Trust Registration

Trust & Trust Registration – An Overview

A trust is a legal arrangement where a person (the trustor) transfers a portion of their assets to another party (the trustee), who manages it for the benefit of a third party (the beneficiary). The trust deed outlines this fiduciary relationship and is a key document in the registration process.

Under the Indian Trusts Act, 1882, a trust is defined as a "relationship between the trustor and trustee to hold specific benefits for the beneficiary." Trusts are commonly created for charitable, religious, or private family purposes and must be registered to operate legally and claim tax benefits.

Parties Involved in the Trust Registration Process

Trustor
The person who creates the trust and donates property or assets.

Trustee
The individual or organization responsible for managing the trust and ensuring the objectives are met.

Beneficiary
The person or group intended to benefit from the trust. Beneficiaries can be individuals, families, or the public at large.

Types of Trusts in India

Understanding the type of trust is essential before registration.

Private Trust
Created for specific individuals or families and governed by the Indian Trusts Act, 1882.

Public Trust
Formed for the benefit of the general public, usually for charitable, religious, or educational purposes. Governed by state-specific laws such as the Bombay Public Trusts Act, 1950.

Public-Cum-Private Trust
Serves both general public and private beneficiaries, combining features of both public and private trusts.

Private Limited Trust
A form of private trust restricted to a select group such as family members or close associates.

Public Limited Trust
Focused on broader public interest such as education, religion, healthcare, or environmental issues.

Regulatory Authority and Applicable Laws

Trust registration in India is regulated by different authorities depending on the type of trust.

• Registrar of Trusts: Maintains records and regulates trust registrations.
• Indian Trusts Act, 1882: Applies to private trusts.
• State Acts: Apply to public trusts (e.g., Bombay Public Trust Act).
• Income Tax Act, 1961: Provides tax exemptions under sections 12A and 80G.
• Societies Registration Act, 1860: Often applicable when trusts work alongside societies.

Why Register a Trust?

• Ensures the trust operates legally and transparently.
• Allows eligibility for income tax exemptions under Sections 12A and 80G.
• Boosts credibility with donors, institutions, and government bodies.
• Enables the trust to own property, open bank accounts, and enter into contracts.
• Promotes charitable, educational, social welfare, or religious objectives effectively.

Benefits of Trust Registration

• Charitable Contributions: Enables structured giving and charitable activities.
• Tax Exemptions: Reduces income tax liability for the trust and its donors.
• Legal Status: Protects the trust under the Indian Trusts Act, 1882.
• Asset Protection: Facilitates structured family wealth management.
• Probate Avoidance: Simplifies transfer of assets to heirs.
• International Benefits: Useful for managing assets during immigration or emigration.

Requirements for Trust Registration

• At least two individuals are required to form a trust.
• The trust must comply with the Indian Trusts Act, 1882.
• Parties involved must not be disqualified by law.
• Objectives should align with public interest and not violate any existing laws.
• Activities must reflect the trust deed’s stated purposes.

Key Components of a Trust Deed

The trust deed serves as the foundation of the trust and must include:

• Duration or term of the trust
• Registered address
• Geographical area of operation
• Objectives and mission
• Settlor and asset contribution details
• Trustee information, roles, and responsibilities
• Amendment and dissolution procedures
• Legal compliance and governance structure

Documents Required for Trust Registration

• Trust deed (with proper stamp duty)
• Passport-size photographs of all parties
• PAN cards and ID proofs of all individuals
• Address proof (individuals and office premises)
• No Objection Certificate (if property is rented)
• Utility bill for registered office
• 12A and 80G certificates (if applicable)
• Partner consent forms (if applicable)

Step-by-Step Procedure for Trust Registration

1. Choose a Name for the Trust
Ensure it complies with laws related to trademarks, copyrights, and the Emblems and Names Act, 1950.

2. Identify Settlor and Trustees
Minimum of two trustees is mandatory. Settlor cannot be a trustee.

3. Draft the Memorandum of Association (MOA)
Clearly state the trust's objectives and legally permissible goals.

4. Draft the Trust Deed
Include all relevant clauses and legal terms. This document will be submitted for registration.

5. Submit Documents to the Registrar
Submit the signed trust deed along with the supporting documents.

6. Obtain Trust Registration Certificate
Upon approval, the registrar issues the certificate. The trust can now open a bank account and begin operations.

Winding Up a Trust

A trust may be dissolved once its assets are legally distributed to beneficiaries or a similar organization. Proper procedures must be followed, including approval from the Charity Commissioner or relevant court. Compliance with tax laws during asset transfer is essential to avoid legal issues.

How Easy My Tax Can Help

At Easy My Tax, our experts simplify the trust registration process. We offer:

• Guidance on selecting the right type of trust
• Assistance with documentation and drafting of trust deed
• End-to-end registration support with local authorities
• Help in applying for 12A and 80G certifications
• Legal and tax advisory post-registration

Let Easy My Tax help you set up your trust with ease, clarity, and full compliance—so you can focus on making a meaningful impact.