Bermuda has over its 50-year history as an international trust jurisdiction adopted a conservative yet flexible approach to the regulation and administration of trusts.

Trusts normally bring to mind those which are created for the benefit of private individuals and their families.

But the trust vehicle can also be used for many charitable purposes in Bermuda, where the Courts have traditionally defined `charity' more widely than Courts in many other jurisdictions.

English courts, for example, have placed a strict interpretation on what qualifies as a `charitable' trust, with the result that many purposes that the general public might consider charitable have been excluded.

The approach of the English courts is generally thought to be the result of the country's tax system. Charities are given a special tax-exempt status and taxpayers contributing to charitable organisations may also be afforded certain income and capital tax breaks.

Traditionally, charitable purposes, in the legal sense, have been restricted in England to four categories: The relief of poverty; the advancement of education; the advancement of religion; and other purposes beneficial to the community not falling within the previous three categories, for example the protection of the environment or animals.

At first glance this may look like a rather generous selection of humanitarian causes but the courts have always sought to construe narrowly the scope of these categories.

Courts in Bermuda have traditionally looked to English case law for their primary definitions and legal authorities.

In Bermuda, however, the Legislature has been more flexible and has facilitated even those benevolent causes that may not fit within the strict legal definition of a charity.

The result is that the law has been extended to make it clear that valid trusts can be created for philanthropic and other purposes even though they are not strictly charitable.

Consequently, a trust may be created for a non-charitable purpose as long as the purpose is lawful, is sufficiently certain to allow the trust to be carried out, and is not contrary to public policy.

As Bermuda is a jurisdiction that primarily taxes consumption rather than income, abuses of charitable status or charitable donations have never been an issue.

It follows, therefore, that the creation and regulation of a Bermuda charitable trust is relaxed in comparison to England or the United States.

In Bermuda, gifts to charities are exempt from stamp duty. However, for a trust to receive favourable stamp duty treatment, the trustees must obtain confirmation from the Minister of Finance that the trust is in some way beneficial to the public in general or to a certain section of the public and therefore worthy of charitable status.

Companies limited by guarantee can also be designated as charitable if they promote art, science, religion, charity, sport, education or any other social or useful purpose.

Charities which solicit funding from the public in Bermuda must be registered with the Registrar General.

The straightforward registration process requires that an application detailing the purpose of the charity be submitted to the Registrar General who places the application before the Charities Commission for review and approval.

The treasurer of a registered charity must submit annual accounts to the Registrar General.

At present, charities that are not raising funds from the public need not be registered. Their regulation is achieved through the Proceeds of Crime Act, 1997 and the Proceeds of Crime (Money Laundering) Regulations, 1998.

The benefits afforded to society by charities are unquestionable, and it is beneficial to us all that the law supports and encourages giving to such organisations.

*** Attorney K. Renee Benjamin is a member of the Trusts and Financial Structures Team of Appleby Spurling & Kempe. Copies of Ms. Benjamin's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm.

This column should not be used as a substitute for professional legal advice.

Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.