Charitable Trust Registration Process: We have several questions about Trust. If anybody wants to start a Trust, what do they do, and how do they start? Here is the solution we share regarding Trust. A trust is a legal relationship in which the legal title to property is committed to a person or legal entity with a fiduciary duty to hold and use it for another’s advantage. We provide complete information about the “Trust registration process” throughout this article. You get information about Charitable Trusts, What trust is, how they work, the Charitable Trust Registration process etc.
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What is Trust?
Types of Trust
Role of Trustee
Charitable Trust Registration Process (Flow Chart)
Trust Registration Process
What are the Benefits of Trust Registration?
What is Trust?
According to Section 3 of the Indian Trust Act of 1882, Trust means that when an obligation is attached to / owned by the property, a person (the settlor) puts the Trust in the hands of another person (Trustee) ( Third-party beneficiary). In other words, a trust is a legal vehicle that allows a third party, a trustee, to operate and manage assets in a trust fund on behalf of a beneficiary. A trust dramatically increases your choices about controlling your assets, whether trying to shield your wealth from taxes or pass it on to your kids.
In the amendment, the expression “Charitable Purpose” Act under section 2 (15) is included in the following:
- Relief of the poor,
- Medical Relief
- Advancement of any other object of general public utility.
Types of Trust
Trusts are classified into two categories:
Public Trust is one whose beneficiaries include the general public or a sizeable portion. Public Trust is further categorized into:
- A public Charitable Trust
- Public Religious Trust
Public Trust is a Non-Profit Charitable Organisation or Non-Governmental Organisation (NGO).
However, charitable and religious trusts fall under the rule of “Charitable and Religious Trusts Act, 1920, Religious Endowment Act, 1863, Charitable Endowments Act, 1890, Bombay Public Trusts Act, 1950” as the law of public trusts in India Are listed.
Note: The Central Act does not apply to public trusts. However, various states have passed their terms and their functions for administration.
Reasons for creating Public Trust?
The main reason for building public trust from two types of trust is;
- Public trusts are relatively popular because they are straightforward to register and manage.
- A public trust can avail of the exemption from the government under the Income Tax Act.
In addition, the charitable Trust has three requirements:
- Declaration of trust made by the Settler which is binding on him,
- Separation of certain property by the settler and thereby deprive himself of ownership, and
- Description of an item, what will be the property of the beneficiaries?
The property is considered once transferred to a trust.
Further, in case of violation of public trust, either the Advocate General or a suit regarding two or more persons interested in the trust may institute:
1. Removing a Trustee,
2. Appointment of a new trustee,
3. To keep any property in Trustee,
4. Instruct the expelled Trustee to occupy the property of any trust,
5. Directing the audit also.
Read also: Top 10 NGOs in India
A private trust is one whose beneficiaries are individuals or families. Personal trust is further classified into: –
- Private Special Trust / Private Discretionary Trust: In this case, both the beneficiary and the share are determined.
- Where either of the two beneficiaries and their share is uncertain.
However, faith can be a mixture of both. Such trusts are called public-cum-private trusts.
Content of a valid Private Trust
Guidelines for creating a private trust are given below.
- The settlor of the property should declare some property set aside for the benefit of the beneficiaries.
- According to the trust deed, a trustee should manage the property for the benefit of the beneficiaries. A settler may also be a trustee of the same trust.
- There should be a beneficiary or beneficiary who benefits from the property of the colonizer (trust).
- Trust properties are properly demarcated.
- Besides, the objects of the trust must be specified.
Reasons for creating a Private Trust?
The private trust route of succession planning is gaining popularity in India as money asset protection grows rapidly. It helps in securing the property while the heirs can benefit from it. Furthermore, it helps to maintain the next generation of wealth rather than dispose of it shortly. Besides, he can enjoy tax benefits or deductions.
- Private trusts help apply the trust’s assets and insolvency protection to retain the trustee’s beneficiary or beneficiary.
- In a private trust declared by will, registration would not be necessary, even if it included an immovable property.
