Since 1 July 2008, the Charities Act 2005 has required all charitable trusts and societies to register with the Charities Commission should they wish to obtain favourable tax treatment for themselves and those who donate to them.

One of the major issues that we have discovered when registering charitable trusts with the Commission was the failure to properly record the appointment and departure of trustees. The problem arises because sections 43(1) and 45(1) of the Trustee Act 1956 are absolutely unequivocal, new trustees must be appointed by deed and the retirement of trustees must also be recorded by deed.

While overcoming this problem can be time‐consuming and costly, the real concern we have is that anyone who acts as a trustee without having been properly appointed by deed may be personally liable if anything goes wrong (if the trust is incorporated, personal liability is usually limited, but that limitation does not apply where proper appointment processes have not been followed).  In addition, a retiring trustee who fails to ensure that their retirement has been properly documented and that any required replacement trustee has been validly appointed may be deemed to have abandoned the responsibilities of trusteeship, and have ongoing personal liability if things go wrong.

Charities and trusts have complicated legislation surrounding them.  If you are unsure or in doubt over any aspect of a charity or trust that you are involved in please contact one of our team: Jodi Lett, Simon Wilton or Mark von Dadelszen, without delay. 

May 2011