A charitable trust is a legal entity created to advance charitable causes or benefit the public. It is formed when a settlor (the person establishing the trust) transfers assets, such as money, property, or investments, to trustees, who then manage and administer the trust per the settlor’s wishes and the trust deed.

Key characteristics of a charitable trust include:

Charitable Purpose: The trust must have a clear charitable purpose, such as relieving poverty, advancing education, promoting religious activities, advancing culture, or providing benefits to a community.

Beneficiaries: The beneficiaries of a charitable trust are typically the general public or a specific group of individuals, rather than specific individuals named in the trust deed. The beneficiaries benefit indirectly through the trust’s charitable activities.

Trustees: Trustees are responsible for managing the assets of the trust and ensuring that they are used for the charitable purposes outlined in the trust deed. Trustees have a fiduciary duty to act in the best interests of the trust and its beneficiaries.

Perpetual Existence: Charitable trusts often have perpetual existence, meaning they can continue to operate indefinitely, even beyond the lifetime of the settlor or trustees. This allows the trust to have a lasting impact on charitable causes.

Tax Benefits: In many jurisdictions, charitable trusts enjoy tax benefits, such as exemption from income tax, capital gains tax, or inheritance tax, as long as they meet certain requirements and are recognised as charitable organisations by the relevant tax authorities.

Public Accountability: Charitable trusts are subject to regulatory oversight and must comply with laws and regulations governing charitable organizations. They may be required to submit financial reports, maintain transparency, and demonstrate that their activities are consistent with their charitable purposes.

Overall, charitable trusts play a vital role in supporting philanthropic efforts, addressing social needs, and contributing to the welfare of society. They provide a structured and legally recognised way for individuals to donate assets for charitable purposes and ensure that their philanthropic intentions are carried out in accordance with their wishes.