TRUST REGISTRATION

Overview

Trust registration begins with the drafting of a trust deed. Trust deed is the first requirement in the process of trust registration. Trust Deed is formed on the non-judicial stamp paper, every state has fixed its own rate on stamp duty. Book an appointment with the sub-registrar office once you are done with the trust deed. It is essential for all the trustees to appear before the sub-registrar on the appointment date along with the trust deed and two witnesses.

What is a Trust?

Indian Trust Act 1882 defines the Trust as an organization where the owner (trustor) decides to transfer the right of his property to a second person called trustee so that the third person (beneficiary) can take the benefit out of it.

Such a property is moved by the trustor to the trustee alongside a declaration that the trustee should hold the property for the recipients of the Trust.

Public Trust

Public trust is created to provide benefit to the public at large, thus beneficiaries in the case of public trust is general public at large. Public Trust is further subdivided into two parts:

1. Public Charitable Trust

2. Public Religious Trust

Private Trust

Often families or individuals are beneficiaries in the case of private trust. Private trust is further subdivided into two parts:

1. Private Trusts whose recipients and their imperative offers both can be resolved

2. Private Trusts whose both or either the recipients and their imperative offers can't be resolved

12A and 80G Certificates

Income Tax Department issues 12A certificate to the trusts or NGOs. Any trust that has 12A certificate is not liable to pay Income tax on its surplus income.

Additionally, an NGO must acquire 80G certificate. This certification gives the donor a permission to avail the benefit of deduction at the time of file his/her ITR. Thus, you can say deduction is offered to the donors under section 80G of the Income Tax Act.

Legislation Pertaining to Trust

A Trust is represented by Indian Trusts Act, 1882 across India. Though, each state can detail its own Trusts Act to administer such non –profit organizations in its own state.

Further, a Trust can get assets and activities much like a Society. Nonetheless, it’s very challenging to get assets or ventures following a Trust get enrolled.

It is necessary for a trust to meet certain eligibility criteria if the trust is interested in obtaining funds or projects. Criteria can be anything such as relevant experience, performance of a Trust, its age and other such parameters.

About

Trust Registration is very detailed procedure, which requires keen knowledge, procedure and team of professionals. Each Trust Registration has its tailored requirements. We at YourLegalExpert.in have a full-fledged, dedicated team of professionals. You are required to fill the form and then our experts will reach out to you, to know the exact requirement and gather further information. Then our experts at YOURLEGALEXPERT.IN will be at your disposal for assisting you with guidance concerning Trust Registration and its compliances. Our professionals will assist you in planning seamlessly at the least cost, confirming the successful conclusion of the process. We shall guide you with Do’s and Don’t’s as well.

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BENEFITS

For claiming exemption from Income Tax, as the case may be, as the incomes received from charitable or religious purposes are exempted from tax Provisions.

For the welfare of the members of the family and/or other relatives, who are dependent on the Trustor/Author of the Trust.

For the proper management and preservation of property by vesting it into the hands of Trustee, who has Active duties to perform regarding preservation of property.

The reason behind creating any trust is to indulge in charitable activities and at the same time avail the benefit of tax exemption. These charitable trusts are also called non-profit organization.

A trust has to be a legal entity if it wants to avail all the benefits of the trust offered by the government. Trust Act and Federal laws makes it mandatory for such entities to get registered under Charitable Trust.

DOCUMENTS REQUIRED

Trust Deed is the primary most important document which you will require at the time of Trust Registration. Trust Deed contains the following information:

Motive of the Trust
Information of the Settler and trustees like Name, Age, Father’s Name, Address, Occupation, Mobile Number, Email Address, Designation
Total number of Trustees
Address of the registered office of the trust
Rules and regulations that the trust will follow
Proposed name of the Trust
A copy of identity proof of the settler and trustee
Passport size photograph of the settler and trustee
Presence of the Settler along with original identity proof and two witnesses at the time of registration. Some states have made presence of trustee mandatory as well.

MUST KNOW THINGS BEFORE TRUST REGISTRATION

Private Vs Public Trust

Private Trusts in India are regulated and governed by Indian Trusts Act, 1882, on the other hand public trust themselves control their functioning except in the state of Maharashtra where Bombay Public Trusts Act, 1950 governs the functioning of public trusts.

