Charitable Trusts - trustees to be held liable if documentation not complete

As of July 1 2008, the Charities Act 2005 will require all charitable trusts and societies to register with the Charities Commission should they wish to retain favourable tax treatment. As the Commission’s processing taking around 3 months there is little time left for charitable trusts and societies to complete what has turned out to be a complex process.    

One of the major issues that we have discovered with charitable trusts is the failure to properly record the appointment and departure of trustees. The problem arises because section 43(1) of the Trustee Act 1956 is absolutely unequivocal, new trustees must be appointed by deed, and retirement of trustees must 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 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.
Last Updated ( Tuesday, 22 April 2008 )
 
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