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​Trusts


Trusts Group

The Trusts Group in the Legal Services Unit (currently consisting of a Senior Lawyer – Trusts​, a Lawyer and a Graduate Lawyer) is available to advise ​UCA entities regarding the use of trust moneys and to answer general queries in relation to trusts.

For general trusts related queries please contact:

Daniel Santopietro
PLT Intern
Phone: (03) 9251 5927
Email: trusts@victas.uca.org.au​

For queries relating to the establishment of an inter vivos gift please see the Gift Agreement for individual donors/multiple donors for Victoria, or the Gift Agreement for individual donors/multiple donors for Tasmania.

For queries relating to the establishment of a bequest please see the suggested Wills Clauses​.

Trusts and the Church

Many donors choose to donate to their local congregation, a community service agency they have had involvement with, to pastoral care programs, for theological training, overseas mission or an aged care service.  Gifts can take many forms, including cash, shares, real property or valuable paintings.

In the context of the Church, a trust exists when a person, generally the relevant incorporated property trust is given and holds a gift for one or more of the charitable purposes of the Church, on the terms specified by the donor.

Some people choose to establish a trust which commences during their lifetime, called an inter vivos gift, others choose to establish a testamentary gift (bequest) in their will.

Trusts are often established with the intention of memorialising someone, through the creation of a perpetual trust which will benefit the chosen purpose indefinitely. If a donor specifies that only income is to be used the trust will exist in perpetuity. The original asset which is given forms the ‘endowment’ of the trust, which generates the income for application to the specified purpose.

The purpose specified by a donor in a will (see the suggested Wills clauses), Gift Agreement (see the template Gift Agreement for individual donors /multiple donors for Victoria, or the template Gift Agreement for individual donors/multiple donors for Tasmania), letter or other document constitutes a trust term which must be complied with. The terms of a trust can only be changed by application to the Attorney General or the Supreme Court of Victoria. Applications to change trust terms are called cy près applications.

The suggested Wills clauses include a clause which allows an incorporated property trust to choose an alternative purpose in the event that it becomes impracticable or impossible to fulfil the trust purpose specified by a donor. Including this clause means it is unnecessary to make a cy près application.

Trusteeship of Trusts and the Property of the Church

The Property Trusts 

The Uniting Church in Australia Property Trust (Victoria) and The Uniting Church in Australia Property Trust (Tas.) are the statutory corporations which hold property for Church purposes, because neither the Church, nor most of its associated institutions are incorporated, and therefore cannot hold property.  They also act as the trustee of most charitable trusts associated with the Church and its purposes.

Many trusts were originally established for the purposes of the Methodist Church of Australasia, the Congregational Union of Australia and The Presbyterian Church of Australia before Union in 1977.

The Victorian Trust holds ‘Trust Property’ as defined in the Victorian Act in trust for the Church and on any other trust affecting the property, and subject to those trusts, holds, manages, administers and deals with trust property in accordance with the regulations, directions and resolutions of the national Assembly.

The Tasmanian Trust holds ‘Trust Property’ in trust for the Church in accordance with the Tasmanian Act and on any other trust affecting the property, and subject to those trusts acquires, holds, manages, deals with and disposes of trust property in accordance with the directions, regulations and resolutions of the national Assembly.

What are the Responsibilities of a Trustee of a Charitable Trust? 

The main responsibilities of a trustee are to:

  1. Act in good faith
  2. Carry out the terms of the trust according to the instructions of the founder, so long as they are capable of fulfilment
  3. Preserve the trust assets by prudently investing the trust capital
  4. Exercise reasonable care in the administration of the trust (which includes keeping proper accounts and records)
  5. Not benefit from their position.

Types of Gifts

Inter vivos gifts 

A gift given by a donor during their life. A template Gift Agreement for individual donors/multiple donors for Victoria, or the template Gift Agreement for individual donors/multiple donors for Tasmania can be accessed by prospective donors and their lawyers.

Testamentary Gifts (Bequests)

A gift made in a Will, which is often called a bequest.

A bequest can be:

  • 'Specific’ (such as of a specific item or items)
  • The whole or a percentage of the ‘residue’ of a person’s estate (that part remaining after payment of debts, funeral and testamentary expenses, as well as any specific bequests)

To assist donors and their lawyers the Church has prepared suggested Wills clauses. The clauses may enable the donor to determine the type of bequest they intend to create before consulting their lawyer. For example a donor might like to consider whether they intend to give a specific bequest, or a percentage/whole of residue bequest. The donor may also want to consider which of the many purposes of the Church they want to benefit.

The sample purposes and suggested Wills cl​auses​ can, with appropriate advice from a donor’s lawyer, be tailored to the objectives and circumstances of an individual.

Inter vivos and testamentary gifts can be given:

1. For the ‘General purposes of’ the Church.
This type of gift permits expenditure on any charitable purpose of the Church including for congregations, working for justice, and providing community services, as well as supporting the physical infrastructure of the Church.

2. For a specific purpose chosen by the donor.
It is very important that the donor specifies the purpose clearly, but also describes it in sufficiently broad terms to allow for changes to Church activities over time as well as to accommodate increases in the amount of income generated by the increasing endowment.

 

Recording the Trust Terms – Church Trust Records 

The incorporated property trusts will create a Church Trust Record for the perpetual trusts of which they are trustee.

A Church Trust Record will set out:

  • When and how the trust was established.
  • The details of the donation including who made it (their name, address, qualifications, dates of death and Will where relevant, as well as other relevant background of the donor including their connection with the Church if any). For inter vivos gifts, where the donor has not executed a clause acknowledging the collection, use and dissemination of personal information, then that personal information will not be included.
  • The capital received.
  • The purpose for which the fund is to be used.
  • Any administrative arrangements decided on as necessary to implement the trust terms.
 