In the case of these trusts, a part of their income is used to promote public welfare, while the other part goes to an individual(s). The part of income going to a person (s) is assessable as private, while the part used to promote public welfare is eligible for tax exemption under section 11. The only condition applicable here is that the trust must have been created before 1-4-1962, before the Income-tax Act, of 1961. Public-cum-private trusts created on or after this date are not eligible for this exemption under Section 11.
This article is to guide you in registering a charitable trust. It is an attempt to remove all doubts, questions and confusion related to it. Before getting the registration and going for the Charitable Trust Registration, you should know the basic concept behind thTrTrust and some related terms.
Role of Trustee
Let’s have a look critical role of the Trustee.
Author of Trust
A person who repeats or declares the trust is called the “author of the trust”.
As per the Indian Trust Act, any person or minor permitted by the contract can trust the principal civil court of the original jurisdiction. But in each case, according to the law for the circumstances and the time limit on which the trust author can dispose of the trust property.
A person who accepts a faith revoked or declared by the author/settler is called a “trustee”.
According to the Indian Trust Act following can be a trustee:
- A person capable of holding property, But where the trust involves the exercise of discretion, it cannot proceed until it is competent to contract.
- The trust is not obliged to accept.
- A sign of acceptance with reasonable certainty by any words or acts of the trustee.
- Instead of accepting a trust, the expected trustee can reject it within a reasonable time. Such rejection prevents the trust property from being vested therein.
- Disclaimer by two or more co-trustees to reject the trust property in one or the other and form the sole trustee or trustee from the date of creating the trust.
- A trustee has to fulfil the trust’s purpose while following the Settler’s instructions at the time of its creation, amended with the consent of all other trustees.
- A trustee has the right to work, reimburse expenses, settlement of accounts, decree etc. However, a trustee cannot relinquish after approval, nor can he use the trust property for his benefit. He cannot delegate or work in private.
Those who benefit from the confidence accepted by the author/settler and Trustee are called “beneficiaries”.
According to the Indian Trust Act, any person who is a beneficiary can keep the property. Beneficiaries have the right to rent, benefits and specific execution, seeking copies of the trust’s instruments, forcing them to do any work, etc. A proposed beneficiary may relinquish their interest to the Trustee subject to the Trustee with a claim inconsistent with the disclaimer or notice of the trust.
The subject f Trust is called “trust property” or “trust money”—an Instrument of Trust – “Instrument of Trust” The instrument by which trust is declared.
Charitable Trust Registration Process (Flow Chart)
Here we are providing the information about Trust Registration Charitable Trust Registration Process; follow these easy steps to start a Trust. Let’s see.
What is the Charitable Trust Registration Process?
1. Before registering your Trust, you must make the following decisions:
- Name of the Trust
- Address of the Trust
- Objects of the Trust (charitable or Religious Trust)
- One Settler of the Trust
- Two Trustees of the Trust
- Trust property is movable or immovable property (To save on stamp duty, a small amount of cash/check is usually given to be the initial property of the trust).
2. Prepare a trust deed on stamp paper of expected value (8% of the value of the trust’s property in Delhi. This rate varies from state to state)
3. Registration requirement of the trust deed with the local registrar under the Indian Trust Act, 1882:
- Trust deed on stamp paper of expected value (as stated at point 2 above)
- A passport-size photograph and a copy of the settler’s identity
- One passport-size photograph and a copy of proof of identity of each of the two trustees.
- A passport-size photograph and a copy of the proof of identity of each of the two witnesses.
- Signature of settler on all pages of a Trust Deed.
- Witness by two persons on the trust deed.
4. Go to the local registrar and submit a trust deed and a photocopy for registration. The photocopy of the deed must also contain the signature of the settler on all pages. At the time of registration, the Settler and two witnesses must be present in person and their identity proof in the original.
5. The Registrar retains the photocopy and returns the original Registered copy of the Trust Deed.
Trust deed proves the legal status and is mandatory if a property is involved, especially land and building, to provide “A Prima Facie” evidence. It is an essential instrument of Trust. It contains a declaration of the aims, objectives and modes of management (of the trust).
