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A charitable trust is a trust in which property or money is held or given for the purposes of carrying out or performing a charitable act.
Charitable trusts can be created during your lifetime or on death. They can be used if you want to give regularly to a number of causes, ask others to contribute or give an amount as a one off gift from time to time.
The trust will have a charitable purpose which must be for the benefit of the public. It can support both individuals and organisations and can operate anywhere in the world unless you restrict to a specific region.
The charitable purpose must fall within 13 descriptions as set out in the Charities Act these include:- the prevention or relief of poverty, the advancement of education, the advancement of health or the saving of lives, the advancement of amateur sport and the advancement of animal welfare.
The trust may not make profit and it is not allowed to be used for political activism.
Why use a Charitable Trust?
They are not limited in duration, will not be void for uncertainty, a wish is sufficient and trustees can act by majority rather than unanimously.
The trust can benefit from a number of tax reliefs if registered with HMRC. As an individual you will be to apply for tax relief on your donations into the trust.
The trust will not pay tax on its investment income, corporation tax or inheritance tax or business rates if the trust has an office (mandatory relief of 80% and further 20% on a discretionary basis). The trust does not have to register for VAT.
Setting Up a Charitable Trust
What is required?
A donor – you and / or your family
Trustees – you, family members, friends, solicitor
A charitable purpose
Trust Deed – the constitution
A trust deed sets out the framework in which the trust will operate, it should include:- the powers and responsibilities of the trustees, how trustees can be appointed and removed, how money will be invested and granted, how the deed can be altered and what will happen after the donor’s death. We will be able to assist you further with the set up and on-going responsibilities of the trust and trustees.
There will be initial set up costs however once the trust has been established then the running costs will be smaller.
The trust must register with the Charity Commission for England and Wales when it has income over £5,000 a year. Once registered it must publish an annual report and accounts detailing grants made and any significant changes.
Please contact us or Kate Beaumont for more information