustees and charitable organizations are increasingly finding themselves in situations where unwavering adherence to literal language frustrates, rather than fulfills, a donor’s intent.

Fortunately, California law is not blind to these realities. The Uniform Prudent Management of Institutional Funds Act (UPMIFA), reflected in Probate Code §§ 18501-18510, and longstanding modification doctrines, including Probate Code § 15409 and the cy près doctrine, recognize a fundamental truth: donor intent is rooted in purpose, not mechanics. (The "Cy-près doctrine" permits legal documents to be enforced "as near as possible.")

The donor’s ultimate objective is what deserves protection across generations, even if the specific method the donor chose no longer produces that result.

Scenario example
A typical scenario illustrates the point. Decades ago, a donor established a scholarship fund at his alma mater with eligibility tied to a narrow criterion, perhaps employment in a particular industry or a familial connection to a specific group. At the time, the criteria made perfect sense, addressing a pressing need or reflecting a personal story. But over the years, the number of students meeting that criterion has dwindled. The endowment continues to grow through prudent investment management, yet the institution cannot identify a single qualified applicant. What began as a living, impactful fund becomes a dormant pool of restricted dollars. The donor’s generosity sits idle.

This is precisely the circumstance California law anticipates. Under Probate Code § 18506, courts may modify restrictions that have become impracticable or wasteful, or where changed circumstances, unanticipated by the donor, require modification to advance the fund’s purpose.

Likewise, Probate Code § 15409 allows modification of irrevocable trusts (including non-charitable family trusts) when unforeseen developments would defeat or substantially impair the settlor’s intent. And the cy près doctrine enables a court to carry out a charitable trust “as near as possible” to the donor’s original objective when literal compliance no longer achieves the intended result.

These doctrines do not dilute donor intent. They preserve it. When institutions demonstrate that the donor’s purpose remains clear, for example, supporting students connected to a particular field of work, but the original method no longer reaches any beneficiaries, courts routinely permit adjustments that realign the fund with its intended mission.

One anonymized California matter underscores how essential these tools have become. A university, stewarding a decades old scholarship designed for a narrowly defined student population, discovered that the beneficiary group had effectively disappeared. For several consecutive years, no eligible students applied. Meanwhile, the endowment grew substantially. The situation raised concerns not only about waste but also about the institution’s fiduciary duty to use charitable assets responsibly.

To address this, the university sought judicial modification, proposing a new structure that honored the donor’s priority beneficiaries while expanding eligibility in a thoughtful, purpose aligned manner. The court agreed. The fund, once nearly dormant, became active again, supporting students in ways that remained faithful to the donor’s original vision.

This evolution reflects a broader shift in philanthropic stewardship. Trust modification is no longer viewed as an extraordinary remedy or an admission that an estate plan was flawed. Instead, it is increasingly understood as responsible governance, a recognition that donors themselves could not predict all future variables, and that good stewardship sometimes requires course correction.

Estate planners and high net worth families are taking notice. They are beginning to rethink not only how to repair outdated instruments, but how to draft new ones with flexibility built in from the start.

And that brings us to the core takeaway for individuals designing their own legacy.

Actionable steps for benefactors and their advisors
For high net worth individuals creating trusts, foundations, or scholarship funds, the best protection for your legacy is careful, forward looking drafting, paired with the understanding that even the most thoughtful documents will eventually collide with a changing world. The goal is not to predict the future perfectly (no one can), but to equip future generations with a roadmap.

First, assemble a complete picture of your estate plan: the trust instrument, amendments, operating agreements for family-owned LLC’s, beneficiary designations, and any letters of wishes or statements of intent. These materials should work together, not at cross purposes.

Second, work closely with experienced estate planning counsel to articulate not only the “what” of your gift, but the “why.” A clearly expressed purpose gives courts, trustees, and future family members guidance if circumstances shift.

Third, recognize that circumstances will change, often in ways even the most sophisticated planners cannot anticipate. The law anticipates this too. California Probate Code § 15409, § 18506, the cy près doctrine, and the decanting provisions of §§ 19501-19530 serve as safety valves, giving your trustees or heirs the ability to adjust your plan while remaining anchored to your intent.

Finally, a word of caution: ambiguity is the foe of legacy. When donor intent is unclear or silent on key issues, future generations, or courts, may be forced to interpret your wishes without the benefit of your voice. That process can become contentious, expensive, and misaligned with what you would have wanted. Thoughtful drafting today can spare your beneficiaries uncertainty tomorrow.

With careful planning, trusts and charitable gifts can be both stable and adaptable, strong enough to carry your values forward, yet flexible enough to remain relevant in a world that will inevitably look very different from the one you know today.