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Legal issues when 10,000 strangers gift a house to a family

  • 31-08-2013 4:33am
    #1
    MadsL
    Registered Users, Registered Users 2 Posts: 20,299 ✭✭✭✭


    We have 31 pledges so far to raise €100k to gift a house to a deserving family. 9969 to go.
    Thread here: http://www.boards.ie/vbulletin/showthread.php?p=86292405

    Couple of issues.

    1. What are the legal implications of 10,000 strangers gifting a house deed?
    2. How would you construct the trust so that
    A. No one person could abscond with the money?
    B. The family could not just liquidate the house and spend the cash?
    C. The person kickstarting this idea (me) has verifiably NO access to the money.


Comments

  • #2
    Bepolite
    Closed Accounts Posts: 2,737 ✭✭✭Bepolite


    I'm assuming, perhaps wrongly, that this in in the US? (Baseball game/Afghanistan reference). I'm not sure how much US trust law differs from that of Ireland, or England and Wales.

    I don't want to go into too many specifics, primarily due to incompetence, but also because this seems to walk the line a little on whether or not to offer legal advice. To address them being able to sell the property and run off with the money, the trust would retain the legal (paper) ownership and the deserving family would be beneficial owners. A jurisdictional issue arises almost immediately in that here, trusts of land are regulated under the LCLRA 2009.

    In Q1. I would also look at if there are any implications with the donations coming from abroad.


  • #3
    MadsL
    Registered Users, Registered Users 2 Posts: 20,299 ✭✭✭✭MadsL


    No this would be Ireland, so Irish trust law would apply.

    Does the house need to be in trust at all, could it just be gifted with some provisos drawn up?


  • #4
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    There are already existing housing charities that have procedures in place for this type of thing. Why not get in touch with them?

    http://www.respond.ie/


  • #5
    MadsL
    Registered Users, Registered Users 2 Posts: 20,299 ✭✭✭✭MadsL


    johnnyskeleton wrote: »
    There are already existing housing charities that have procedures in place for this type of thing. Why not get in touch with them?

    http://www.respond.ie/

    Thanks, appreciate the link, will check them out.


  • #6
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    MadsL wrote: »
    Thanks, appreciate the link, will check them out.

    There are several others and I don't mean to endorse that particular charity. They might also be able to assist in locating a suitable beneficiary of the gift, so that no one accuses you of favoritism or anything.


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  • #7
    MadsL
    Registered Users, Registered Users 2 Posts: 20,299 ✭✭✭✭MadsL


    johnnyskeleton wrote: »
    There are several others and I don't mean to endorse that particular charity. They might also be able to assist in locating a suitable beneficiary of the gift, so that no one accuses you of favoritism or anything.

    Yes, that is pretty much the way I'd like this to go, I don't want access to the money, nor to decide who gets the gift.

    I'll give those guys a call on Monday and have a chat. Appreciate the help.


  • #8
    Bepolite
    Closed Accounts Posts: 2,737 ✭✭✭Bepolite


    MadsL wrote: »
    No this would be Ireland, so Irish trust law would apply.

    Does the house need to be in trust at all, could it just be gifted with some provisos drawn up?

    You'd need to look at the rules concerning the inalienability of land. A fairly reasonable policy at the best of times, but also nicely tied up with history in Ireland.

    To be fair you have your answers but this is a nice hypothetical to have a ramble about.

    IIRC, and I'm open to correction, a gift would be presumed to be a beneficial gift only unless evidence to the contrary is produced, or you happen to be this guys father, but not his mother.


  • #9
    Pat Mustard
    Registered Users, Registered Users 2 Posts: 9,554 ✭✭✭Pat Mustard


    Can't give legal advice as such, but maybe we can offer suggestions that you could look into in greater detail when you get tax and legal advice.
    MadsL wrote: »
    1. What are the legal implications of 10,000 strangers gifting a house deed?
    2. How would you construct the trust so that
    A. No one person could abscond with the money?
    B. The family could not just liquidate the house and spend the cash?
    C. The person kickstarting this idea (me) has verifiably NO access to the money.

    1. The first thing that comes to mind is tax, CAT and CGT. I don't know a hell of a lot about registration of an organisation as a charity with the revenue commissioners, but it could be explored.
    What reliefs from tax are available on the income and property of charities?

     The tax code provides exemptions for charities as follows:
    • Income Tax - Sections 207 and 208, Taxes Consolidation Act, 1997.
    • Corporation Tax (in the case of companies) - Sections 76 and 78 Taxes Consolidation Act, 1997.
    • Capital Gains Tax - Section 609, Taxes Consolidation Act, 1997.
    • Deposit Interest Retention Tax (DIRT) - Section 266 Taxes Consolidation Act, 1997.
    • Capital Acquisitions Tax - Sections 17, 22 and 76 of the Capital Acquisitions Taxes Consolidation Act 2003.
    • Stamp Duty - Section 82, Stamp Duties Consolidation Act 1999.
    • Dividend Withholding Tax - Chapter 8A, Part 6, Taxes Consolidation Act, 1997.

    If you are building the house, do you have to buy a site and employ a builder? If so, you will need a solicitor to act for you in the conveyance of the land. He/she should also be able to draft a building agreement between the trustees of the charity and the builder.

    I know very little about VAT. The builder would normally have to charge VAT. Can this be reclaimed by the charity? A quick look on revenue.ie shows that there are some reliefs, but I didn't check beyond that.

    The legal structure of the charitable organisation will be important. Professional advisors will be necessary for this one.

    2.A. A solicitor should draw up the trust deed, with whatever advice he needs from a tax specialist. He should be able to advise you on setting up the trust so that trustees have to act jointly in order to deal with trust assets and money in bank accounts. I doubt that this could be made 100% bulletproof, so probably best to deal with honest people only.

    2.B. Rather than transferring a freehold interest in the property to the family in question, you could ask for advice about a situation where trustees retain the freehold interest in the house but lease it to the family who intend to live there, imposing various conditions, as necessary. Again, professional advice is necessary, and you will need a solicitor to draft the lease in any case.

    C. In a trust, the trustees will hold the assets. If you don't want access to the assets, you could let others deal with it. Anyway, you will surely have professional advice in relation to the drawing up of the deed of trust, etc.


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