Investment of Trust Money

Perpetual Trusts

The ‘net annual income’ generated by the capital of a trust during a year becomes available for application in the following year. Therefore for new trusts, the income which accrues in the first year is spent in the following year.

Parliamentary Acts Governing Investment  

The Victorian Act
  1. The Victorian Trust can, unless forbidden by any instrument creating any special trust as defined, invest any fund in any investment authorised by statute, or by the Assembly (either by itself or by delegation to the Synod) (Section 37 of the Victorian Act).
  2. The Victorian Trust is allowed to invest the trust money held for different purposes or activities as one fund, with income and losses distributed rateably among the purposes for which the money is invested (Section 36 (1) of the Victorian Act).
     
The Tasmanian Act
  1. The Tasmanian Trust can, unless expressly forbidden by an instrument creating a special trust, invest any funds in any form of investment authorised by the Trustee Act 1898 (Tas.) or authorised by the Assembly (by itself or by delegation to the Synod) (Section 36 of the Tasmanian Act).
  2. The Tasmanian Trust can invest money (or any part or parts of it) held on trust for different purposes or activities as one fund and must distribute the income of the fund rateably among those purposes or activities (Section 35 (1) of the Tasmanian Act). Losses are to be borne rateably (Section 35 (2) of the Tasmanian Act).

Tax Deductibility

For further information relating to tax deductibility:

 

Glossary 

Absolute bequest:  A gift (without conditions) made by a will.

Absolute gift: A gift without conditions. 

Bequest: A gift made by a will. A bequest can be specific or residuary. A bequest can also be called a ‘testamentary gift’.

Cy près application: Cy près means 'as close as possible'. A cy près application is a formal application by a trustee, pursuant to the Charities Act 1978 (Vic.) in Victoria, to change trust terms. An application can only be made where it is impossible or impracticable to implement the trust terms originally specified by the donor (or as varied by a previous cy près Scheme). In Victoria the value of the trust capital determines whether a trustee makes a cy près application to the Attorney-General for Victoria or to the Supreme Court of Victoria. In an application a trustee requests the alteration of the trust terms to terms which are 'as close as possible' to the original trust terms specified by the donor. Section 33 of the Tasmanian Act permits the Synod to declare, by resolution, that it has become impossible or inexpedient to carry out or observe specific trusts, and to declare other trust terms in lieu of them.

Donor: The person who makes a gift.

Endowment: A gift held indefinitely (or 'in perpetuity'), or for a long period, with all or a portion of the income arising from the gift used for a charitable purpose.

External trust: A trust of which an external party is trustee, so trust income is received by the Church for application to the trust purpose.

Gift or donation: A gift or donation may be made inter vivos (‘during life’), or by a ‘testamentary gift’ ('bequest'). A gift may take the form of cash, real property, objects, works of art, or shares.

Incorporated Property Trusts: (See The Victorian Trust and The Tasmanian Trust).

In specie transfer:  'In specie means 'in its actual form'.  An in specie transfer is the transfer (‘distribution’) of assets in their present form, as opposed to distribution of the net proceeds after sale of an asset.

Inter vivos gift: A gift made during the donor's lifetime.

Legacy: A gift of personal property by will.

Net annual income: The annual income of a trust fund less any deductions allowable under the  terms of the relevant trust or any Act, such deductions to include any income added to capital where permitted.

Prize:  An award made on the basis of past academic performance which usually takes the form of a grant to a person in financial need.

Residuary bequest: A gift by will of a portion or the whole of the residuary estate of the donor (in contrast to a bequest of a specific asset).

Residuary estate:  The balance of the estate of a deceased person remaining after the payment of all specific bequests (including legacies), debts, funeral expenses, and all expenses associated with administering the estate.

Scholarship:  An award made to assist study, travel and/or research.

Specific bequest:A bequest of a particular asset; for example, a stated sum (often called a legacy), a painting or shares. Contrast to a residuary bequest.

Stipend:  An allowance or salary, paid at fixed intervals.

Testamentary gift: A gift made in a will. Also known as a bequest.

The Church:  The Uniting Church in Australia

The Tasmanian Act:  The Uniting Church in Australia Act 1977 (Tas.)

The Victorian Act:  The Uniting Church in Australia Act 1977 (Vic.)

The Tasmanian Trust:  The Uniting Church in Australia Property Trust (Tas.)
(ABN 88 774 033 774)

The Victorian Trust:  The Uniting Church in Australia Property Trust (Victoria)
(ABN 39 703 442 583)

Trust:  In the context of the Church, a trust exists when a person, generally the relevant incorporated property trust is given and holds a gift for one or more of the charitable purposes of the Church, on the terms specified by the donor.

Trust capital:  The original gift.  The trust capital is held by the trustee for the purpose, and on the terms, specified by the donor.

Trust income:  The revenue arising from the trust capital.  Trust income must be distributed by the trustee for the trust purpose, and on the terms, specified by the donor.

Trust instrument:  The document(s) which set out the trust terms.  In the case of an inter vivos gift, this may be a Gift Agreement, a letter or other document signed by the donor.  In the case of a bequest, the donor's will records the trust terms.

Trust money: ‘Trust money’ is money held by or vested in a trustee on trust for a charitable purpose of the Church.

Trust purpose:  The purpose of a gift (as specified by the donor).

Trust terms:  The conditions specified by the donor with respect to a gift.

Trustee:  The person who or which holds the trust capital for the trust purpose in accordance with the trust terms.  In the case of most trusts for the purposes of the Church, one of the incorporated property trusts is the trustee.

Will:  A written document in which a person specifies how his or her assets are to be distributed after death.