What is a charitable trust
A charitable trust is an irrevocable trust that is created and structured with the primary intention of benefiting those in need. Another reason for the establishment of a charitable trust is to help relieve and support community and economic issues. The purpose of creating a charitable trust is important to consider and a court of law will require proof of the purpose of the charitable activity of a trust in order to grant it as a charitable trust.
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Charitable trust explained
A charitable trust is a trust that is created for the purpose of charitable activity. Some examples of charitable activity include trusts supporting education, health, religion and support for the poor. A number of high-profile celebrities have set up charitable trusts as a way to support a cause or charity that is important to them. The assets are held and managed by the charity for a specific period of time, with some or all interest that the assets produce going to charity.
A charitable trust must essentially be for the benefit of the public or a section of society. In general, laws will favor charitable trusts due to the trusts acting in good will for the public. Not only are charitable trusts not subject to laws against perpetuity but in most countries a charitable trust is exempt from almost all taxes.
A charitable trust is also known as a public trust and in the view of the law in most countries, the legislation for charitable trusts is particularly advantageous, giving the trust a favorable tax status. In order to create a valid charitable trust you must be able to show that the trust acts in a charitable manner and poses benefits to a particular group. When considering the public benefit of a charitable trust, the ‘public’ cannot simply be a group of private individuals.
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