Trust registration is the process of notarizing the trust deed (the legal contract between the settlor and the trustee) with the registrar of the respective jurisdiction. The Trust serves as the legal vehicle responsible for the legal distribution of the grantor's assets to affected beneficiaries. The trust comes into effect immediately upon authorization of the trust deed by the Registrar.
Benefits of Trust RegistrationTrust registration offers several advantages to individuals and organizations. Here are the key benefits:
Charitable Involvement: Creating a charitable trust allows individuals to benefit themselves, their beneficiaries and the charities of their choice.
Immigration/Emigration Benefits: Establishing a trust can provide benefits during relocation, tax relief, asset protection and flexibility in asset arrangements.
Tax Exemption: Trusts registered in India can enjoy tax exemption granted by the Income Tax Department, thus benefiting from tax reduction.
Probate Avoidance: Registering a trust allows assets to be transferred to heirs without the need for probate, thereby streamlining the asset distribution process.
Financial support: Registered trusts provide essential financial support to disadvantaged people and the general public through charitable activities.
Family Wealth Protection: Trusts help allocate specific assets, preserve and manage family assets that are difficult to divide individually.
Legal protection: The Indian Trusts Act, 1882 ensures full legal protection, protecting the legal status of the trust from unnecessary claims.
Documents required for Trust Registration:1) Trust Deed with the respective stamp value.
2) Authentication from the partners (if applicable).
3) Identity proof of the individuals.
4) Address proof of the individuals.
5) Address proof of the trust registered office.
6) No Objection Certificate for using the premises (if applicable).
7) Any form of a utility bill as proof of address.
8) 12A Registration and 80G Certificates from the respective income tax authorities to claim deductions (if applicable).
9) PAN cards of the individuals associated with the trust.
10) Two photographs of the parties involved in the trust.
Types of TrustsTrusts can be classified into various categories based on the activities they undertake. Here are the different types of trusts:
Public trust fundamentally benefits the public. Unlike private trusts, public trusts do not operate under the Indian Trusts Act and are created for charitable or religious purposes. Such a trust is subject to applicable common law. Like Private Trusts, these trusts can be established at will.
A private trust refers to a legal agreement created for the benefit of individuals and not for a public or charitable purpose. It is established for the financial benefit of one or more beneficiaries known to the Founder. The Private Trust does not pursue charitable objectives and its benefits are intended only for its designated beneficiaries. These trusts are required to comply with the provisions of the Indian Trusts Act, 1882.
As their name suggests, public-private trusts serve a dual purpose. They can use their income for public and private purposes. This implies that the beneficiary of that Trust can be an individual or a state, or both.
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This registration/approval will be valid for a period of 5 years. Therefore, existing trusts must apply for new registration/approval and once registration/approval is granted, it is valid for 5 years.
Trust registration is the process of legally establishing a trust by completing the necessary formalities and complying with the Trusts Act 1882. Trust registration recognizes the trust and ensures comply with relevant legal requirements.
Any person with authority to enter into a contract, including individuals, businesses, or organizations, can create a trust in India. The person or entity that creates the trust is called the trustee or settlor.
Registering a trust in India involves drafting a trust deed, executing it on non-judicial stamped paper and submitting the necessary documents to the competent authority for registration.
