Reasons for a Trust Board to incorporate

It is very common for the board of a charitable trust to apply for incorporation under the Charities Act 1957.  To do this certain forms must be submitted to the Registrar of Societies – information and access to those forms are here.

But why bother??

Well, incorporating a charitable board means that a group of trustees has a single identity in the eyes of the law – it then “exists” as a form of legal entity.  The technical term is a ‘body corporate’ and – separately to the trustees who make up the board – it can be sued, can sign contracts (with a common seal, yes you need one) and can own property.

A board (once incorporated by the trustees of the charitable trust) will not end until certain events occur so it can then administer the trust going forward (whether or not trustees come or go).

Perhaps the biggest reason for trustees to incorporate is that the board itself will then enter into contracts and obligations – if things go wrong the incorporated board is liable for that (rather than the individual trustees).  That is important safeguard for the trustees to have in place.  Also, since it can hold trust property in its own name that does not need to be held in the names of the trustees themselves.

Having said all that, it is not a legal requirement to incorporate a trust board.  If that is not done then the property of the trust is held in the personal names of the trustees.

If you have any questions about the process of incorporating a Trust Board or would like to discuss your situation we are happy to have a chat with you.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. Contact Steven Moe at stevenmoe@parryfield.com to request this or for any other questions. Copyright © Parry Field Lawyers 2017.