Trusts are a business structure created with noble intentions to promote the development of sciences, literature, and other worthy causes. They serve purposes such as alleviating scarcity, providing education to those in need, and offering medical support. Trust registration is officially registering a trust under the Trusts Act of 1882. This legal step ensures that the trust is recognized and operates within the framework of the law. Trust registration provides legal validity and establishes its existence as a separate entity.
Parties involved in the Trust Registration Process
The trust registration process involves the following parties:
Trustor:
The trustor is the person who establishes the trust. They are typically the owner of the assets or property being placed in the trust.
Trustee:
The trustee is an individual or entity entrusted with the responsibility of managing and overseeing the trust. They hold and administer the trust property on behalf of the trustor and for the benefit of the beneficiary.
Beneficiary:
The beneficiary is the person for whom the trust is created. They are the intended recipient of the benefits, assets, or property held within the trust. The beneficiary can be a third party, known to both the trustor and trustee, and they are entitled to receive the benefits according to the terms and conditions of the trust.
Types of Trusts
Trusts can be classified into various categories based on the activities they undertake. You need to understand these types to navigate how to register a trust in India. Here are the different types of trusts:
Public Trust
Private Trust
Public Cum-Private Trust
Private Limited TrustsPrivate Limited Trusts are established to carry out activities for specific individuals, families, or close associates. These trusts can have beneficiaries closely related to the trust'strust's founders. Private limited trusts are governed by The Trusts Act of 1882.
Public Limited Trusts
Public limited trusts are typically created to benefit the general public. They are often established for charitable, educational, and religious purposes and are governed by specific statutes such as the Religious Endowments Act of 1863, the Charitable and Religious Trust Act of 1920, or the Bombay Public Trust Act of 1950. Charitable and religious trusts are the most common types of public trusts in India.
Public Cum-Private Trust
This type of trust serves both public and private purposes. It can utilize its income for the benefit of the public and specific individuals or families. The beneficiaries of a public cum-private trust can be a combination of public and private individuals.
To be eligible to obtain a trust registration certificate, the following criteria must be met:
A trust must be formed by at least two or more individuals.
The trust must be established in accordance with the provisions outlined in the Indian Trusts Act of 1882.
None of the parties involved should be disqualified under any prevailing law in India.
The objectives of the trust formation must not contravene any existing laws in India.
The trustee must conduct their activities in a fair and just manner.
The trust formation should not be contrary to public interest or any other applicable laws.
The activities carried out by the trust must not cause harm to any individual.
The trust activities should align with the objectives stated in the trust deed.
The trust deed must be drafted appropriately, reflecting the genuine interests of the parties involved in forming the trust.
The trust has more than two purposes, both purposes must be valid. If one goal is reasonable and the other is invalid, the trust cannot be formed.