A Trust is an unincorporated entity set up to hold property to be used solely for charitable purposes.  Just how do you go about establishing a charitable trust? 

The main characteristics of a Trust are as follows:

1.         It is simple to set up

2.         The Trust Deed (which is the governing document of the Trust) will identify the individuals who are the trustees responsible for the control and management of the Trust and its assets. The powers and duties of the Trust are set out in the Trust Deed which also sets out the framework within which the trustees must operate. A Trust Deed will generally also set out:

• The charitable purposes of the Trust
• The process for the appointment and removal of trustees
• The investment powers
• How the Trust Deed can be amended

3.         Trusts are generally controlled by a small number of Trustees meaning decisions can be taken quickly.  They decide how the income and assets of the Trust should be distributed, and make sure that this is consistent with its defined purposes

4.         A charitable Trust will be able to benefit from tax reliefs

Process of registration of charity

Once the Trust Deed agreed and the trustees are ready to proceed, they can approach the Office of the Scottish Charity Regulator (OSCR) to register as a charity.  This will require the following documents to be sent to OSCR:

• Application for charitable status
• A copy of the Trust Deed
• A description of the Trust’s proposed activities

OSCR will consider if the Trust meets the charity test and various registration requirements.  OSCR aim to assess the majority of applications within 90 days of the initial application.

No legal personality

A charitable Trust has no legal personality in its own right and accordingly property is held and contracts entered into by the individual trustees on behalf of the Trust.  This lack of corporate personality and limited liability means that a charitable trust may not be a suitable vehicle for a charity intending to deliver services itself or employ staff.

Summary

A Trust may be appropriate when some or all apply:

• The organisation is to be run by a fairly small group of people
• The administration of the organisation is going to be simple
• The organisation is to be a grant-making body only
• Assets are to be held on trust for permanent use for the purposes of the charity

For more information in setting up a charitable Trust or charity law in general, please contact one of our experienced charities team.