Charitable Trusts: Revocable, Irrevocable & What You Need to Know

Thinking about setting up a charitable trust? You probably wonder if it can be changed later or if it’s locked in forever. The short answer is: it depends on the type of trust and where you are. In the UK (especially Scotland) and the US the rules differ, and each option has its own pros and cons.

Revocable vs. Irrevocable – the basics

A revocable charitable trust lets the creator (called the settlor) alter or cancel the trust while they’re alive. This gives flexibility if goals shift or new opportunities appear. The downside is that revocable trusts usually don’t get the same tax benefits as irrevocable ones because the assets are still considered the settlor’s property.

An irrevocable charitable trust, on the other hand, can’t be changed once it’s set up (except in very specific circumstances). Because the assets leave the settlor’s control, the trust often qualifies for stronger tax relief and can protect the money from creditors. The trade‑off is you give up the ability to tweak the purpose later.

How the UK (Scotland) and US treat charitable trusts

In Scotland, the Office of the Scottish Charity Regulator (OSCR) oversees charities. A charitable trust can be registered as a “charitable trust” or a “charitable incorporated organization.” Revocability is allowed, but OSCR expects a clear plan for how the trust will operate if the settlor steps back.

In the US, the Internal Revenue Service (IRS) looks at whether a trust meets the 501(c)(3) requirements. Irrevocable trusts are the norm for tax‑exempt status because the IRS wants to see that the assets are dedicated to charity forever. Some states also allow a “charitable remainder trust,” which is irrevocable but gives the settlor an income stream for life before the remainder goes to the charity.

If you need flexibility, a revocable trust might be better for a short‑term project. If you want lasting impact and tax benefits, an irrevocable structure is usually the way to go.

Here are a few practical steps to decide which format fits you:

• Define your goal. Is the charity a one‑off effort or a long‑term mission?
• Check tax advantages. In the UK, charitable trusts can claim relief on income and gains. In the US, irrevocable trusts often qualify for deduction on the initial contribution.
• Plan for governance. Who will run the trust if you step back? Irrevocable trusts need a board or trustees with clear powers.
• Think about asset protection. Irrevocable trusts shield assets from personal lawsuits, whereas revocable trusts do not.

Remember, you don’t have to choose right away. Many people start with a revocable trust to test the waters, then convert to an irrevocable trust once the project proves its worth.

Wrapping up, the key is to match the trust type with your charity’s purpose, the legal environment you’re in, and the tax benefits you want. Whether you’re in Minehead, Scotland, or anywhere in the US, a clear plan will keep your charitable trust on track and make the most of your generosity.