What is a Trust?
According to Indian Trust Act 1882, a trust is an arrangement wherever the owner of the property(Settlor)transfer his/her property to a different person(trustee)for the advantage of person party(Beneficiary)
The property has been transferred by the settlor to trustee beside proclamation that the trustee can use the property for the beneficiaries of the trust.
Trust could be a relationship whereby any property is held by one party for the advantage of another.it is established for charitable purposes. People produce trust for various reasons.
In India, the trust is ruled underneath the Indian Trust act,1882 across the country. However, every state will formulate their own trust act to control such non-profitable organization in its own state.
It will receive funds or projects thus for acquiring such a fund or project, a trust has got to be meet bound criteria it should embody bound expertise, their performance, its age and such, other parameters.
Different Kind of Trust
It is created for the advantage of one or ore discoverable beneficiaries, and not for the promotion of the welfare of the final public or for the advancement of a cause it is regulated by Indian Trust act 1882.
For example – Mrs. Priya Gupta needs to use her look income to purchase the education for her kinsman Rohan. To do that, she ought to found out trust.
Public or Charitable Trust
It is created for the promotion of public welfare and not for the advantage of one, or additional individuals.it may or might not be a charitable trust .public trust Direct the functioning of charitable trust except within the state of geographical region and Gujarat.
For example – Mr. Piyush has found out associate Education Trust, “Bhagwati Edu Trust” within the name of his an late father to assist poor kids with providing them scholarship for his or her Education.
Public Trust is divided into Public Charitable and Public religious Trust.
When will the Trust be Registered?
Usually, it’s not obligatory to register a trust, however, in bounds cases, it’ll be an associate obligation to register a Trust. If someone involving his property (House or Building) in the Trust, it has to be registered.
Additionally, if some need to give the money in trust to urge a Tax exemption than Trust ought to have registered.
“According to section 80G Exemption” is potential if someone donates any cash or property to any trust.it is deduct from their dutiable financial gain.
Number of Trustee
There is no higher limit for the trustee in trust, however, a minimum of 2 Trustees are continuously needed for registration. The deed of trust ought to have provisions concerning the management of the trust besides the procedure of appointing or removing the members.
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Parties Concerned in Trust
Settlor – Owner of the property / Asset who transfers his/her property.
Trustee – who is capable of holding the property
Beneficiary – someone is entitled to the advantage of trust arrangement
It is the document that contains the objective of the trust, and therefore, the manner during which trustees ought to work towards achieving the goal of the trust. The documents that contain all such details are named trust deed.
The trust deed is the necessary instruments in a trust, it prescribed the objective for that the trust is set up. Apart from the main objects of the trust, it defines its beneficiary and powers of the trustee, the deed is signed in presence of 2 witnesses.
Content of Trust
Trust deed is the primary and essential document for registering a trust that defines the rationale for forming the trust.
Clauses in the trust deed
- Name of the trust
- Registered of the Trust
- Area of operation
- Objective of Trust
- Detail of Settlor of the trust
- Asset of Trust
- Power and performance Managing Trustee or alternative trust
- Quorum of the Board with their qualification,
- Terms,tenure Closure and modification of the deed of trust .
The deed of trust to be dead on acceptable Non-Judicial stamp paper the speed of taxation differs from state to state.
Procedure of Trust Registration in India
- Selection of Name
- Drafting of deed
- Registration of trust
- Pan, Tan &Bank Account
Documents Needed for Trust Registration
- Trust Deed on Proper stamp paper
- Two Witness
- Proof of registered address
- NOC from the owner of the premises
Self Attested copy of documents of the settlor,trustee,and witness
- Two Photograph
- Copies of Pan card
- Valid Identity proof
- Latest Address proof
Rights of the Trustee
- Rights of the trustee To manage and coordinate the activities of the trust.
- Ensure that the property that belongs to the trust is correctly managed.
Frequently Asked Question
Trust is arrangement between parties during which one person transfers his/her property to a different person(trustee)for the advantage of the benefices of a third party.
How many sorts of trust is registered in India?
There are two type of trust are-:
- Public Trust: It is generally a charitable trust which is created for the benefit of the general public whereas,
- Private Trust: it is created for the advantage of specific individuals or clusters of individuals. And these individuals are referred to as the beneficiary.
How many trustee are needed for Trust registration?
There are minimum 2 trustees are needed for trust registration and for maximum, there’s no limit.
Who is Settlor?
A settlor is the owner of the property who transfers possession of the property to an alternative person referred to as trustee and therefore, the property ought to be used for the advantage of an individual or cluster of the person who is beneficiary.
What is Trust Deed?
Trust deed could be a document that defines various clauses of trust associated with their object, functions, rights.