Changing And Reorganising Charitable And Public Trusts

The purposes and provisions governing a trust fund can usually be changed. However, the type and terms of each trust will determine the proper legal course to make the change. Changes to a trust can also be platform to new, modern, better governance including leaving the trust law regime. Escaping being a trust would often mean becoming a Scottish Charitable Incorporated Organisation (SCIO).

As well as a narrative on the issues, we have a diagram below to help navigate the processes to change and reorganise a charitable or public trust.

The major type distinction is between charitable and non-charitable trust funds.

Changes to non-charitable trust funds are regulated by the trust deed itself, the courts and in very small trusts a specific statutory regime. Changes to charitable trust funds are mainly regulated by the trust deed itself and the Office of the Scottish Charity Regulator (OSCR). It should be mentioned that this note only addresses charitable and public non-charitable trust funds. Private and family trusts are dealt with differently.

Do you really have a "trust" (in the strict legal sense)?

It is important to check whether or not the fund is indeed a "trust". It may not be and that could alter the methods required to change the purposes and terms of the "trust" fund. For charities that will still mean OSCR regulation is relevant. This issue is perhaps most apparent where an existing charity has acquired assets from a trust- the funds may be held subject to the terms and conditions contained in the original trust, but the legal vehicle involved will be that of the recipient body. This situation can be quite common in the education sector where educational institutions (often established under a statutory regime) receive funds from trusts or wills to be managed, held and applied by the university or college under its legal framework.

Statutory "trust funds": take extra care

Charities and other organisations which have been established under a statutory regime should confirm what statutory or parliamentary processes they might need to go through to make a change. We have Scotland's widest experience of helping organisations navigate parliamentary processes in order to change the purposes or terms of their "trust fund".

The terms of the trust: do you have the power to change?

A fundamental port of call for any proposed change is the trust deed itself. Does it allow the particular change? Is there a clause permitting amendments and...

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