Page 62 - Washington Nonprofit Handbook 2018 Edition

information. A corporation’s failure to file the report within the required time
period results in automatic dissolution of the corporation by the Secretary of State.
A nonprofit corporation may also be required to file annual reports pursuant to the
Charitable Trust Act (see Chapter 17) or the Charitable Solicitations Act (see
Chapter 45). Finally, the corporation may be required by federal tax law to file a
Form 990. See Chapter 35 for a discussion of this form.

CHAPTER 17. Entities to Report as Charitable Trusts

The Charitable Trust Act (“CTA”), codified in RCW 11.110, applies to all
entities, including corporations that meet the definition of a “trustee.” A nonprofit
corporation meets this definition if it is either (1) formed for the administration of a
charitable trust or (2) holds assets that can only be used for charitable, religious,
eleemosynary, benevolent, educational or similar purposes.

a. Significance of the CTA

(i) Attorney General Enforcement Powers

The CTA empowers the attorney general to enforce the terms of the trust as
the statutory representative of its public beneficiaries. Trustees are required to
give the attorney general notice of all judicial proceedings affecting the trust or its
administration in which the attorney general is a necessary party. The attorney
general is authorized to investigate transactions and relationships involving the
trust. This includes the authority to issue administrative orders requiring any
person to appear to answer questions regarding trust administration.

(ii) Registration Requirement

Perhaps of greater day-to-day importance, some trustees are also required
to register and report annually to the Secretary of State concerning the trustees’
affairs. While the law defines “trustee” for purposes of the attorney general

enforcement powers very broadly, it requires only some trustees to register with
the Secretary. The registration requirement applies when:

y The trustee holds assets that are invested for income-producing
purposes. Even though assets are invested, all or part of the principal
or income of the trust must be presently available for charitable
purposes. A trustee is not required to register if the trust’s terms
require that the assets be entirely expended for a charitable purpose
within one year; and

WASHINGTON NONPROFIT HANDBOOK -51- 2018