Number Of Trustees

There is no maximum limit define for the number of trustees but at least two trustees are always required at the time of trust registration. The trust deed ought to have arrangement concerning the administration of the trust alongside the strategy of delegating or removing the members

Trust Deed

Trust registration cannot be done without the most important document called trust deed. It explains the reason behind the existence of the trust. The document also contains the list of its beneficiary and narrates the power of trustees. Minimum two witnesses are required at the time of deed signing process.

Tax Benefit

After the registration process public trusts can enjoy the privileges offered by government. Public trusts are also eligible to avail the benefit of tax exemption.

TRUST REGISTRATION PROCESS

Selection Of Name

Select a unique name for your trust, the name should be new and must not lead to any infringement.

Drafting Of Deed

The trust deed should be drafted wherein the gatherings to the deed will be settlor (creator of the trust deed), the trustee and the recipient.

Trust Registration

A trust deed is a document which contains all the crucial information related to registration and must present it before the registrar of the trusts having jurisdiction.

PAN, TAN And Bank Account

The final step in the process of registration is to apply for allocation of PAN number and TAN and afterwards apply for a bank account.

FAQs on Trust Registration

Please reach us at info@yourlegalexpert.in if you cannot find an answer to your question.

How do I register a trust under Indian Trust Act 1882?

Selection of Name: Select a unique name for your trust, the name should be new and must not lead to any infringement.

Drafting Of Deed: The trust deed should be drafted wherein the gatherings to the deed will be settlor (creator of the trust deed), the trustee and the recipient.

Trust Registration: A trust deed is a document which contains all the crucial information related to registration and must present it before the registrar of the trusts having jurisdiction.

PAN, TAN and Bank Account: The final step in the process of registration is to apply for allocation of PAN number and TAN and afterwards apply for a bank account.

who can create a Trust?

A trust may be created: -

· By any person competent to contract.

· A person who is competent to deal with a property

Who can become a Trustee?

Every person capable of holding the property.

Whether the Trustee becomes the full owner of the property?

Yes, Trustee becomes the Legal owner of the Trust property. He acts as the custodian of the property or assets.

Can a Trust be created for both Movable as well as immovable property?

Yes, Trust can be created for both Movable as well as immovable property.

Is Trustee Personally Liable for his Acts?

Yes, Trustee is personally liable for all his Acts since he becomes the legal owner of the Trust property. There is no principal Agent relationship involved during creation of Trusts.

Under what circumstances can Trust be extinguished?

Trust is extinguished:

1.When the purpose is completely fulfilled; or

2.when its purpose becomes unlawful; or

3.When the fulfilment of its purpose becomes impossible due to destruction of the Trust property or otherwise; or

4.when the trust being revocable, is revoked

Under what circumstances can Trust be extinguished?

Trust is extinguished:

1.When the purpose is completely fulfilled; or

2.when its purpose becomes unlawful; or

3.When the fulfilment of its purpose becomes impossible due to destruction of the Trust property or otherwise; or

4.when the trust being revocable, is revoked

Are Trusts required to be registered?

If, a Trust is created by the way of will, it does not require any registration.

If, Trust in relation to any movable or immovable property it required to be registered mandatorily

Is Stamp Duty payable while creating a Trust?

A Trust declared otherwise than by a will is chargeable to Stamp Duty under Article 64, Schedule I of the Indian Stamp Act, 1899. The Stamp Duty varies from State to State.

What are the important Points that needs to be Incorporated in a Trust Deed?

1.Mention the of name of Trust.

2.Mention the Name of the Settlor/Trustor of the Trust

3.Mention date on which the Trust Deed is executed and also mention the Address of the Trust Property.

4.Mention the Main Objects of the Trust along with the Ancillary objects if any.

5.Mention the Names of all the Trustee.

6.Mention the Amount of settlement with the Trustees

7. Also Mention Meetings of the Trustees, Resolutions, proceeding of the Trust, Dissolution, powers/obligation of Board of Trustees.

Minimum how many Trustees are required to form a Trust?

Minimum 2 Trustees are required to form a Trust.

What is the Procedure for registration of Trust?

Step 1:- The Trust Deed is drafted along with the initials of settlor on each page.

Step 2:- e-stamp paper is purchased for the execution.

Step 3:- Date is fixed for registration of Trust deed with the sub-Registrar.

Step 4:- The Government Registration is fees paid.

Step 5:- All the Trustees and 2 witnesses visit the sub-registrar office on the fixed day for verification and Registration of the Trust Deed.

Step 6:- The Registration Deed is approved and can be collected within 7 to 15 days.