Setting Up A Charitable Trust: Be A Donor And Make Your Family Members The TrusteesA charitable trust is a legal entity that can be set up by anyone. Such person should be the one who would like to keep aside a part of his assets for charitable purposes. That does not mean that you require a huge amount of funds to set up a charitable trust. Ordinarily, the setting up of charitable trusts commence with a bonus, an inheritance, or sale of shares that provides you with a lump sum to start the trust. Since the trust is classified as a charity, it can also receive sums from other sources, such as, gifts, aids, payroll giving, and share giving. Most of these other sources are used for the purpose of tax savings. The benefits of setting up of a trust require a careful and systematic planning. You will have a good say in the management of the assets, and the income there from when you are setting up a charitable trust. You will have to decide your objectives and priorities at the first instance. You will also have to select the criteria on the basis of which you will decide the charities or organisations that would be supported by your trust. People often involve their families as trustees. This is one of the most fruitful ways of developing a shared family commitment that would support your objectives of charity. A good number of tax benefits are derived when you set up a charitable trust. You gain tax benefits on your own donations. No tax is charged on any investment income either. There will be no corporation or inheritance tax. If the trust runs its own office, it will be exempted from business rates. Moreover, unless the trust is very large, it may not have to register for VAT either. Donations to the trust can be made through various ways, like, the payroll giving. You get a 10% Government top up that expands your financial capabilities considerably. In case of some companies, there are employees matching schemes that can further enhance your financial stature. Trusts are not controlled by the Government or by any external source. The benefits to be extended to the beneficiaries shall be at the discretion of the trust. The only obligation for the trust is to work within the stipulated purposes established by the trust deed. However, this does not mean that trusts are completely left on their own, and there are no checks and balances. The Charity Commission has been set up to supervise and verify the formal annual report, and the statement of accounts, which the trust is obliged to furnish every year. The trust has also to produce a list of the organisations supported by it. Any major change affected in the activities should be brought to the notice of the commission. The trust may continue after your death, and your favourite legacies may also continue. You need a donor, the trustees, the charitable purposes, and a trust deed to set up a trust. The donor may be you, your family members, or business, while the trustees could also be members of your family or outsiders. The purposes are well defined when a trust is formed, and the same should be for public benefit. The trust deed provides the constitution for the trust. The trust is required to be registered. Once registered, it can lawfully continue its pursuance of charitable purposes. The only restriction is that the trust cannot have any political affiliation and cannot work for private profit. |