Overview of Trust Registration

A trust is a charitable organization which is formed by the trustor and managed by the trustees for the benefit of the beneficiary. Some of the key requirements to register a trust are minimum three members, a philanthropic motive which can be in simple language charitable purpose and a well-drafted strong deed of trust. In order to manage a trust according to the law in India it is necessary to first register it under the Trust Act of 1882 and then make sure to comply with the same law. 

Under the Indian laws there are mainly three types of Non Government Organizations which are trust, section 8 company and society. Out of them, trust certification is not so common. In order to register a trust in India all the rules and regulations given under the Trust Act of 1882 need to be followed. As a layman is not aware about these laws in depth, it is advisable to take help of a legal professional who can make these rules and regulations easy for you and help you out to get trust certification in India.

Understanding of Trust & Trust Registration in India 

Trusts are established by those people who are interested in allocating portions of their properties for the benefit of other people. It is a relationship formed by the trustee, trustor and a beneficiary. The parties involved in the trust are mentioned in the deed of trust while applying for the registration of the trust. It can be established by a trustor when he/she transfers a specific property or an asset for the benefit of a beneficiary.

In order to form a trust in India it is suggested to register it. In order to register a trust in India one needs to prepare all the documents and then submit them before the registrar under whose jurisdiction you will fall. After that the registrar will evaluate your application for registration and if they show the green flag trust will be registered. One of the most important things in order to register a trust is the documents. Under the necessary documentation, a deed of trust needs to be drafted correctly. Drafting this deed for the trust is not child play because it must be framed as per the rules. Hence to complete your documentation you should ask for professional help. 

Parties Associated with the Trust Registration Process

The parties involved in the process of Trust Registration are discussed below:

• Trustee

An entity or a person who is responsible for managing and supervising the trust is called a trustee. On the trustor’s behalf, a trustee handles the trust properties for the benefit of a beneficiary. It is the duty of the trusty to use the properties as a normal prudent man. He or she cannot harm the property intentionally. 

• Trustor

A person who sets up the trust is called a trustor. Basically, they are the owners of the property which are being placed in such institutions. Without them, it is impossible to form such an NGO in India. They are the intrinsic part of the registration process of the trust. 

• Beneficiary

Any person for whom the trust is created is considered as a beneficiary. The beneficiaries are the intended inheritors of the benefits, and property that are related to the trust. These beneficiaries can be the third party and can be both the trustee and the trustor. They are the ones who are able to receive benefits depending upon the terms and conditions of the trust.

Key Types of Trust Registration in India 

Trust can be divided into different categories which relies on the events functions they perform. In India, those who want to register a trust should first understand the different types of trust shortly. The different types of trusts are listed below:

• Public Trust

In India, trusts are established to benefit the public at large and are the most common type of public trust. They are often created for different purposes like religious, charitable and educational purposes. Such NGOs are governed by specific statutes like the Charitable and Religious Trust Act 1920, the Religious Endowments Act 1863 or the Bombay Public Trust Act.

• Private Limited Trusts

These NGOs are created to provide services and functions for particular people like families and close friends. Usually, the beneficiaries of this trust are closely related to the founders. These institutions are governed by The Trusts Act 1882.

• Public Cum Private Trust

Such NGOs offer services for both private and public purposes and they can use their income to benefit the public and particular persons or their families. As they work for both the public and private persons or entities they are called public cum private trusts. 

Regulatory Authority and Laws for Trust Registration

The key regulatory authority of Trust Registration in India is the Registrar of Trusts. They focus on maintaining the databases of the registered trusts spread all over the country. The trust certification of the private trust is done under the Trusts Act 1882. When it comes to public trusts, there is no single governing act that can be applied uniformly to all of them. In India, the laws that play an important role in the regulation of trusts are:

• Income Tax Act of 1961: This law provides the different types of tax deductions and exemptions which are there for the trusts in India. Hence in order to get various tax benefits this law has been used. 
• Trusts Act of 1882: The entire management and operations are managed by this law called Trust Act. it governs the registration as well. 
• Societies Registration Act of 1860: This law does not have any direct implications on the trusts but indirectly many times it has been used with respect to trust, hence we put it here. 

Some Important Reasons for Trust Registration

Trust Registration is necessary because of the following reasons:

• The purpose of trust comprises the promotion of non profit activities in different areas like environment, education, arts and science as a contribution towards building a better society.
• Registration of trust makes sure their compliance with laws and rules and also ensures maintenance of regulations of trust events.
• The certified trusts can avail of multiple tax benefits under sections 80G and 12A which encourage support and donations.
• They contribute towards the development of different sectors like social welfare, healthcare, education and the environment.
• Trust Registration provides a license to operate business related to trusts by remaining under the legal guidance.

What are the Key Benefits of Trust Registration? 

