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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3517
Experience:  Solicitors 2 years plus PQE
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Set up a private trust or foundation

Resolved Question:

My wife and I would like to set up something like a private trust or foundation to donate small amounts of our own money directly to individual or to pay for fees (to set up websites, for example). We would therefore like to set up a bank account into which to pay a small amount every month between £50-£200 and we do not expect any tax brakes for this. We would like, however, that the money we give away is given away under the name of our trust/foundation. We have already helped 2 artists with a website and a third one with a camera so that he can take photos of his painting to send to galleries.  We would like, for example, to have a small copyright at the bottom that it was sponsored by the so and so trust/foundation (we do not yet have a name). All the information I can find on the internet is for charities and trusts and foundation with larger amounts of capital that attract tax brakes but this is not what we are about. My wife and I have a specific interest in the art would like to give something back towards struggling artist. Is it possible to call oneself a trust or foundation without the legal implication of charities which demand tax brakes and if so how does one go about it? Thank you very much

Submitted: 2 years ago.
Category: Law
Expert:  Nicola-mod replied 2 years ago.
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Nicola
Customer: replied 2 years ago.

Hello Nicola,


 


Thank you very much for your assistance and for working hard on our behalf. Yes, we are happy to wait longer for the reply so please go ahead.


 


Thank you very much,


Michele

Expert:  Nicola-mod replied 2 years ago.
Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola
Customer: replied 2 years ago.

Great, I look forward to be contacted by you again.


 


Have a good evening,


Michele

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is XXXXX XXXXX I will assist you.

Can you confirm the following:
1. Are you certain you do not wish to register as a charity?
2. Does the name have to include the words "Foundation" or "Trust"?

Kind regards

AJ
Customer: replied 2 years ago.

Hello AJ,


 


Thank you for accepting to work on our question.


 


1. Yes, at present we really are not interested in registering as a charity. This is purely our private interest and initiative. From what I could read online the legal implication are too big to justify what we wish to achieve. We can't say what is going to happen in a couple of years. Maybe we will manage to inspire some more people to get on board but right now we really are only talking of a monthly deposit of £50 - £200 depending on our financial situation.


 


2. Our hope is indeed to able to incorporate the word Fund, Foundation or Trust in the name we will come up with like for example "Fund For Art" or "The Art Trust". If this is not possible what can you suggest we do?


 


Thank you,


Michele & Vinesha


 

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

What I would suggest are the following options:

1. You set up an actual trust - you would be the trustees and you would fund the trust - you would need a trust deed to do this and I would highly recommend that you obtain a local solicitor to assist you. In order to form a trust there must be certainty over the beneficiaries, so you would need a solicitor to help you draft the wording. As trustees you could then distribute the monies to your desired causes.

2. You form a company limited by guarantee. You would be able to use the word "Foundation" in the name but Companies House acknowledges "Foundation" as a restricted word that means you would have to comply with the following guidance in order to Incorporate a company using the word "Foundation" -
Foundation:
To use this word the company should normally be limited by guarantee. The articles of association should include objects that reflect the specific purpose of the company and a non-profit distribution clause which provides that any profits should be used to further the objects of the company and not paid to the members as dividends. The company should have a pool of money or a regular source of finance available to promote the objects. You will need to confirm this when you submit your application.
This effectively means you are forming a not for profit company and you would have to confirm this in a letter to Companies House when you form the company. The word "Trust" in a company name is XXXXX XXXXX so please this link and scroll down to "Trust" it will explain the numerous circumstance when you can register a company with the word "Trust" - http://www.companieshouse.gov.uk/about/gbhtml/gp1.shtml#appA

The pros and cons between a trust and limited company vary. A company will be cheaper to form and the yearly administration fees are probably no more that £50. A trust you would have the initial set up cost of a trust deed, but the laws are more complex. You would probably find it easier to set up a bank account with an actual trust (as opposed to a company using the name "Trust" or "Foundation") - as the bank account would be in your personal names as trustees of your trust. Banks often make hard work of setting up bank accounts in the names of newly formed limited companies.

Can I be of any further assistance?

Kind regards

AJ
Customer: replied 2 years ago.

Hello AJ,


 


Thank you for this reply. This has given us a better understanding of the issue. At present setting up a company seems the more viable option. May I take the time to mull this over with my wife over the weekend and to research what you suggest and get back to you?


