How Trusts Are Registered ?

Trusts are made by individuals to place a particular part of their assets or property in the hands of others. It’s for another’s benefit that trusts are made. Between a trustor, trustee, and beneficiary, it is more of a fiduciary relationship. If an applicant goes through the trust registration process, they would be different parties to the trust deed.

Trust registration parties :

In order to register a trust, the following parties are involved:

1.Trustor :

Trusts are created by trustors. 

2.Trustee :

Trust properties are given by the trustor to a trustee, who holds them for the benefit of the beneficiary.

3.Beneficiary :

The trust is for the benefit of a specific individual. Trustees and trustors may be acquainted with the beneficiary.

Trust types :

Depending on the activities of a particular trust, trusts are divided into different categories. Some examples are:

 

Societies :

Science, arts, commerce are the main reasons for forming societies. Societies conduct no commercial activities. As a result, societies are non-profit entities. According to the Societies Registration Act of 1860, associations must be registered with the government. 

Private Limited Trusts :

An Individual Limited Trust is formed for the benefit of an individual, their family, or close friends. The beneficiaries of this trust can be close friends and family. Trusts are governed by the Trust Act, 1882.

Public Limited Trusts :

It is common to form public limited trusts with beneficiaries that include the general public. Charity, education, and religion are usually the primary purposes of public trusts. 

2013 Companies Act, Section 8 :

Companies act section 8 can be applied to private limited companies. Profitable businesses are not permitted by section 8 of the act. Educational, artistic, scientific, sustainable, and environmental activities are promoted through the companies that form under this program.

What is the purpose of Trust Registration?

It is exclusively for non-commercial purposes that trusts are formed. Art, science, education, and the environment must be promoted by these activities. The registration of a trust is essential. In India, establishing a trust can provide the following benefits.

  • The trust’s activity needs to be properly regulated.
  • Promoting activities that contribute to a better society.
  • Under 12A and 80 G, the benefits are tax-based.
  • Generally speaking, the general public is the beneficiary of a public trust. In order to promote the development of trust in an organization, every trust must act in the best interests of the public.
  • Obtaining the license is mandatory to ensure that the business of trust is conducted as per the law as well.
  • There are many aspects of society that need to be developed.

Application for Trust Registration

Trust title: If this is a trust, the parties have to decide on the name first. Trademarks, Copyrights Act, and Intellectual Property Rights Act must not be broken by the name of the trust. It must also be noted, in addition, that the name of the trust must comply with the Emblems and Names Act (1950).

Trust settlers – Settlers are selected by the parties. The amount of trustees that are to be considered is in no way constrained by this, and there is no limit to the number of trustees. In order to be able to establish a trust, there must be a minimum of two trustees. 

Form Memorandum of Association for the Trust – A company’s article of incorporation identifies the purpose for which it was formed. A Memorandum of Association(MOA) for the trust has been established in the same way. Included in the Memorandum of Association are a list of the trust’s objects and the purpose for its establishment. 

Create a trust deed  : it is the most valid instrument to form a trust. Whenever a trust is formed between two parties, a copy of the trust deed must be obtained from the company’s registrar. 

  • Name of trust.
  • Registrar of trusts or place of business.
  • How the trust carries out its activities.
  • Which goals does the trust have? 
  • A list of authors, trustees and their affiliations
  • How much money does the trust own in net assets? 
  • A description of the trust’s board of directors. 
  • A detailed look at the trust’s qualifications, quorum, and other information.
  • Duties and responsibilities of directors, managers, and trust members.
  • Powers and functions of Managing Trustees.
  • The amendment of the trust or anything else about it.

Registration of trusts requires the following documents :

  • To register a trust, you need the following documents:
  • With stamp value on trust deed.
  • A photograph of each party.
  • People with a trust have their PAN cards.
  • Address verification.
  • Individuals’ identification.
  • A partner’s authentication.
  • The Building has a No Objection Certificate
  • Utilities bills.
  • A copy of the address proof of the Trust’s registered office.
  • To make a claim for any deductions, you will need to present a Form 12A or an 80 G Certificate from the respective income tax authorities