Organizations and people benefit from trust certification in the following ways: 

• Involvement in Charity: Establishing a NGO is beneficial for the person who has established it including their selected charities and their beneficiaries.
• Financial Support: The certified trusts are able to provide support and financial help to the unprivileged groups and the public at large by doing charitable activities.
• Tax Exemptions: In India, Trust Registration is helpful as they may get access to tax exemptions and deductions provided by the Income Tax Department, thus benefiting from tax relations.
• Legal Protection:  The registered trusts provide legal protection under the Indian Trusts Act 1882, thus protecting the trust from unnecessary claims.
• Wealth Protection: through trust registration many times family wealth has been protected. 
• Avoidance of Probate: it helps in distribution of the assets among the legal heirs without probate. It is simply the process of distribution of assets. 
• Emigration Benefits: There are hundreds of emigration related benefits which have come with the trust registration like relocating, assets safeguarding etc. 

Registration Related Requirements for the Trust in India

The eligibility criteria for getting a Certificate of Trust Registration are listed below:

• Minimum two or more persons must be involved in the formation of the trust.
• They must be created with legal compliances and with the provisions mentioned in the Indian Trusts Act 1882.
• The trust's aims must not be against any current Indian legislation.
• The actions of the trust must be conducted by the trustee in a non biased way.
• The trust must function and perform actions in accordance with the deed of trust.
• The actions organized by the trust must not harm anyone.
• The deed of trust drafted by the parties should signify their good faith interest in forming the trust.

Key Content of the Trust Deed of the Trust 

The below mentioned are the needed contents of a deed of trust in order to register a trust in India: 

• The term period in which the foundation intends to keep active.
• The address of the trust’s registered office.
• Objectives and goals of the trust.
• The areas in which the trust intends to undertake its actions.
• The responsibilities, powers and roles of the trustee.
• Names of the trustor, trustee as well as beneficiary 
• Proper Addresses of the trustor, trustee and a beneficiary
• Process for amending the deed of trust must be mentioned in it. 
• This deed needs to ensure that trust will act according to the laws and regulations. 

Key Documents Required for the Registration of Trust 

In India, the paperwork for Trust Registration are listed below:

• Minimum two photographs of the parties associated with the trust.
• PAN cards of the members involved in the trust.
• Trust deed with stamp value.
• Address evidence of the members.
• ID proofs of the person involved.
• If applicable, the trust members must authenticate themselves.
• Any utility bill as an address evidence. 
• Any evidence of the address of the trust’s registered office.
• Certificates of 80G and 12A registration from income tax departments for claiming deductions, if applicable.

Step by Step Process Trust Registration in India 

The following steps must be followed for Trust Registration:

• Choose an Appropriate Name: Choosing an appropriate and unique name by the relevant acts like the Emblems and Names Act 1950, Intellectual Property Rights Act and Trademarks and Copyrights Act.
• Select the Settlors of the Trust: Determining the settlers of the trust is necessary because without determining the settlers of the trust can't be formed. 
• Drafting of MOA: Prepare the MoA that is Memorandum of Association for the Trust. In this document the ultimate goals of the trust will be drafted. Make sure whatever purpose or objects are there in the MOA must be legally permissible ones. 
• Drafting the Trust’s Deed: This is one of the most important documents with respect to the registration of the deed of trust. In short if you will not draft this correctly there are chances the registrar will either reject your application for the registration or raise the query which will unnecessarily delay the process of registration. Hence it is necessary to draft it correctly. 
• Application Submission: Submission of Deed to the Registrar’s Office is the next step which one needs to complete. Once all the documents of your application are completed and ready to summit make sure to check them twice. 
• Certification: Obtaining the Certificate of Trust Registration after completing the process of registration lawfully. 
• Winding up of a Trust in India: The disclosure of a trust happens when all the properties and related properties of the trust are uniformly allocated to every beneficiary or others in a legal way directly or through resettlement. The trust members must solve any tax responsibilities that may arise as a result of asset transfers. Before completing all the compliances, duties and liabilities one cannot close up the trust in India. 

Why to Choose Whizseed for the Trust Registration? 

In India, registration of trust is done for the benefit of all the members including the trustor, trustee and a beneficiary in many different ways. Different types of trust exist in our country and one must understand all of them accurately before establishing a trust itself and getting them registered. That is where Whizseed helps you out. We will draft a deed that contains details about the parties of the trust, address and aims, and purpose of the trust. The various actions performed by the trust must be in accordance with the deed of trust. Some of the key features of Whizseed due to which you should opt us are: 

• Specialization: Expert in registration method.
• Speed: Efficient and expedited registration process.
• Compliance: Ensures full legal compliance.
• Personalized Service: Customized solutions based on client needs.
• Support: Throughout the process, help and direction were provided.