What is Trust?
Trust means when one person transfers his property to another person on whom he has trusted for the benefit of some other third person. The objective to create a trust can be defined as it operates for promoting arts, science, and literature, it helps to remove poverty, providing education to those who are underprivileged and helping them in medical facilities are some of the major areas where a trust operates. Here transfer of property does not only mean the transfer of the real estate, but It could be the transfer of cash, shares, and other valuable assets.
There are mainly two types of trust which are as follows:
- Public trust: The primary aim of the public trust is to provide benefits to the public at large.
- Private trust: The objective of the private trust is to provide benefits to their families or some individuals.
In Trust there are 3 parties involved:
- Trustor or Donor: As the name says he is the person who transfers his property.
- Trustee: He is the person on whose name the property is transferred by the trustor.
- Beneficiary: It resembles those who will get benefit from the trust soon.
The instrument by which the trust is created is called the Trust deed. It describes the objective for which the trust is created, it elaborates the powers of the trustee and defines the beneficiary for whom the trust is created.
Why should you register a Trust?
Registration is mandatory if it involves the charitable purpose where you have to transfer the immovable property in the name of a trust. If trust takes 12 A certificate from Income Tax Department then it can also avail Tax exemptions, and if it also takes the 80 G certificate then it will help the donor to avail deduction by donating, so trust must register as it is more appreciable, credible and accepted by donors as it involves public money.
Procedure to register a Trust:
Step 1: The initial step is to choose an appropriate name of the trust and the name must not be such which is restricted.
Step 2: Select the Trustor and the Trustee, further there is no such restriction in the maximum or a minimum number of trustors but generally, there is one trustor and in case of a Trustee there is no such restriction on the maximum number but a minimum of two Trustees is required.
Step 3: Now the most important part in order to register a trust is to prepare a Trust deed and MoA (Memorandum of Association).
- Documents required:
- Self-attested copy of the proof of identity of both the trustor and the trustee.
- PAN card.
- Proof of the registered office of the trust.
- NOL (No Objection Letter) signed by the landowner.
- The Trust deed must be prepared on the stamp paper. The value of stamp paper is of a certain percentage based on the total value of Trust’s property. In addition, you have a sum of Rs.100 for registration fees and Rs. 1000 for keeping a copy of the trust deed with the sub-registrar. Once you submit the copy you can get a certified copy of the trust deed within one week from the registrar office.
Step 4: The final step for obtaining a registration certificate from the registrar is to Submit the Trust deed with the Registrar. Once you receive a certified copy then you have to submit the same with the registrar along with the photocopies attested by the local registrar. The Trustor must sign every page of the photocopy of the trust deed and it is also mandatory for the trustor as well as two other witnesses to be physically present along with their identity proof( original as well as photocopies of the same) at the time of registration.
After all the above-mentioned steps are followed now the registrar takes the photocopy of the trust deed and provides the original back to the Trustor.
And after completing their work, he will issue the certificate of registration by taking a minimum of seven days.