Skip to main content

How to form a Trust in India

 What is a Trust

A trust is an obligation placed on a person with whom confidence or authority is placed. It is a confidence reposed on him by conveying to him the legal title to the property which he is to hold for the benefit of others.


Trust is defined in section 3 of the Trust Act, 1882 as” an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another or of another and the owner.

 


Requirements of a Trust

A trust is not a contract of agency to hold the property in this there is a transfer from the owner to the trustee subject to certain terms and conditions. A trust is essentially a transfer of property by one to the other to be held by the other for the benefit of some person or for carrying out some object. The purpose of a trust must be lawful, that is,


It should not be forbidden by law.


It should not be of such nature that, if permitted it could defeat the provisions of any law.


It should not be fraudulent.


It should not involve or imply injury to the person or property of another or It should not be such as would be regarded by a court as immoral or opposed to the public policy.


Where a trust is created for two purposes one of which is lawful and the other is not and the two purposes cannot be separated, the whole trust is void.

 


Creation of Trust

A trust can be created by two ways. One by a non-testamentary document and another by a testamentary document such as a will.


A trust regarding an immoveable property cannot be created orally but it must be by a document duly registered. A trust of a moveable property can be created either by a document or delivering the property to the trustee with necessary oral directions. If the directions are given in writing it would amount to a trust by a non-testamentary document which may or may not be registered.


A person who creates a trust is called the settlor, the person to whom the property is transferred on trust is called a trustee and the person for whose benefit the property is transferred is called the beneficiary or "cestui que trust”.

 


Deed of Trust

A trust relating to immovable property is required to be created by a document and such document must state and contain five essential things with reasonable certainty namely:


the intention on the part of the author of the trust or settlor to create a trust.


the purpose of the trust.


the beneficiary.


the trust property, and transfer of the property to the trustee.

 


Declaration of Trust

A trust can be created by the author himself declaring that he would hold the property, not as owner, but as a trustee for the benefit of some person or persons including himself and in such case the transfer of property is not necessary but the declaration of trust is by the owner and he alone should be the trustee. Such a declaration would, however, require registration under the Registration Act.

 


Testamentary Trust

A trust can also be created by a testamentary document i.e. Will and the same conditions as mentioned in Section 6 of the Trust Act are required to be fulfilled. Such Will also does not require registration.


A trust is also created by the application of employed trust or as a constructive trust or as derivative trust.  But they are created by fiction by of law and cannot be a subject matter of conveyancing.

 


Who can Create a Trust?

A Trust can be created by any person competent to contract or even by a manner with the authority of a competent court and respect of any property which is transferable and over which the author of the trust has dispossessing power.

 


What are the types of a Trust?

A Trust may be Private and Public.


When the purpose of the trust is to benefit an individual or a group of individuals or his or their descendants for any legal person and who is capable of holding property, it is a private trust.


When the purpose of the trust is to the benefit the public or any section of the public, it is public trust.

 


Who can be a trustee?

A trustee can be any person that is, an individual or a corporate body or a corporate sole, capable of holding property and competent to contract. and he must accept the trust.

Comments

Popular posts from this blog

INCOME TAX SECTION 32AD - Investment in new plant or machinery in notified backward areas in certain States

 Description (1) Where an assessee, sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new asset for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new asset for the assessment year relevant to the previous year in which such new asset is installed. (2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger or re-organisation of business referred to in clause (xiii)or cla

60 Minute Marriage Counselling Session On Phone

Description A 60 minute phone call with an expert Marriage\Relationship Counselor to discuss your marriage\relationship related issues. Counselling aims to resolve issues and improve communication in a relationship. Couples’ counselling works with both people in the relationship, however sessions can start with one individual, working towards the involvement of the other partner. What's Included a) 60 minute phone call with the counselor where you can discuss all your issues and seek guidance. What's Not Included a) Counselling session via meeting

Send Legal Notice for Divorce

 India being a secular country derives a large part of its laws from various religious practices. One such area of law is Divorce law of India. A divorce case in India can be initiated by either party based on the procedure relevant as per the law applicable to the parties. However, the procedure for divorce always starts with sending a legal notice.   Either party can send a legal notice to the other spouse intimating his/her intent to initiate legal proceedings for divorce. Sending a legal notice acts as a formal way of communication by one party to the other acting as a warning and at the same time creating chances for a last attempt for conciliation, if possible. Connect with an expert lawyer for your legal issue   What is a legal notice for divorce? A legal notice refers to a formal communication to a person or the opposite party in a case, informing him/her about one’s intention to undertake legal proceedings against him/her. Therefore, a legal notice for divorce is a formal inti