Are you in the process of planning your Estate? Read on for some helpful information on using a Charitable Trust.

Why set up a charitable trust

Charitable trusts are an effective tool for those who are passionate about a particular cause. Such trusts are established to distribute funds in a considered way in order to enable charitable organisations or groups to fulfil a charitable purpose in the long-term, well after your death. Rather than making a one-off lump sum payment, charitable trusts continue to donate money to charities on an ongoing basis, preserving your gift for many years to come.

Apart from the philanthropic benefits that setting up a charitable trust provides, another major advantage is the favourable tax treatment the law affords charitable trusts. The Duties Act 2000 (Vic) provides exemptions from duty for a declaration of trust over property (or non-identifiable property) to be held on trust for a charitable purpose.

To qualify for charitable status, an organisation's purpose must be predominantly charitable. For a purpose to be considered 'charitable' and to be considered eligible for the duty exemptions, the purpose must be for the benefit of the public in general and must either:

relieve of poverty
advance education
advance religion, or
have another purpose beneficial to the community.

How to set up a charitable trust

Charitable trusts are often set up through a bequest in a Will. However, they may also be set up when an individual is still living.

For those seeking to set up a charitable trust through a bequest in a Will, the most effective approach is to have a testamentary trust introduced into your Will.

On the other hand, the most effective approach for establishing a charitable trust while still living is to have a Charitable Trust Deed. This Deed will set out the rules for establishing and operating your charitable trust and will include such information as the Deed's objectives, trustee details, payment details (i.e. amount of payment, frequency of payments and the like).

This trust will be established with an initial investment of a sum of money to be held in perpetuity (in Victoria, this is no more than 80 years). A nominated percentage of the interest on this sum is applied periodically to nominated charities, causes and the like.

The charitable trust is then administered by the trustee(s) in accordance with the Charitable Trust Deed. In addition to making payments in accordance with the Deed, including investing the trust funds and keeping proper accounts. Charitable trusts may also be managed by trust administrators or other organisations (for example, State Trustees), which enables the trust to be maintained in perpetuity, beyond the lives of either the person who established the charitable trust or the initial trustees.

How Can Sharrock Pitman Help You?

At Sharrock Pitman Legal, we have an Accredited Specialist in Wills and Estates Law. If you require expert legal assistance preparing your Will to include charitable trust provisions or require assistance setting up a Charitable Trust Deed, please contact our Wills and Estates team on 1300 205 506 or complete the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by a member of our Legal Team

For further information contact

Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

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Are you in the process of planning your Estate? Read on for some helpful information on using a Charitable Trust.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

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Estate planning: How a charitable trust works

Are you in the process of planning your Estate? Read on for some helpful information on using a Charitable Trust.

Why set up a charitable trust

How to set up a charitable trust