A trust is nothing but a transfer of property by the owner to another person for the benefit of a third person or person. The Indian Trust Act 1882 governs private trusts across India and public trusts are governed by state specific trusts of every state.
Usually when we say about trust, it usually mean real estate, but that is wrong. It can be cash, share or any other assets and it will be created by an instrument called instrument of trust or trust deed.
There are three parties to a trust
Author also called as settler is the person or persons who creates trust
Trustee is the person or persons with whom the trust is created
Beneficiary is the person or persons for whom the trust is created
Every person including artificial legal person who can enter into contract can create trust. And if a trust is needed to be created by on or behalf of a minor, then the approval of Principal Civil Court having original jurisdiction is needed.
Section 4 of the Trust Act says that a trust can be created for all lawful purposes unless it
Is forbidden by law
Defeats the provision of law
Involves injury to another person or his property
Immoral or against public policy.
Procedure for Registration of Trust under the Indian Trusts Act,1882
1. Decide the following:
a) Name of the trust
b) Address of the trust
c) Objects of the trust (Charitable or Religious)
d) One settlor of the trust
e) Two trustees of the trust (minimum)
f) Property of the trust — movable or immovable property (normally a small amount of cash/cheque is given to be the initial property of the trust, in order to save on the stamp duty).
2. Prepare a Trust Deed on stamp paper of the requisite value. The rates of stamp duty varies from state to state. Kindly check the current rate of stamp duty applicable in your state.
3. Requirement for registration of Trust Deed with the Local Registrar under the Indian Trusts Act, 1882:
a) Trust Deed on stamp paper of requisite value.
b) One passport size photograph & copy of the proof of identity of the settlor.
c) One passport size photograph & copy of the proof of identity of each of the two trustees.
d) One passport size photograph & copy of the proof of identity of each of the two witnesses.
e) Signature of settlor on all the pages of the Trust Deed.
t) Witness by two persons on the Trust Deed.
4. Go to the local Registrar and submit the Trust Deed, along with one photocopy, for registration. The photocopy of the Deed should also contain the signature of settlor on all the pages. At the time of registration, the settlor and two witnesses are required to be personally present, along with their identity proof in the original.
5. The Registrar retains the photocopy and returns the original registered copy of the Trust Deed.