Setting Up Charitable Trust

A charitable trust is one of the most straightforward and tax-efficient ways to ensure your charitable objectives are met - both during your lifetime and beyond. Charitable trusts are established for charitable purposes and are generally used to manage assets or make grants to other charities, serving the public benefit. They can function similarly to a charitable foundation, offering flexibility and managed administrative responsibilities. The advantages and benefits of setting up a charitable trust include tax advantages, goodwill, and a positive impact on both donors and the community. Whether you want to make regular donations or leave a meaningful legacy, a charitable trust allows you to retain control, see the impact of your giving, and create a structure that can continue for generations.

Why Set Up a Charitable Trust?

1. Control of Your Funds : Unlike a one-off donation, a charitable trust lets you and your chosen trustees decide how, when, and to whom funds are distributed. The trust can hold a variety of assets, including cash and property, which are managed within the fund to achieve the trust’s purposes. You’ll receive applications for grants and can monitor how every pound is used to achieve your chosen objectives.

2. Create a Family Legacy : Many donors name the trust after themselves or their family. The trust can continue to operate even after the founders have passed away, with younger family members or trusted advisers stepping in as new trustees to carry your vision forward.

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3. Tax Efficiency : Gifts to a charitable trust are immediately free from Inheritance Tax (IHT), Income Tax, and Capital Gains Tax (CGT). Donating different types of assets, such as cash or property, can provide additional tax benefits. Funds placed in the trust can be invested, and any growth or income is also tax-exempt, giving you more to distribute to your chosen causes. Any remainder in the trust after distributions continues to serve charitable purposes.

How a Charitable Trust Works?

Trustees : You appoint a small group of individuals (often family members or close friends) who are responsible for managing the trust and making decisions on behalf of the trust.
Trust Deed : The trust deed is the governing document that clearly defines the charitable objectives, rules, and powers of the trustees. It is usually irrevocable, meaning it cannot be revoked or altered once established.
Registration : Depending on size and scope, the trust may need to register with the Charity Commission.
Ongoing Management : Trustees decide when and how to grant funds, ensuring donations are used exactly as intended.

A charitable trust does not have a legal personality and therefore cannot employ staff or directly deliver services.

Once the trust deed is signed, the charitable trust comes into effect and can begin making grants immediately.

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Example Uses

Supporting local community projects year after year
Funding scholarships or medical research
Providing relief in times of crisis while maintaining long-term capital
Providing support to beneficiaries, including individuals and organisations, through targeted grants or ongoing funding

Our Role in the Process

Setting up a charitable trust can feel daunting, but our specialist estate-planning team, with extensive expertise in estate planning and charitable giving, guides clients through every step:

Drafting and executing the trust deed
Advising on charity law and trustee responsibilities
Structuring investments for maximum charitable impact
Registering with HMRC and the Charity Commission where required

Clients also have access to a range of resources and services to support the establishment and management of their charitable trust, making it easier to obtain the help and information they need.

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Next Steps

Whether you are considering a significant lifetime gift or planning your Will, a charitable trust ensures your money creates lasting good while remaining tax-efficient and fully under your control.

You can apply to set up a charitable trust or a giving account, and our team can advise you on which options you are eligible for.

Book a free, no-obligation consultation to discuss your charitable objectives and explore the best structure for your needs.

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