Trust

Trust Registration Process in India

For social or welfare work you can register your NGO under trust Registration Act. In this article, we are going to discuss Trust Registration process and creation in details.                             

What is the Trust Registration?

Trust Registration is one of means and mode of operating for some social activities and advancement of public utility, generally in India. The state does have Trust Registration Act but in general Indian Trust Act, 1882 is governing law for registration, operation, and management of Trust in India.

• The public charitable trust is generally floated when there is property involved, especially in terms of land & building.
• Different states in India have different Trusts Acts in force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or region, the overall principles of the Indian Trusts Act 1882 are applied.

• The main instrument of any public charitable trust is the trust deed, wherein the aims & objects & mode of management (of the trust) should be enshrined. In every trust deed, the minimum & maximum number of trustees has to be specified.

• The trust deed should clearly spell out the aims & objects of the trust, how the trust should be managed, how other trustees may be appointed or removed, etc. The trust deed should be signed by both the settlor/s & trustee/s in the presence of two witnesses.

• The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.

• Registration of Trust requires a minimum of 2 trustees & there is no upper limit to the maximum number of trustees. The Board of Management comprises the trustees.

• The application for Trust registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.

• Once all the details are furnished in the form regarding designation by which the public trust shall be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee to the form & pay a registration fee which may range differently, depending on the location & value of the trust office & trust property.

• The application form will be signed by the applicant before the registrar, sub-registrar, deputy registrar, regional officer or superintendent of the regional office of the charity commissioner or authorized registrar. The application form should be submitted, together with a copy of the trust deed.

• Two other documents which should be submitted at the time of making an application for registration are affidavit & consent letter.

Meaning of Certain Terms

A “Trust” is an obligation annexed to the ownership of property, & arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.

• Author of Trust – The person who re-poses or declares the confidence is called “the author of the trust”.

• Trustee – The person who accepts the confidence is called the “trustee”.

• Beneficiaries – The person for whose benefit the confidence is accepted is called the “Beneficiaries”.

• Trust property – The subject matter of trust is called “Trust property” or “Trust Money”.

• Trust instrument is the instrument is by which the trust is declared is called the “Instrument of Trust”.

Requisites for Creation of a Trust

• There is a founder/settler/author of trust;

• There should be the person(s) called trustee/trustees;

• There is a property of the trust which the settler gives;

• There is a person capable to enforce that obligation called cestui que trust;

• There are beneficiaries who will enjoy benefits out of that property.

• An intention of the author or founder to create a trust;

• The purpose of the trust;

• Transfer of the property to the trustees.

Conditions for Creation of a Trust

• The settler has to give up ownership and all beneficial interests in the property,

• The property should be clearly described,

• The objects or purposes for the creation of trust should be clearly indicated,

• Formal deed or any other writing not required intention to create a trust may be shown through words. However, it is advisable to have a written trust deed for all practical purposes,

• The settler must be a person competent to contract,
• The trust property must be properly transferable to the beneficiary. It must not be a merely beneficial interest.

Trust Registration Process

• Before one register your trust you will need to decide the following:
  • Name of the trust
  • Address of the trust
  • Objects of the trust (charitable or Religious)
  • One settler of the trust
  • Two trustees of the trust
  • Property of the trust whether the 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).

• Prepare a Trust Deed on stamp paper of the requisite value which varies from state to state.

• The requirement for registration of Trust Deed with the Local Registrar under the Indian Trusts Act, 1882.
  • Trust Deed on stamp paper of requisite value.
  • One passport size photograph & a copy of the proof of identity of the settler.
  • One passport size photograph & a copy of the proof of identity of each of the two trustees.
  • One passport size photograph & a copy of the proof of identity of each of the 2witnesses.
  • Signature of a settler on all the pages of the Trust Deed
  • Witness by two persons on the Trust Deed.

• Go to the local registrar & submit the Trust Deed, along with one Photocopy, for registration. The Xerox of the Deed shall also contain the signature of the settler on all the pages. At the time of registration, the settler & two witnesses are required to be personally present, along with their identity proof in the original.

• The Registrar retains the photocopy & returns the original registered copy of the Trust Deed.

• A trust-deed, generally, incorporates the following:
  • The names of the authors/settlers of the trust;
  • The name s of the trustees;
  • The names if any, of the beneficiary/ies or whether it shall be the public at large;
  • The name by which the trust shall be known;
  • The place where its principal and/ or other offices shall situate;
  • The property which shall devolve upon the trustees under the trust for the benefit of the beneficiaries;

Note: In terms of section 21 of the Indian Registration Act^[1], 1908 a deed of trust relating to immovable property must, for the purposes of registration, contain a description of the property sufficient to identify it.

Note: It may be noted that the foundation of a charitable or religious trust is a purpose. The purpose should be expressed in unequivocal language and with a reasonable degree of certainty. However no particular or technical words are necessary, yet the words used must be capable of definite meaning.

• The objects of the trust;
• The procedure for appointment, removal or replacement of a trustee
  their rights, duties, and powers, etc.
• The mode and method of determination of the trust.

On go through of applicable act and state act, while making conclusive remarks on Trust Registration Process in India, any person who wishes to register the trust required to fulfilled the above-stated procedure and has to followed rules and laws provided by state Act and general act to the extent applicable to Trust.

Read our article: Required Documents and Complete Checklist For Trust Registration in India