 


Also, can one set up a trust to persons unspecified? Basically we do not know which artists we will support in the future. We scout them out so don't know until we actually decide to give the money what their names are?


 


How do I get back to you, by the way? Whenever I log into the site and click on My Questions the thread does not appear so I am a bit at a loss. It seems I can only get back to the thread when JustAnswer sends an e-mail.


 


In the meantime thank you very much for your efforts.


 


Have a good rest of your day,


Michele

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

No problem. Please revert to me when you are ready.

The issue with an actual trust is, that while you do not need to name the individual beneficiaries, you have to be able to identify them as a class of people or persons. So for example all students of the performing at St Martins College, or all Schools that teach arts and crafts in London. (Note: a company is a separate legal entity).

If you had a limited company you can be much more vague in the objects as to who you would like to distribute the company funds to.

If you respond to this Answer, I will respond. The experts are users of the site in the same way as you, so I do not have any control of its administration. What I will do is refer this to customer services, so you can get hold of the whole thread.

Kind regards

AJ
Customer: replied 2 years ago.

Hi AJ,


 


I understand about the trust. Thank you, XXXXX XXXXX clarified it and I don't think that we will go with the word "trust" since we all we could say is that it would go to "artists" but not of a specific school, studio, etc.


 


Yes, if you could just send me a one word reply once I have sent this I should hopefully get back to the thread next time I log in.


 


Have a great weekend and I truly appreciate your help,


Michele

Expert:  Alex J. replied 2 years ago.
Hi,

No problem.

Please do not hesitate to contact me when you are ready.

Kind regards

AJ
Customer: replied 2 years ago.

Hello AJ,



My wife and I discussed and researched the options you suggested last week and may have come up with a name which solves all the issues at once. If we were to set up a company with a name ending in "Project" like The So & So Project would we still be held to the same law and regulations governing Trusts and Foundations since we are not using those terms in the name?



Also, should we years from now have gained momentum and decide to apply for charity status would we able to keep the same name? Since we neither use the words Trust or Foundation am I right in thinking that we could distribute the funds to artists and art related causes as we see fit with the consent of the other members if necessary?



We look forward to receiving your reply. Once we have these answers I think we will pretty much know what to do.



Thank you very much,


Vinesha & Michele

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

1. Yes it appears "Project" is not a restricted word. You should be good to use that.

2. It is not a pre requisite of registering a company for charitable status that it must have the word "Trust or Foundation" in the name. You can always change the company name at a later date if you decide it fulfills the criteria to use the word "Trust or Foundation".

Kind regards

AJ
Customer: replied 2 years ago.

Thank you for your reply. Sorry AJ, one last thin?... when you say it is "not restricted" you are basically confirming that we can allocate the funds to any art related cause we choose, right?


 


We thank you in advance for your answer to the above and for the other answers you have provided. Should we require to get in touch with you in the future with different questions will we be able to do so? Can one look for a particular expert on JustAnswer?


 


We look forward to release the funds now and leave a rating.


 


All the very best,


Vinesha & Michele

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

If you are going to form a company the restriction on the use of the name of that company (specifically using the words "Foundation" or "Trust") has nothing to do with how the company spends its money. You could call the company "Scrooge for Capitalism Limited" as long as the objects of that company and its constitution says it can distribute its funds for charitable causes or as the directors see fit then the name has no relevance. Obviously for aesthetics and goodwill you want to have a name that attributes to your cause. When you arrange for the company to be formed make sure you ask the agent that forms it to include a wide scope to distribute monies to arts and any other charitable cause that you see fit.

The restricted list of names is really there to give certain words the gravitas they deserve. For example you would not want anyone to be able to use the word "Doctor, Nurse or Midwife" in their company name, because anyone who is unregulated could run off and use these words and mislead people, therefore they are restricted and can only be registered with permission. It is the same with trust and foundation, these words suggest something altruistic and goodwill and therefore their use requires permission or proof of the good cause.

At they end of the day it is not making profit that makes companies evil, it is how they distribute that profit. The way they can do that is contained in their constitution.

If you ask for me Alex J, I will be happy to assist you.

Thank you very much. Any feedback is gratefully received.

Kind regards

AJ

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Experience: Solicitors 2 years plus PQE
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