What is a Trust?
When a trust exists, the trustee is the one who grants the authority to another person (‘The trustee’) to hold title to assets or property for the benefit of the beneficiary (‘The Beneficiary’). Trusts are usually created or incorporated in order to safeguard the trustor’s assets in order to ensure that the assets are distributed or used according to the desires of the trustor, as well as to speed up the process, reduce the paperwork. In certain cases trusts may also be created to minimize or eliminate estate or inheritance taxes.
A trust deed, an agreement that is legally binding between the settlor as well as the trustee, is legally endorsed by the registrar for the relevant state by the process of trust registration. The Trust is an official vehicle for the fair distribution of the assets of the settlor to the beneficiaries who are targeted. Once the trust’s registrar has given the trust deed their approval the trust becomes effective.
The term “trust” is defined as
A legal obligation that is tied to owning property, and
that result from a confidence that was entrusted to and
acknowledged and recognized by the owner and accepted by him
In the interest of someone else or another owner.
DEFINITIONS
‘ author of the trust is the person who responds or announces the confidence,
‘ trustee‘ is the person who accepts trust
‘ beneficiary‘ is the individual, who benefits from the trust or confidence is acknowledged;
‘ trust property” or ” trusts’ money” is the object of trusts;
‘ beneficial interest” is the right of the beneficiary to sue the trustee, who is the owner of the trust’s assets;
‘ instrument of trust’ is the instrument which declares the trust
In the legal sense, trust can have a specific and specific meaning that is quite different from the meaning that the word is commonly used. It is a legal term or relationship that is similar to the other types of relationships created by the law, e.g., Contract, Agency.
Classification of Types of Trusts
There are a variety of classes of trust that are classified by the method of their establishment. Some of the most well-known types of trusts are:
Charitable or Religious Trust
Charity means piety/mercy/betterment/welfare something religious or divine, so charitable trust means a trust created for the charity of people or society.
Express and Implied Trusts
Express Trust The Express Trust is a trust that is stated by the creator of an trust. I It is a trust that the settler himself made through the expression of a desire for the creation of one. It is a type of trust in which conditions and terms are clearly stated in the document.
Implied trust They are trusts that a court determines from participants’ actions as well as the circumstances of the transaction. For instance, if a person chooses to settle a property in favor of someone else in exchange for a valuable consideration, the person who is not immediately becomes the trustee on the estate. It’s a form of trust where the terms and terms are written, but the purpose isn’t obvious but it is able to be easily understood.
Public and Private Trusts
Private Trust A private trust benefit individuals, regardless of when they’re or not. If they do not expire within the period of perpetuality, the trust’s interest is deemed to be insufficient. It’s a form of trust that is set up for a specific group of people or for a family , or a certain
The public trust A trust that is established for people of all ages with a charitable motive or to ensure the well-being of the community.
Procedure for Registration of a Trust
Preparation of Trust Deed:
It’s not a mandatory obligation, but it is beneficial to have the Trust deed in place. It is also legally binding by law and gives a greater feeling of security. The following details should be mentioned within the document:
- Address and name of the the trustor (the person who established the trust)
- Address and name of a trustee’s other address
- Address for correspondence and evidence
- Name of trust
- Minimum and maximum amount of trustees
- The registered office address for the trust
- Trust is the goal
- Regulation and rule of trust
Registering the trust through the trustee
The next step following the finalization of the Trust is to sign and register the Trust deed. It’s not a requirement, however it is required to have the trust registered in accordance with the Income Tax Act for availing the exemptions provided under Section 12A and Section 10G. Additionally, a deed acts as an initial proof of the trust’s existence as well as a formal proof of the trust’s existence. The deed must be presented to the trust’s local registrar along with a copy , and the settler must make sure to sign all of the pages of the original copy of the deed.
Tenure of Trustees:
The tenure of trustees is at a minimum one year and up to 5 years maximum.
20G, and the 12A certification Application is for tax benefits.
A trust should seek approval under sections 12A and section 80G in order to get tax exemptions as provided under the Income Tax Act.
Documents needed For Trust Registration
The application to register a Trust must be accompanied by the following details:
The specifics of the documents that created the trust
Other than documents about the creation of
The trust’s objects;
The sources of income of the trust
Particulars of encumbrances in the event that they exist, for trust assets;
Information about the scheme that relate to the trust
Particulars of title deeds that relate to trust’s properties
The names and addresses of the Trustees’ and managers’ names and addresses;
Documents for Registration of a Trust Deed
Deed of Trust on stamp paper that has the required stamp duty
Identification and Photograph of the trustor (one who created the trust);
Photo and Identity Two trustees’ proofs of identity;
The trust document must contain, on every page and the signatures of trustor
At least two witnesses to the trust’s deed.
