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What happens when the trust will benefit the community in a charitable way

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If the testator or settlor or the person declaring that he or she holds property wishes to benefit the community instead of named or identifiable beneficiaries in a way that the law considers to be charitable, some different considerations apply.

If the testator or settlor or the person declaring that he or she holds property wishes to benefit the community instead of named or identifiable beneficiaries in a way that the law considers to be charitable, some different considerations apply.

The term 'charitable' traditionally covers four areas – that is, trusts for

  • advancing religion,
  • advancing education,
  • relief of poverty and
  • purposes of public utility such as establishing a fire brigade.

 

The law considers that charitable trusts benefit the community in a greater way than having the trust conclude with a final distribution within 80 years; they will not be affected by that time limitation. 

The Government, through Inland Revenue, may also grant a non-profit tax exemption, on the basis that the trust will benefit the community more than taxing its income will do.

Charitable trusts can also register with Charities Services.  The websites for Inland Revenue and Charities Services have further information on these aspects.  Importantly, the Government also permits the trustees of a charitable trust to apply to incorporate.  

 

Last updated 11 March 2015

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