Trust-Creation Trust Deed and Registration

Trust-Creation Trust Deed and Registration

Introduction

 According to Section 3 of Indian Trust Act 1882,  a trust refers to an obligation attached to the property ownership and arising due to the confidence reposed and accepted by the property owner, for the benifit of another or the owner.

Creation Of Trust

For the creation of Trust, the following aspects must be taken into consideration which  includes;

• Author’s intention to establish a trust

• The objective of Trust

• The monetray assets must be assigned for the benifits of the trustee.

• The trustee can claim salary and expenses from the benifit from the trust for his work.

• Provides the authority to control and transer the property to trustee that incorporates the author’s intention.

Who can create Trust?

According to Section 7 of the Indian Trusts Act, a trust can be created by any person who is competent to enter a contract and also on behalf or by a minor provided with the permision of the court of the actual jurisdiction. The following are the persons who are eligible create a Trust;

• Hindu Undivided Family;

• Minor

• Woman

• Association of Persons

• Company

Registration of Trusts

According to section 5 of the Indian Trusts Act,  A trust created personally regarding an immovable property has to be created by a non testamentary instrument and the same must be  in writting, signed by the trustees and author of the Trust. It is to be noted that it has to be registered under Section 17 of the Indian Registration Act. Hence, the registration of a trust is very crucial when it is created by a non testamentary instrument.  However, in case of  Religious and charitable trust regarding an immovable property, to  claim exemption under section 11 of the Income tax Act. For which it is very important that the trust instrument must be registered.

Trust Deed

A Trust deed can be defined as an document which establishes the fact of Trust registration. The follwing are some of the contents of a Trust Deed;

• Name of the Trust

• Office place of the Trust

• Objectives of the Trust

• Terms and Duration of the Trustees

• Number of Trustees

• Name of the Trustees

• Details of Trust Management

• Power, duties and Functions of Trustess

• Application of Trust Property

• Other relevant matters

• Procedure of Registration/Appointment/Termination details of Trustees

Trust Deed Registration

The Trust Deed has to be executed with a suitable value on the stamp paper. It must be signed by the trustees and two witnesses in front of the sub-registrar.  After the execution of Trust deed, it can be registered with the local registrar. Once the local registrar register the trust, it will keep the copy of the trust deed and will return the original trust deed  back to the trustees.

Procedure for Registration of Trust

The step –wise procedure for registration of Trust is provided below;

Step: 1

Selection of Name for the Trust. However, it is to be noted that the name must be new and must not create any violation.

Step: 2

Provide the definition of  trustees’ number and accordingly determine the number of trustee required for the creation of Trust. It is to be noted that a minimum of 2 trustees is required for registration of Trust.

Step: 3

Drafting of  the Trust deed is required.

Step: 4

After drafting of the Trust deed, the Trustees and the author of the trust has to present at the office of the sub-registrar along with two witnesses for the trust deed registration.  A proper and accurate attested copy of the trsut deed must be submitted along with the prescribed registration fees.

Step: 5

After the filing of a deed of trust,  the next step is to applu for the PAN and TAN of the Trust and lastly file application to check account.