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Charitable trusts

Consolidation practical and expedient

New Zealand has a large number of charitable trusts, which can be considered a reflection of a strong underlying philanthropic aspect of New Zealand culture. However, management of assets on account of charitable purposes comes at a cost, which means that sometimes smaller charities might better achieve their purposes through amalgamation of consolidation. This was considered in Re Public Trust where both James Smaill and Florence Smaill created testamentary trusts for charitable purposes pursuant to their respective wills. As the terms of each of the trusts did not allow for variation by way of amalgamation and application was made to the High Court under Part 3 of the Charitable Trusts Act 1957seeking approval of a scheme concerning the two trusts. In particular Public Trust sought to:

The legal background was set out at [2] and [3] as follows:

As a practical matter the annual costs to administer the Florence Smaill Charitable Trust (FSCT) exceeded its income. The amalgamation proposal was intended to be effected by a resettlement of the assets of the FSCT onto the James Smaill Charitable Trust whose name would be varied to the James and Florence Smaill Charitable Trust.

The court accepted that without the order sought it was impracticable or inexpedient to carry out the purposes of the FSCT and that as noted at [13](b) amalgamation would permit Public Trust to apply at least some of the income of the FSCT to charitable purposes.

Also see Another Charitable Trust needs attention

References:

  • Re Public Trust  [2021] NZHC 2852
  • Charitable Trusts Act 1957

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