A charitable trust is a legal instrument where the donor signs over assets to a third party, known as a trustee, for the benefit of a charity and anyone else the donor specifies. This provides tax benefits for the donor, and also allows the donor to have control over how assets are distributed.
- What is a Trustee. A trustee is a person or firm that holds and administers property or assets for the benefit of a third party. A trustee may be appointed for a wide variety of purposes, such as in the case of bankruptcy, for a charity, for a trust fund or for certain types of retirement plans or pensions.
Charity trustees are the people who ultimately exercise control over, and are legally responsible for, the charity. If the charity is a company, these people may also be known as directors or board members.
- 1 What is the role of a trustee for a charity?
- 2 Do trustees of a charity get paid?
- 3 What is involved in being a trustee of a charity?
- 4 Who can become a trustee of a charity?
- 5 What are the powers and duties of a trustee?
- 6 Are trustees financially liable?
- 7 Do trustees get a salary?
- 8 Can trustees take a salary?
- 9 How many trustees should a charity have?
- 10 What are the legal duties of a trustee?
- 11 Can a family member be a trustee?
- 12 When can a trustee be held personally liable?
- 13 What can a trustee do with money?
- 14 Can a charity employee be a trustee?
What is the role of a trustee for a charity?
A trustee’s role in a charity is to be the ‘guardians of purpose’, making sure that all decisions put the needs of the beneficiaries first. They safeguard the charity’s assets – both physical assets, including property, and intangible ones, such as its reputation. Most trustee boards meet four to eight times a year.
Do trustees of a charity get paid?
Most trustees are unpaid, but all trustees can claim reasonable out-of-pocket expenses. Charities can pay some of their trustees (or people and businesses connected to trustees) for services. But a charity trustee may only be paid for serving as a trustee where it: is clearly in the interests of the charity, and.
What is involved in being a trustee of a charity?
Charity trustees are the people who share ultimate responsibility for governing a charity and directing how it is managed and run. They may be called trustees, the board, the management committee, governors, directors or something else.
Who can become a trustee of a charity?
Becoming a trustee You must be over 18 to be a trustee (or 16 if the charity is set up as a company or Charitable Incorporated Organisation). Charities need committed and enthusiastic people from a wide range of backgrounds. It depends on the charity whether you need any particular skills or experience.
What are the powers and duties of a trustee?
The three primary functions of a trustee are: To make, or prudently delegate, investment decisions regarding the trust assets; To make discretionary distributions of trust assets to or for the benefit of the beneficiaries; and. To fulfill the basic administrative functions of administering the trust.
Are trustees financially liable?
Trustees of incorporated charities are treated in a similar way to company directors and are generally not liable for the charity’s debts. By contrast, trustees of unincorporated charities are at much greater risk of personal liability.
Do trustees get a salary?
Trustee’s remuneration and costs Trustees are entitled to be paid for the necessary work they properly perform in the administration. A trustee is entitled: to be paid reasonable remuneration for the work they perform, once this remuneration has been approved.
Can trustees take a salary?
It is a fundamental rule that, except in certain specified circumstances, trustees cannot receive any benefit from the charity. However, a trustee cannot be paid for performing his or her duties as a trustee, such as participating in trustee meetings. Nor are they allowed to become a paid employee of the charity.
How many trustees should a charity have?
Aim for a minimum of three unconnected trustees with a good range of skills. Each trustee must read and sign a trustee declaration form to confirm they can act as a trustee.
What are the legal duties of a trustee?
Legal duties of trustees
- Ensure your charity is carrying out its purposes for the public benefit.
- Comply with your charity’s governing document and the law.
- Act in your charity’s best interests.
- Manage your charity’s resources responsibly.
- Act with reasonable care and skill.
- Ensure your charity is accountable.
Can a family member be a trustee?
One choice is a professional trustee –a bank or trust company or an individual who is in the business of serving as a trustee. The other choice is to name a family member to serve as trustee, such as a sibling of the trust beneficiary or some other trusted family member.
When can a trustee be held personally liable?
Yes, a trustee can be held personally liable if they are found to be in breach of duty or breach of trust. The state requires trustees to follow the terms of a trust to the letter.
What can a trustee do with money?
They can withdraw money to maintain trust property, like paying property taxes or homeowners insurance or for general upkeep of a house owned by the trust. The trustee can use trust funds to pay filing fees, registration fees, title fees as necessary when transferring assets into the trust’s name.
Can a charity employee be a trustee?
A charity employee can be appointed to the charity’s trustee board without express authority. This is because the person’s employment precedes the trusteeship.