Cy Pres Applied to Redirect Charitable Trust Funds

Trust Law Controversies

Cy Pres Applied to Redirect Charitable Trust Funds After Hospital Closure—Trustee's Due Diligence Found Inadequate

Prepared March 15, 2026

Court: Supreme Court of Rhode Island

Date: February 20, 2026

Citation: Bank of America, N.A. v. Neronha, No. 2024-30-Appeal, 2026 WL 478704 (R.I. Feb. 20, 2026)

Summary of Relevant Facts

Bank of America served as trustee of five charitable trusts created between 1930 and 1969, all naming Memorial Hospital in Pawtucket, Rhode Island as a beneficiary. The trusts funded free hospital beds for the poor—the Richardson Trust established the “E. Russell Richardson Bed,” the Preston Trust established the “Florence H. Preston Free Bed” and “Jennie R. Fairburn Free Bed,” and the Wood Trust allocated 20% of income to Memorial Hospital. In 2013, Memorial Hospital was acquired by Care New England Health System. Due to financial difficulties, Memorial Hospital ceased functioning as a licensed hospital in 2018—its emergency department closed and inpatient care was eliminated. Some outpatient medical offices continued operating on the former campus.

Procedural Background

In July 2022, Bank of America filed a petition for application of the cy pres doctrine to redirect trust funds. A Mayor’s Advisory Committee recommended a joint proposal from Progreso Latino and The Miriam Hospital Foundation. A seven-day bench trial was held beginning July 2023. Expert testimony established that at the time the trusts were created, “hospital care” meant inpatient and emergency services. The trial justice entered final judgment designating The Miriam Hospital as the alternative beneficiary, rejecting the trustee’s and the Advisory Committee’s recommended joint proposal. The Attorney General, CNE, Memorial Hospital, and Kent County Hospital appealed.

Main Controversies

The main controversies were: (1) whether Memorial Hospital’s closure frustrated the purpose of the charitable trusts; (2) what the settlors’ charitable intent was at the time of trust creation; (3) which alternative beneficiary would best honor the settlors’ intent; and (4) whether the trustee performed adequate due diligence in evaluating alternative beneficiaries.

Position of the Parties

The Attorney General and CNE/Kent County Hospital argued the trial court applied too narrow a definition of “hospital care” and that modern healthcare delivery changes should be considered. They supported redirecting funds to community health services including mental and behavioral health programs. Bank of America supported The Miriam Hospital as an alternative but was criticized for inadequate due diligence. The Miriam Hospital argued the trial justice properly found it was providing hospital care most similar to what Memorial Hospital historically offered.

Holding or Decision

The Supreme Court affirmed. It held that the cy pres doctrine properly applied, that the settlors expressed a general charitable intent, and that The Miriam Hospital was the alternative beneficiary closest to the settlors’ original intent. The court found the trustee’s due diligence was inadequate but agreed with the trial justice’s independent determination.

Reasons for the Decision

The court applied Rhode Island’s cy pres statute (G.L. 1956 § 18-4-1), which requires courts to carry out settlors’ intents “as near as may be.” The court reasoned that it must place itself in the shoes of the settlors at the time of trust creation to determine what they would have wanted. Expert testimony established that in 1930, 1941, and 1969, “hospital care” consisted of inpatient and emergency services—not the broader array of outpatient, mental health, and community health services that exist today. The settlors donated to a hospital providing inpatient care, and the closest alternative must be another hospital serving the same purposes. Neither Progreso Latino nor The Miriam Hospital Foundation were hospitals, and their proposed use of funds for predominantly mental and behavioral health services did not comport with the settlors’ intent as understood at the time of creation. The court also found the trustee’s due diligence inadequate—Bank of America should have investigated settlors’ obituaries, interviewed Advisory Committee members more thoroughly, and considered the specific services contemplated at trust creation.