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Can a State Demand an Accounting of Church Trust Funds?

Yes, rules a court.

Maine
State:

• Does a state have the authority to demand an accounting of church trust funds? Yes, concluded the Supreme Judicial Court of Maine. In 1939, a wealthy individual made a gift of a substantial amount of stock to a church, subject to the following two conditions: (1) the church was to use the trust fund for "charitable uses and purposes," and (2) the church was not to sell or transfer the stock for a period of fifty years. In 1983, after faithfully observing the terms of the trust for forty-four years, the church sought court permission to sell the stock. It noted that the value of the stock had fallen sharply and the rate of return was substantially less than could be achieved with other investments. The court permitted the church to sell the stock (then valued at $733,000) in order to protect the trust fund. In 1987, the state attorney general received information suggesting that the ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Posted:
  • July 1, 1992

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