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Trust Registration in India

Our experts will be at your service for facilitating required support concerning Trust Registration and its compliance. The trust registration in India revolves around sensitive and error-prone legal implications. This is where our expertise comes in so handy. Call us now.

Meaning of a Trust

The Indian Trust Act 1882 governs all registered Trusts in India and facilitates the legal provisions for the same. The Trust is usually referred to as a legal arrangement where the Trust’s owner transfers the property to the concerned Trustee (aka beneficiary). The object of the Trust is to ensure the seamless transfer of the Trustor’s assets among the beneficiaries as per the clauses cited in the Trust deed.

A trustee, selected by the grantor, is liable for administering the Trust & finally distributing his/her assets to the designated beneficiaries selected by the grantor when the Trust is set up. Heir, family members, or charity are some common beneficiaries of the Trust in India.

Trusts can be utilized to reduce taxes, simplify or avert the probate process & safeguard assets.

How Can domiyance help

  • Governing compliances and registration legalities could run any client into the trouble of application rejection and re-filing, which indeed is a time-consuming and cumbersome task. However, all such nuisances can be overcome if you opt to proceed via Domiyance’s way.

    1: Screening of client’s requirement regarding trust setup in India;

    2: Name Selection for the Trust in view of prevailing bylaws;

    3: Identification of applicable provisions and legalities;

    4: Insertion of Relevant clauses in the Trust Deed depending on the nature of Trust;

    5: Availing necessary authorization from Sub-Registrar.

Benefits of Trust Registration in India

To Involve In Charitable Undertakings

A Charitable Trust is primarily a way to set up your assets to benefit you, concerned beneficiaries & a charity simultaneously. Such Trust could render various advantages for a person seeking to aid society with nonessential assets, such as stocks or real estate.

Accessibility to Tax Exemptions

All registered trusts in India have access to several tax exemptions offered by the Income-tax department. Since the object of the Trust doesn’t revolve around profit generation, like NGOs, they are eligible to avail various tax relaxations. However, such a benefit is only available to trust that have a registered deed at their disposal.

Trusts are very useful in ensuring taxation relaxation on capital and income. The Trust may facilitate better coverage for the settlor, the beneficiaries & the trust assets from stringent tax provisions.

Provide Benefits to Financially Aggrieved Individual

The registered Trust facilitates the much-needed financial aid to the poor people and the masses via charitable activities.

Encounter Minimal Legal Hindrances

The Indian Trusts Act, 1882, ensures comprehensive legal protection for the Trust. It also prevents any third party to make an unnecessary claim that could endanger the legal standing of Trust.

Ensures Legal Coverage for the Family Wealth

Trust can be used to allocate specific assets such as land/an interest in the entity formed by the family, which otherwise would not be practical for a trustor to split between individuals.

Avert Probate Court

Anybody can leverage trust registration as a tool for transferring an asset to the heir in the absence of a Will. As the legal title of the assets transfers from the settlor to the Trustee in case when they are “settled”, there is no change of ownership after settlor demise, thus evading the requirement for probate of a will on account of trust assets.

Unlike probate, the trust acts as a private agreement that skip the requirement for additional registration. The use of a trust can also avert the economic adversity often encountered by surviving spouse even as waiting for grant of probate.

Immigration/Emigration of Family

When an individual & her/his family move to another nation, it is a perfect event to establish a trust to get rid of taxation in the destination country, thereby safeguarding the family assets and facilitating flexibility in its organization.

Stepwise Procedure for Trust Registration in India

The NGO Trust registration online is done with the Registrar of Trusts in India. While a private trust is registered under the Indian Trusts Act, 1882, a public trust is registered under the Trust Act specific to the state where it is getting established. The entire process of Trust Registration is centered around the registration of the Trust Deed, drafted and signed by the author of the trust in the presence of the registrar and 2 other witnesses. A detailed stepwise procedure for the registration of Trusts in India has been mentioned below.
 
The detailed Procedure for trust registration entails the given steps:

Step 1: Select an Apt Name for the Trust

The first and foremost step in the process of Trust registration is the name selection for the proposed Trust. Be mindful while serving such a purpose and take the following points into account to avoid any hassles:

  • The name should fit the provisions of the Emblems and Names Act, 1950
  • There should be no violation whatsoever when it comes to Trademark Act.
  • The name should stay to the originality.

Step 2: Drafting of Trust Deed

Drafting of Trust Deed is an important undertaking because it is the only thing that makes the Trust legally enforceable.

In general, the trust deed consolidates the below-mentioned clauses:

Objects

The Object clause reflects the object behind the formation of the Trust

Acceptance of Funds

This clause enables the Trust to accept contributions, donations & subscriptions from any person, government body, or charitable avenue, in the form of cash, immovable assets without any charge on it. Furthermore, the clause states that any contributions that hamper the Trust’s object are non-acceptable in nature.

Investments: the investment clause sets out the conditions for the lawful and effective administration of the Trust’s fund. Further, this clause also framed conditions for effective allocation of the additional funds that are not in use and could help in generating extra income via investment.

Power of the Trustees

As the name suggests, this specific clause talks about the responsibilities of the trustees.

Generally, such clauses confer the following powers to the trustees.

  • Appointing employee(s)
  • Alienating the trust properties
  • Opening the bank account in the Trust’s name
  • Suing defaulters in case of legal dispute on behalf of the Trust
  • Accepting any gift, donation via legitimate individuals or sources
  • Investing additional funding in securities

Accounts and Audit

This clause mandates the trustees to administer the book of account on a regular basis. Further, it also sets out the requirement for account auditing that should be conducted by the certified CA.

Winding Up

A trust is wound up when all of the Trust properties/assets are lawfully distributed to the beneficiaries or to a similar entity, either directly or via resettlement. The involved parties must identify any tax obligations incurred owing to the transfer of assets when the Trust is wound up. Furthermore, this clause renders the requirement of conducting such legal undertaking with the approval of charity commissioner/Court/any other law to mitigate any chances of legal dispute.

Documents Required for Trust Registration in India

Following are key documents that one needs to arrange for Trust Registration:

  • Proof related to Identity for Trustor & Trustee such as Aadhaar Card, Voter ID, Passport, DL
  • Address Proof related to Registered Office such as Copy of Certificate of Property/Utility Bills
  • No objection certification from the Landlord if the property is rented .
  • Trust deed’s objective
  • Detail about the Trustee and settlor such as Self-attested copy Id & Address Proof and occupation
  • Trust Deed on Proper Stamp Value
  • Trustee and settlor Photos
  • Trustee and settlor
  • PAN details
  • Trust deed must reflect the following information:
  • Number of trustees
  • Trust registered address
  • Proposed name of trust
  • Proposed Rules that will govern the trust
  • Presence of settlor as well as two witnesses at the time of registration of Trust.