I have a client who wishes to create a Discretionary Trust in his Will to provide income and/or capital to unnamed Charities only (ideally locally). He is single and worth in the region of £1.5m.
Initially my thoughts were to do so with ‘standard’ DT wording with discretion to benefit UK registered charities as the potential beneficiaries. Indeed, at a previous firm this approach had been adopted on a matter before I started there by appointing out of a DT of residue to an appointed fund created specifically for UK based charities.
From reading past TDF posts, and looking through Kessler’s “A Modern Approach”, it seems doing it that way may not be the best, or even correct way to proceed. Kessler suggests creating a lifetime charitable trust, even if just with a nominal sum, and have that as the benef in the Will.
What is an acceptable nominal sum as I have read at least £5K if it is be registered with the CC (but then there is the £5k income requirement).
Does the pilot charitable trust need registering with the CC if only a (smaller) nominal sum?
Can this be done without registering with the CC? Either if lifetime or in the Will.
The client is in his 80s and is not in the greatest health.
I’ll be totally honest and would look to do this by Will if workable but happy to be advised otherwise.
Any help/suggestions greatly appreciated as always.
Looking at my book, I see I said at 26.12:
“It is possible to create a charitable trust by will or to make a gift by will to an
existing charitable trust. It is good practice to create a lifetime trust (if need be, a pilot
trust with a nominal trust fund) and make a gift to it by will. The trust can then be
registered and its charitable status will not be in dispute when the will takes effect:
this will simplify the administration of the estate and avoid the risk that the trust may
fail. This should not be necessary if the trust is in an absolutely standard form.”
But I think if this is a will to benefit English registered charities only, I would regard that as standard form. A lifetime pilot trust should not be necessary, and I can see why a testator might prefer the simpler option.
Whlie a pilot trust could be made without registering it with the Charity Commission (because its income is under the £5k limit) there is not much point in that. The point of the lifetime charitable trust is specifically to register it with the charity commission, so after the death that side of things is sorted out.
It is possible to do it in a Will although it will end up a lengthy one. Practical Will Precedents do have a specimen Will for this and it runs to 18 pages without any Administrative Powers – inclusion of the STEP Standard ones could limit the length!
You could do a pilot settlement but you’ll then have 2 documents to complete instead of 1 and the settlement deed will probably be just as lengthy.
Either way, registration with the Charity Commissioners only needs to take place after the death when the estate falls into the charitable trust. The only issue with using a Will is that the whole Will must be disclosed to the CC but if there’s nothing else in the Will then that may not be a problem.
Graeme Lindop Probate Consultant Coles Miller Solicitors LLP
