Guidance On Trusts

Trusts Contacts

Trust Assets: Estates and Trusts Officer
Financial Statements: Finance Assistant Accountant
School Financial Trusts or Buildings: School Buildings Officer

Financial Trusts

In the case of most trusts, the St Albans Diocesan Board of Finance is the holding or “custodian” trustee and the PCC or vicar and churchwardens are the “managing” trustees who administer the trust.

There are also some educational financial trusts attaching to particular church schools which are vested in the Board as trustee.

To make a withdrawal request relating to parish trusts, the managing trustees need to complete and sign the Custodian Trust withdrawal form and send it together with enclosures to the Estates and Trusts Officer either by post or as a scanned document by e-mail. For withdrawal requests relating to school trusts, the school governors/head teacher should send the application to the School Buildings Officer.

Before entering into any obligations to spend trust money, or making a PCC resolution to spend money, please check with the Estates and Trusts Officer that the intended use is consistent with the purpose permitted by the trust. This will mean checking the original trust document. Special wording in the PCC resolution may sometimes be needed under the Charities Act 2011. The Diocesan Board of Education must also be consulted well in advance of proposals for expenditure under school trusts.

Trusts are generally set up on the basis that only the income may be used and not the capital, but this is not always the case and the original trust document should always be checked if you want to spend any of the capital. Even if use of capital is not permitted under the trust, the Charities Act 2011 has a mechanism to allow the trustees to spend all or part of the capital where this is in the best interests of the trust, although for larger trusts Charity Commission consent may be needed. Of course, if trustees spend capital, it reduces the value of the fund for the future.

It is the responsibility of the managing trustees to make investment decisions relating to the trust funds which they administer. Please see our longer term investments webpage for more information on this.

It usually takes at least two weeks from the date a withdrawal request is made for funds to reach the payee account, but on occasion, especially for non-CCLA holdings, withdrawals can take longer. Please bear this in mind when instructing contractors, and please check timings with the Assistant Accountant at an early stage if this may be an issue.

Land And Buildings Trusts

By law, legal title to land and buildings held on parish ecclesiastical trusts generally has to be vested in the diocesan authority, which here is the St Albans Diocesan Board of Finance as the holding or “custodian” trustee. However, the Board does not have a management role.

The managing trustees named in the trust deed are usually the PCC but sometimes the vicar and churchwardens. They have management responsibility for the trust property and must use it in accordance with the trust deed and comply with all legal requirements relating to use and maintenance of the trust property. The trust deed will set out how income from the trust may be used, but the first duty is to maintain the trust asset (such as a church hall, a house, a car park or even sometimes a piece of agricultural land).

The trust deed may be a “Declaration of Trust”, or sometimes the trust provisions are set out in the original conveyance of the site, in which case the conveyance is the trust deed. It will usually say something like “to use the property for ecclesiastical purposes” but may be more restrictive in some cases. In a few cases, trust property such as church halls or car parks may be subject to faculty jurisdiction, in which case consent from the Registrar might be needed to let out the premises.

For church halls, the trust deed does not tend to set out how the hall should be managed. That would be decided by the managing trustees. Managing trustees may delegate management to a committee but should always maintain control as to how the hall may be used. The managing trustees are responsible to maintain the trust asset (the hall) and comply with legal requirements relating to its use, so it is important that they are kept fully informed.

Sometimes church halls are let on a formal long lease to a secular body, which usually needs Charity Commission consent (known as an Albemarle Scheme) because secular use is not normally permitted under the original trust deed. If the church hall is let then, while the lease is in force, the day to day management responsibility would usually be with the tenant and not with the managing trustees. There are a number of church halls in the Diocese which are let on long leases to village hall associations in this way.

In the case of a disposal of land or a longer lease, the managing trustees will usually need to comply with section 119 of the Charities Act 2011 and obtain a written report from a qualified surveyor before entering into an agreement for the sale or lease of the land. The surveyor may advise the managing trustees to advertise the proposed sale or lease before going ahead. The Act requires that the managing trustees must decide that they are satisfied, having considered the surveyor’s report, that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for the charity.

Note that any income or sale proceeds received from the trust property will still be subject to the original trust and may only be used in accordance with that trust. This will usually mean that, rather than sale proceeds being released to the parish, the sale proceeds will be held by the Board in a dedicated account as custodian trustee for the managing trustees, till applied in accordance with the terms of the trust. However, the terms of the trust need to be checked in each case.

The Board as legal owner and custodian trustee needs to be a party to disposals and to most formal leases or agreements and will need to be advised by its own solicitors and surveyor, at the cost of the managing trustees under the trust, on both the transaction as a whole and on any Charities Act report. The managing trustees are not obliged to use the same advisers, but it may save money to do so. Please therefore get in touch with us at an early stage if you want to sell or let your property, before you instruct any professional advisers.