The appointment and removal procedures are outlined in the trust deed to eliminate any opportunity for the future discrepancy. If there is a change of trustees or their number or registered address for the trustor’s aims and objectives, a new trust deed should be prepared after this one must be registered at the Registrar’s Office. If not prepared properly, the trust deed becomes useless and is akin to working without registration. Without a well-crafted fiduciary trust, there is a greater likelihood of confusion, issues and disputes in the future. YouTrTrust will face many problems in purchasing projects or raising funds.
Some people mistake mimicking trusts of existing trusts which is again a big mess because every trust is different and the memorandum should be prepared explicitly targeting their particular needs. Thus, it is advisable to hire a consultant, as they are experienced in formulating trusts that meet specific needs. Their main function is to prepare a trust deed.
- Charitable Trusts are registered under Public Trusts under the public trust Act, of 1882.
- Needs a minimum of 2 persons above 18 years old just in case} of female and 19 years old in case of males with a sound mind and with any or no educational qualifications.
- Government, Semi-Government employees, too, are eligible to be Trustees of trust. They create no profit, salary, or personal interest for themselves through the public trust and offer selfless social services to the Trust.
- Aadhar and PAN Cards (Original and their Self Attested Copies) are required together with Water/ Electricity bills within their name or in the owner’s name of the property and the Permission/Consent letter the owner to open the Registered Office of Trust(NGO).
- Rent Agreement too required if the property is on rent, 2 witnesses one of which is to be a Registered Advocate together with 2 passport-sized photos.
- Trust Deed to be signed and submitted in the Sub-Registrar office under the Revenue Department of the concerned District Court of the respective area/district.
NOTE: Legal document done by an experienced or knowledgeable Advocate to avoid future conflicts.
What are the Benefits of Trust Registration?
Here in this section, we provide information about critical topics like the Benefits of Charitable Trust Registration. Let’s have a look one by one.
- To Include in Charitable Activities
- Registered Trust Avails Tax Exemptions
- Gives Benefits To Poor People
- Compliance With Law
- Preservation Of Family Wealth
- Avoid Probate Court
- Immigration Of Family
- Forced Heirship
- Tax Mitigation & Managing Assets
Frequently Asked Questions (FAQs)
What are the Documents Required During the Charitable Trust Registration process?
> Charitable Trusts are registered under Public Trusts under the public trust Act, of 1882.
Needs a minimum of 2 persons above 18 years old just in case} of female and 19 years old in case of males with a sound mind and with any or no educational qualifications.
> Government, Semi-Government employees, too, are eligible to be Trustees of trust with the condition that they create no profit, salary or personal interest for themselves through the public trust and offer selfless social services to the Trust.
> Aadhar and PAN Card (Original and their Self Attested Copies) are required together with Water/ Electricity bills within their name or in the owner’s name of the property together with the Permission/Consent letter of the owner to open the Registered Office of Trust (NGO).
Read the above article to know more information about the documents required during the Charitable Trust Registration process.
What are the different types of Trust?
There are two types of Trust
1- Private Trust
2- Public Trust
What is the Difference between Trustee and Trustor?
Trustor is the person who creates the trust, whereas the person responsible for accomplishing the trust for the beneficiary is known as a Trustee.
How to start Trust?
Before registering your trust, you must make the following decisions:
> Name of the Trust
> Address of the Trust
> Objects of the Trust (charitable or Religious Trust)
> One Settler of the Trust
> Two Trustees of the Trust
> Trust property movable or immovable property (To save on stamp duty, a small amount of cash/check is usually given to be the initial property of the trust).
Read the above article carefully to check the complete process of starting a trust or filling out the Charitable Trust Registration form.
Does a charitable trust need to be registered?
All Charitable Incorporated Organisations (CIOs) must register with the Charity Commission, regardless of their annual income. CIOs do not formally exist as charities until they are registered for the charitable trust registration.
What is the difference between trust and charitable trust?
