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A charitable trust is the most straightforward gifting vehicle to ensure your charitable objectives are met.

There are various ways of supporting your chosen charitable causes, such as making donations or leaving legacies through your will. Many of our clients wish to make an impact with their charitable giving, but often worry they cannot ensure the funds are used for their intended purposes. It can be very difficult to see how the donation is utilised once it reaches the charity.

Increasingly, individuals are looking to have a more ‘hands on’ approach to their charitable gifting, by deciding how their funds should be used, and truly appreciating the difference their donations can make to the lives of others.

How to set up a charitable trust

Although the prospect of setting up a charitable trust can seem daunting, we frequently guide individuals and their families through this planning process. A charitable trust is the most straightforward gifting vehicle. The structure is usually appropriate where the charity is to be run by a few individuals who will act as trustees (such as family members or a group of friends), and the intention is to make donations or grants of money to individuals or other charitable causes.

The charitable trust is created through a trust deed. This document sets who will be the trustees, the charitable objectives, and the rules of the charitable trust. Once the trust deed is signed, the charitable trust will be established and the charitable work can begin immediately.

Why create a charitable trust?

  • The trustees (you and the individuals of your choosing) will manage the charitable trust. You will receive applications and make decisions as to how, and when, donations should be granted. You will see first-hand how the funds are being utilised, and will be in a position to ensure your charitable objectives are met.
  • Many clients find the charitable trust to be a means of ensuring their charitable legacy. Often, the charitable trust will be named after the individual or be given the family name. The charitable trust will continue to function even once the founding individuals have died, or retired from the role of trustee. The charitable trust will continue on with new trustees, who may be younger family members, or third parties who support your charitable cause.
  • The charitable trust ensures tax efficiency, and allows you to set aside funds for future charitable gifting. There are no negative tax consequences of making a gift into a charitable trust (unlike making gifts to individuals). Once the funds are safe in the charitable trust, they will be immediately free of inheritance tax, income tax, and capital gains tax. The trustees may decide how, and when, to utilise the funds both now and in the future. By creating the charitable trust now, it ensures your funds are safely ring-fenced, ready to be donated to any given charitable cause in the future. If the funds are not immediately donated, they will be invested by the trustees, and any capital growth, or income will not be taxed within the charitable trust.

We appreciate there is a lot of information to consider when deciding to create a charity. We have a dedicated team of solicitors who advise on the creation and administration of charitable trusts, as well as other charitable structures. We would be happy to meet with you to discuss your specific charitable objectives with a no obligation initial meeting. Please do not hesitate to contact a member of our team.

Talk to our expert trust solicitors for information on all aspects of trust creation, management and closure.

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