FORMATION OF TRUST
Trust is a formal organization established by law to keep and administer assets for the benefit of one or more people. The trust may be established for any objective, including the beneficiaries’ financial security.
Settlor is a person who forms a trust.
Trustee is a person or firm that holds and administrates property of trust.
Beneficiary is a person or group of persons for whose benefit the trust is formed.
Documents required for formation of Trust:
- The Trust Deed
- Two photographs of settler
- Two photographs of trustee
- Self-attested copy of the identity proof of the settler. Like, Aadhar Card, Passport, Voter ID etc.
- Self-attested copy of the identity proof of the trustees. Like, Aadhar Card, Passport, Voter ID etc.
- Self-attested copy of the identity proof of each of the two of the witnesses. Like, Aadhar Card, Passport, Voter ID etc.
- The address proof of the Trust’s registered office. Like, Electricity or Water bill.
- The No-Objection letter by the Landowner.
Steps for Registration of Trust:
- Name of Trust: The first thing that needs to be done is choose a name for the trust that makes sense. The name chosen cannot be one that is prohibited under any law.
- Choose the Trust’s Settlors and Trustees: A trust can only be established with a minimum of two trustees. The total number of trustees that a trust may have, however, is without limit. The settlor must reside in India and can serve as the trustee as well.
- To draw up the Trust Deed: which should include all rules and guidelines governing the trust. In actuality, the deed serves as legal proof of the trust’s validity. Additionally, it has bylaws that specify how trustees should be added, removed, and changed. As it outlines the relationship between the settlor and trustees.
- Contents of Trust Deed:
- Name(s) of settlor(s)
- Name(s) of trustee(s)
- Name(s) of beneficiary/ies (if any)
- Name of trust
- Address of principle or other office
- Object of trust
- Intention to vest the trust property upon trustee(s)
- Procedure for appointment, removal or replacement of trustee(s)
- Rights and duties of trustee(s)
- Right and duties of beneficiaries
- Stamp Paper: The trust deed must be written on stamp paper in order to be valid. Paying the requisite stamp duty is also necessary.
- Sub-Registrar should receive the trust deed. The certified copy of the trust deed must be submitted in office of sub registrar within whose sub-district the property is situated, within 4 months of execution of the trust deed, additional time of 4 months can be allowed only in justified cases (along with fine which shall not exceed 10 times the amount of registration fees). The settlor must sign the trust deed’s photocopy on each and every page. At the moment of registration, the settlor’s physical presence is required, along with the attendance of two additional witnesses.
- Getting the Certificate of Registration the sub-registrar receives the trust deed, makes a photocopy for himself, and then returns the original trust deed document to the owner. The registration certificate is therefore issued following the completion of all processes. Typically, the registration certificate is obtained in seven working days.