Charitable Purpose a charitable purpose improves, benefits or uplifts humankind mentally, morally, or physically. The requirements of intention, trustee, and res in a charitable trust are the same as those in a private trust. As a general rule, a charitable trust may last forever, unlike a private trust.
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33 thoughts on “Charitable Trust Registration Process: Trust Type, Eligibility, Documents etc.”
Can a settler be one of those trustees in the trust?? Is it mandatory of having atleast 2 trustees??? I want to run the trust only with a settler and a chairperson…. Is it possible sir/mam?? Awaiting your reply….
Yes, it is possible you can run trust in 2 members.
Yes. The Settlor or Author is usually a Trustee too. In rare scenarios when the actual Settlor is not able to be physically present in the court then anyone on his behalf can be a settlor only in case of (attaching movable property to the trust). That person will only be settlor and not Trustee & later can resign as Trustee as per mutual arrangements. In General, if there is mutual agreement between other Trustee(s), the Settlor/Author is Trustee too.
Atleast 2 persons are required as Trustees to establish a Charitable Trust (NGO)
For your valuable comment.
Hi, How do I know as a settler that my trust is a charitable trust or otherwise?
Thank you for the valuable comment.
Excellent and nice explanation… very informative… keep it up… all the best
I am disable in ortho. I registered trust for intellectual challenged. I am in vellore district. To whom i want to inform and start the same. Please help to us. Thanks.
Charitable Trusts are registered under Public Trusts under Charitable Trust Act, 1882. You need atleast 2 persons above 18 years of age in case of female and 19 years of age in case of males with sound mind and with any or no educational qualifications. Government, Semi Government employees too are eligible to be Trustee of a Charitable Trust with a condition that they make no profit, salary or personal interest for themselves through the Charitable Trust and offer selfless social services to the Trust. Aadhar, PAN Card (Original and their Self Attested Copies) are required along with Water/ Electricity bill in their name or in owner’s name of the property along with Permission/Consent letter of owner to open Registered Office of Trust(NGO). Rent Agreement too required if property is on rent. 2 witnesses one of which to be Registered Advocate alongwith 2 passport sized photos. Trust Deed to be signed and submitted in Sub-Registrar office under Revenue Department of the concerned District Court of the respective area/district. It’s advisable that you get your Trust Deed done by an experienced or knowledgeable Advocate to avoid future conflicts.
Great, thanks for sharing this information.
I want to start a trust in the nutrition arena.
I would like to establish a trust in memory of my father. Major activities of it will be health, education and economic upliftment of the needy group. I want to keep the ownership within my family. Looking forward for your advise.
Yes, and you can complete the entire process of trust registration in the above article.
Is Trust registration certificate necessary?or Trust deed is enough at delhi
Yes the trust deed is enough because the most important document required for Trust registration is ‘Trust Deed.
Sir a m a man from Tanzania seeking to become your food distributor to poor families in TANZANIA
If you wanted to help poor families by providing great food, then do it.
I want to start new trust can you please assist your guidance.
If you want to start a trust then there are just six steps to setting up a trust:
Decide how you want to set up the trust.
Create a trust document.
Sign and notarize the agreement.
Set up a trust bank account.
Transfer assets into the trust.
For other assets, designate the trust as a beneficiary.
How to register a trust
You can check the complete information in the above post.
We are interested in starting a private trust that includes socio-cultural and religious activities. Is there someone we speak with in detail?
You can check the complete registration process in the above post.
Sir / Madam, who is the settlor? 2. I want to open a library, provide books and internet facility to the poor and needy students. to start with my village in our ancestral house. 3. Please guide me – (a) can start a charity trust or Society Act
1: Settlor means: A person who makes a settlement of the property and a person who creates a trust by conveying property to a trustee; trustor.
To start a trust or go through the above article carefully.
We are going to commence old age home,in Haryana
That’s great; All the Best.
Hi I want new trust
You can check the complete trust registration process for starting a new trust.
Hi team, can i get the application for the registration of Telangana?
Yes, you can register for trust; check the complete registration process in the above articles.