Leaving a legacy through Charitable Trusts….

This month, we have focused on the importance of giving and supporting charities, as well as some of the benefits you may be able to glean through your generosity.

But, perhaps you are so fortunate as to have the resources to take things further, and you’d like to establish a charitable trust to support the community in perpetuity.

Setting up a charitable trust is a noble endeavor, one that our firm would be delighted to support.

While setting up a charitable trust is not difficult per se, it would benefit to seek out professional advice to ensure everything is accurate, enforceable and legally correct. The following is an overview of how to set up a charitable trust.

Determine the Structure

The type of structure of your charity will affect how it operates, such as who will run it, whether it will have a wider membership if it can contract or employ staff in its own name, and the liability of the trustees who administer the charity.

There are four primary types of charity: a charitable incorporated organisation (CIO), a charitable company (limited by guarantee), an unincorporated association, and a trust, which is what this article will focus on.

Draw up a Trust Deed

The Trust Deed is the document that will set out how the trust will be run, including how members of the trust determine which causes to support, or how the trust assets will be disbursed. This document must satisfy the requirements of the Charity Commission in order to be legally valid.

Primarily, the document must show the Charity Commission that the trust has been set up for a charitable purpose, wherein there must be some sort of public benefit. Previously, these purposes were often quite limited, with trusts being allowed only to support poverty reduction, religious endeavors or education. However, the Charities Act 2011 has broadened the grounds of a charitable purpose to 13 sections, with one final catch-all provision.

If you have questions about whether or not your cause would be suitably ‘charitable,’ seek out the advice of a trust attorney to give you guidance.

Fund Your Trust

If you are going to independently fund the trust yourself, you can transfer assets through a Gift of Property or a Gift of Shares.

You will also be able to claim Gift Aid on any donations that are made to your trust by donations given or solicited. You will need to set up a bank account in the name of the organization, as well as ensuring the minimum threshold is deposited. Currently, that threshold is £5,000.00.

Apply for Charitable Status

This is generally advisable, although there are some drawbacks for holding charitable status.

True, you will receive favourable tax treatment; however, you will also be subject to more regulations and will be required to submit regular accounts to the Charity Commission.

While not a complex process, it is very document-based and requires multiple forms. A solicitor will be able to help you through this process, or you can seek out information on the Charity Commission’s website.


If you are the trustee, you will also be obliged to submit any records to the HMRC and Charity Commission annually.

Trustees will incur personal liability in this regard, so it is important to know your duties (and any risks!) before you take on this role. Otherwise, you may be able to appoint a professional trustee to run the trust; however, this must be memorialized in the Trust deed to be approved of by the Charity Commission.

Most charities cannot compensate their trustees, although exceptions are made. To find out whether you will be able to hire a professional trustee, seek out the advice of a solicitor specializing in trusts.

Our firm is happy to advise you on all aspects of creating a trust, whether it is for charitable purposes or simply as part of a comprehensive estate planning venture. Get in touch with Wayne today for a consultation.


Telephone – 01883 708155