Trust Registration

Trust registration in Chennai

The Trust must be formed for charitable purpose. Charitable purpose have been defined to include relief of poverty, advancement of education, advancement of religion and other purpose beneficial to the community not failing under any of these preceding heads.

A charitable trust in order to be charity in the legal sense, will have to be for purpose of a public nature in other words for the benefit of the community or some part of it. When the beneficiaries of a trust constitute general public or a section of public, as distinguished from private individuals and when the trust is meant to perform a public charity, it is public charitable trust.

The instrument by which trust is created is called as Trust Deed. Although it is not mandatory for trusts to enter into agreement, since trusts can be formed even by oral communication except in case of trust with immoveable property which is required to be created by a instrument in writing. It is mandatory to get the deed registered under the Income Tax Act for availing the exemptions such 12A, 80G etc., and more over a deed is a evidence of the existence of a trust.

Contents of a Trust Deed
  • Name(s) of the author(s)/settlor(s) of the trust.
  • Name(s) of the trustee(s).
  • Name(s) of the beneficiary ,if any
  • Proposed name of the Trust
  • Place where its principal and other offices shall be situated.
  • The property that shall devolve upon the trust for the benefit of the beneficiary.
  • The objects of the trust.
  • The manner of appointment, removal or replacement of a trustee, their rights, duties and powers etc.
  • The rights and duties of the beneficiary
Procedure for Formation

A Trust may be declared either by will or by a non-testamentary instrument called as Trust Deed. A Trust in relation to immovable property can be created also by transfer of ownership of that property to the trustee.

A Trust can be created by any of the following ways:

  • Instrument of Trust Deed
  • Creation by Will
  • Creation by Transfer of Property
Trust Deed

A trust declared inter vivos or by the acts of the parties is to be supported and evidenced by Creation of instrument in writing and signed by the author of the trust and the trustee (i.e trust deed). There is no prescribed form of a trust Deed. Any words which indicate the intention of the author that the property of which he is the legal owner, shall beneficially be another's is sufficient. A trust in relation to an immoveable property must be supported by a trust deed, unless it is declared by a will, and must be registered.A trust declared by a non testamentary instrument comes into effect from the date specified in the instrument or the date of its execution, where the date is not specified.

Need for Trust Deed

A trust can be created by words but in such cases it is necessary to prove that there was either an express declaration as to the trust or that there is evidence of language or expressions used by or facts and conduct of the owner of the property to indicate with reasonable certainty that trust was created. In order to remove ambiguity and disputes, it is always advisable to create a trust by a written trust deed.

Registration of Trust Deed

As Trust deed is non mandatory requirement, the registration so is not statutorily required but it is always desired. A registered trust deed has the following advantage

  • A registered trust deed is an official document enforceable by law.
  • A registered deed effectuates transmutation of possession. The registration of trust deed , in the absence of an intention to the contrary, is enough to convey the title to the trust property to the trustee even if the trust deed is not delivered to the trustee.
  • A conveyance of the trust property to the trustee, under a registered deed is generally, not open to challenge, except where there is no intention to act upon the deed.
Creation by Will

A person may declare his intention to create a trust in respect of his property or any part thereof by way of a will. A will according to the Indian Succession Act must be in writing and signed thereof by all testators in presence of witnesses.

Creation by Transfer of Ownership

A trust in relation to moveable property can be formed also by transfer of ownership of the property or the trustee with a direction that the property be held under trust for the benefit of the beneficiary. The ownership of a moveable property can be transferred by physical act of handing over the possession of the property. In case where the author himself is the trustee, transfer of possession is neither necessary nor possible and mere declaration of the author that he holds the property under trust would be sufficient to constitute a trust.

Society Formation

Societies Registration Act, 1860 is a central Act, All the states in India have adopted this act (with or without modifications)

Basic Requirement to form a society.
  • The main documents in formation of a society are Memorandum of Association and Rules and Regulations.
  • Minimum seven people are required to form a society. There is no upper limit on the number of members.
  • The designations of the members can be decided among themselves. Usual designations are President, Vice-Present, Secretary, Joint-Secretary and Treasurer etc These members are collectively called the Governing Body. They directs and controls the functioning of the society. All the members of society are elected for a specific period, After expiry of this period; it can filled through elections in which members of the Governing Body take part.
  • Unlike trusts, societies function only within a specified geographical area. To make an all India level society, you would need at least eight members (of which five should be from different states of India).
Contents of a MOA
  • Name of the Society. ( It should be confirmed with the registrar before finalising).
  • Place of Situation registered office
  • Names, designations, addresses and occupations of the members of first governing body
  • Objectives of the society (It should be specific).
  • No stamp paper is required for MOA.
  • Related people (i.e. belonging to the same family) cannot be part of the governing body.
  • Members of the Governing Body can not draw any remuneration from the society funds. While executing their duties as members, expenses incurred by the members of the Governing Body can be reimbursed from the society funds.
  • Income of society is exempted from tax under Section 80G and 12A of Income Tax. (i.e. the donor will not have to pay tax on the amount donated by him). for Availing 12A and 80G need to apply with Income Tax department and get certification for the same.

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