What is a Trust?

A Trust is a legal arrangement in which one person (called the Author/Settlor) transfers property or assets to another person (called the Trustee) for the benefit of certain persons or for a charitable/religious purpose (called the Beneficiaries).

In India, private trusts are governed by the Indian Trusts Act, 1882, while public charitable trusts are governed by respective state laws.

Benefits of Forming a Trust

1. Legal Protection of Assets: Assets transferred to the trust are managed according to the objectives of the trust.

2. Separate Legal Identity: A registered trust gains legal recognition and credibility.

3. Suitable for Charitable Activities: Trusts are commonly used for:

• • Education
  • Medical relief
  • Religious purposes
  • Social welfare activities

4. Tax Benefits: Eligible trusts can apply for tax exemptions under Income Tax provisions.

5. Continuity: Trust continues irrespective of change in trustees.

6. Better Management of Property: Trust structure helps in organized management of funds and assets.

7. Public Credibility: Registered trusts are generally trusted more by donors and institutions.

Eligibility for Trust Registration

To form a trust in India:

Minimum 2 persons generally required for private trust

3 trustees commonly preferred for public charitable trust

• • Settlor/Author must be competent to contract
  • Trustees must be legally capable persons
  • Trust must have lawful objective
  • Registered office/address required
  • Trust property or initial contribution required

Process of Trust Registration

Step 1: Decide Name of Trust : Choose a unique name for the trust.

Step 2: Draft Trust Deed: Prepare trust deed containing:

• Name and objectives of trust
• Details of settlor and trustees
• Rules and powers of trustees
• Beneficiary details
• Trust property details

Step 3: Arrange Stamp Paper: Trust deed must be executed on appropriate value stamp paper as per state law.

Step 4: Execute Trust Deed : Settlor and trustees sign the deed in presence of witnesses.

Step 5: Register Trust Deed: Submit deed before Sub-Registrar along with required documents.

Step 6: Obtain PAN & Bank Account: Apply for PAN card and open bank account in trust name.

Step 7: Apply for Tax Registrations (If Required):

Such as:

• • 12A Registration
  • 80G Registration
  • CSR Registration
  • NGO DARPAN Registration

Documents Required for Trust Registration

Documents of Settlor and Trustees

• • PAN Card
  • Aadhaar Card
  • Passport size photographs
  • Address proof

Trust Documents

• • Trust Deed
  • Passport size photographs of trustees
  • Identity and address proof of witnesses

Registered Office Documents

If Rented Premises:

• Rent agreement
• Utility bill
• NOC from owner

If Owned Premises:

• Ownership proof
• Utility bill

Trust is Most Suitable For

• Charitable organizations
• Religious institutions
• Educational activities
• Social welfare activities
• NGO operations
• Family asset management

Types of Trust

1. Private Trust: Created for benefit of specific individuals or family members.

2. Public Trust: Created for public charitable or religious purposes.