Financial liability of a Trustee of an Independent school with charitable status

Canadoug

My wife is a Trustee of a small Independent school which has charitable status.
The school receives no State funding and is dependent for its income on the fees charged to the pupil's parents.
In view of the financial forecasts for the country as a whole, I am concerned that my wife could become financially responsible for any debts owed by the school in the event of enforced closure do to lack of funding.
I would welcome any informed opinion as the subject of school closure and possible Trustees financial liability does not appear to be covered elsewhere on line.

Savvy_Sue

It will depend, I believe, on the set up of the charity. The one I work for (not a school) is also a Ltd Co, so trustee liability is limited. 

Your wife needs to ask for the governing documents. 

Undervalued

Savvy_Sue said:

It will depend, I believe, on the set up of the charity. The one I work for (not a school) is also a Ltd Co, so trustee liability is limited. 

Your wife needs to ask for the governing documents. 

Indeed.

The last five years accounts and probably governing documents etc can be downloaded from the Charity Commission website. Unlike limited company accounts (from Companies House) the charity ones will be far more detailed. That assume it is actually a charity. There are some other similar concepts, such as friendly societies etc, which are regulated slightly differently.

This also highlights how important it is to fully understand what you are taking on when you get involved in something like this, no doubt with the best of intentions. This can also apply to being on the committee of a club. Generally a well set up one will be affiliated to a national body or similar which usually provides indemnity insurance for directors (trustees / committee members etc) liabilities.

Savvy_Sue

Undervalued said:

The last five years accounts and probably governing documents etc can be downloaded from the Charity Commission website. Unlike limited company accounts (from Companies House) the charity ones will be far more detailed. That assume it is actually a charity. There are some other similar concepts, such as friendly societies etc, which are regulated slightly differently.

This also highlights how important it is to fully understand what you are taking on when you get involved in something like this, no doubt with the best of intentions. This can also apply to being on the committee of a club. Generally a well set up one will be affiliated to a national body or similar which usually provides indemnity insurance for directors (trustees / committee members etc) liabilities.

Absolutely. ALL the trustees are responsible for the financial affairs, you can't just leave it all to the Treasurer (my husband's major problem for several charities where he treasurers).

And the indemnity insurance is never a complete blank cheque indemnity. If the trustees SHOULD have realised there was a problem, it may not pay out.

But don't panic: there is trustee training available, and I'd highly recommend doing some.

Canadoug

Thank you both for your replies, the school does carry liability insurance for Trustees and Governers.
However it appears that this only covers financial liability for actions and situations occurring during properly conducted business - not debts arising from insolvency consequent on failure to cease operations in good time.
I would guess that a parent funded school would be quite likely to struggle on rather than close in good time.