Trusts Made Easy: What You Need to Know

Ever heard the word “trust” and felt it was too legal‑sounding? You’re not alone. A trust is just a way to hold assets for someone else, following rules you set. Whether you’re thinking about a charitable project, a family inheritance, or simply a safer way to manage money, trusts can be useful without being confusing.

What Is a Trust?

A trust has three main players: the settlor (the person who creates it), the trustee (the person or group that manages the assets), and the beneficiaries (who get the benefit). The settlor writes a trust deed – a short document that spells out what the trust can do, how the assets are used, and when beneficiaries receive them.

Think of it like a backpack. You put your books (assets) in the backpack, give it to a friend (trustee) with a note that says, “Only open this when I’m away, and give the books to my sister.” That note is the deed, and the friend follows it until the end.

Charitable Trust vs. Regular Charity

Many people mix up charities and charitable trusts. A charity is an organization that registers with the regulator (the Charity Commission in England and Wales, OSCR in Scotland) and can receive tax‑relieved donations. A charitable trust, on the other hand, is a specific legal structure where the assets are held in trust for a charitable purpose.

The big difference is control. In a charitable trust, the trustees have a legal duty to follow the deed and the charity’s governing documents. They can’t just use the money for anything – it must further the charitable aim, like supporting education or the arts.

If you want a simple, one‑off donation channel, setting up a charity might be easier. But if you have a specific fund you want to protect for a long‑term cause – say, a scholarship fund for local students – a charitable trust gives you tighter control and can keep the money safe for generations.

Revocable vs. Irrevocable Trusts

Another common question is whether a trust can be changed later. A revocable trust lets the settlor modify or even cancel the trust while they’re alive. This flexibility is handy if your plans might shift – maybe you’ll add more assets later or change the beneficiary list.

Irrevocable trusts lock things in. Once you set them up, you can’t easily change the terms or take the assets back. The upside is tax benefits: assets placed in an irrevocable trust are often removed from your personal estate, which can lower inheritance tax. It also offers protection if creditors come knocking.

In the UK, the tax rules differ for each type. Revocable trusts usually don’t get tax breaks, while irrevocable charitable trusts can qualify for income‑tax relief and may avoid capital gains tax on growth.

How to Set Up a Trust in 2025

1. Decide the purpose – is it for charity, family, or a specific project?

2. Choose trustees – they should be trustworthy, understand the purpose, and be willing to handle paperwork.

3. Draft the deed – you can use a solicitor, a trust‑creation service, or a reliable template if the trust is simple.

4. Transfer assets – move money, property, or investments into the trust’s name.

5. Register if needed – charitable trusts must register with the Charity Commission (or OSCR). Non‑charitable trusts usually don’t need registration but may need to file tax returns.

6. Keep records – trustees must keep clear accounts, file annual returns, and report any changes to the regulator.

Why Trusts Matter for Fundraising

Fundraisers love trusts because they provide a transparent, dedicated pool of money. Donors feel confident that a charitable trust will use funds exactly as promised. Plus, trusts can hold onto money for years, letting projects grow slowly instead of needing a big splash in a single year.

When you’re planning a fundraising event, think about setting up a trust to collect the donations. It shows seriousness, encourages larger gifts, and can give donors tax relief on their contributions.

Bottom line: trusts are not as scary as they sound. They’re just a tool to keep assets safe, used the way you want, whether that’s helping a local cause, protecting family wealth, or making fundraising smoother. Start with a clear purpose, pick the right trustees, and you’ll have a solid foundation for whatever you want to achieve.