A Trust is a legal contract in which the owner of the property (the settlor) transfers the property to a trustee who will hold it for the benefit of a third party (the beneficiary). Trusts are generally formed for charitable, religious, or private purposes and are governed by the Indian Trusts Act, 1882 for private trusts and under state law for public charitable trusts.

Trusts are widely used in India to serve non-benefit objectives such as education, healthcare, social welfare, and community development. The public charitable trust must register so that it can obtain legal status and benefits like tax exemptions under Sections 12A and 80G of the Income Tax Act.

Trust Registration involves preparing a trust deed, mentioning the objectives, details of trustees, management provisions, and utilization of funds. It is executed on non-judicial stamp paper and submitted to the local sub-registrar office along with proofs of the trustees' and settlor's ID and address.

Participants in the Process of Registering a Trust

The registration of a trust involves three key roles: the Settlor (also known as the Truster), the Trustee, and the Beneficiary. Each has a vital contribution to make in establishing and running the trust legally and ethically.

1. Trustee (Settlor):

A trust is established by the settlor, who can also take on the role of trustee.The Settlor transfers ownership of some assets or property to the trust and defines its purpose by issuing an official document called the Trust Deed. The Truster designates the objective of the trust—education, charity, medical aid, or some other social cause—and appoints trustees to operate it.

2. Trustee:

Trustees are the individual or group of individuals who are charged with the responsibility to deal and manage the trust assets in terms of the directions given in the Trust Deed. They are legally required to act in the interests of the beneficiaries and ensure the purpose of the trust is achieved without profit or misuse.

3. Beneficiary:

A beneficiary is the person or group entitled to receive the advantages or assets distributed by the trust. The beneficiaries may be given financial support, services, or support depending on the trust's purpose. The beneficiaries are privileged to receive the benefits as provided by the Truster in the Trust Deed.

TYPES OF TRUST

In India, trusts are mainly divided into two categories based on their purpose and nature: Private Trusts and Public Trusts. Both of them are for different purposes and according to different legal provisions.

1. Public Trust:

A Public Trust is created for the benefit of the general public or a large part of society. It is typically created for charitable or religious purposes such as education, healthcare, relief to the poor, or promotion of art and culture. Public trusts are regulated by state legislations in the form of Public Trust Acts and involve rigorous compliance and transparency. Examples include charitable hospitals, schools, and old-age homes.

2. Private Trust:

A Private Trust is created in favor of specified persons or a defined class. Private trusts are normally created for the management of family wealth, assets, or property. Private trusts fall under the Indian Trusts Act, 1882. Private trusts are not open to the public and are kept for private or family purposes.

3. Public-Cum-Private Trust:

This type of trust combines elements of both public and private trusts, serving the interests of the general public as well as specific individuals.For example, part of the income can go to charity, and the rest to family members of the settlor.

There are diverse types of trusts, each with its own formalities under the law and benefits depending on the intended purpose and scope.

Benefits of Trust Registration

Registration of a trust is legally, financially, and societally beneficial in many ways, especially for those who desire to work for charitable, educational, religious, or social welfare causes. Some of the top benefits include::

1. Legal Recognition:

A registered trust gains a legal status under the Indian Trusts Act, thus giving it an official identity. This makes entering into legal agreements, opening bank accounts, and acquiring property in the name of the trust possible.

2. Tax Exemptions:

Trusts that are officially registered can apply for tax exemptions under Sections 12A and 80G of the Income Tax Act. This benefits the trust by allowing it to save taxes and receive donations as donors are also given the advantage of deduction of tax.

3. Credibility and Transparency:

Registration enhances public confidence and trust, enabling mobilization of funds from the public, corporations, and government agencies with ease. Registration also promotes transparency and accountability in the operation of the business.

4. Protection of Assets:

Once registered, the assets of the trust cannot be used or claimed by anyone without authority. Trustees have a duty under law to deal with the assets wisely according to the intended purposes.

5. Easy Succession and Administration:

A registered trust ensures continuity since the trustees may be replaced or appointed under the trust deed. This makes the company long-term sustainable.

Trust registration is a requirement for any individual or organization that intends to have sustainable social impact with the power of law.

Requirements for Trust Registration

India has the Indian Trusts Act, 1882 (private trusts) and state legislations (public charitable trusts) to regulate it. Legal registration of a trust involves some main requirements to be fulfilled.

1. Trust Deed:

The Trust Deed is the key legal document that outlines the trust's name, objectives, information about the settlor and trustee, the method of administration, and the operational guidelines. It must be duly signed by the settlor along with two witnesses.

2. Settlor and Trustees:

There must be at least one Settlor (Truster) who creates the trust and one or more Trustees who administer it. Such persons must be residents of India and competent to contract as per Indian laws.

3. Beneficiaries:

There must be identification of the Beneficiaries of the trust, i.e., the individuals or groups who are responsible to receive its services or support.

4. Address Proof

A proper proof of the trust's registered office is required, along with NOC from the property owner (if rented).

5. Identification Documents:

The PAN card, Aadhaar card, and passport-size photos of the settlor and the trustees are required for registration.

Once all the requirements are done, the trust deed is submitted to the local sub-registrar office for registration.

How The Legal Team help in Trust Registration

Registering a trust can involve complex documentation and legal procedures, but The Legal Team makes the process simple, quick, and hassle-free. Our experienced professionals guide you at every step, ensuring that your trust is registered legally and efficiently.

We start by understanding your objective, whether it’s for charitable, religious, educational, or social purposes. Based on your goals, we help you draft a clear and legally sound Trust Deed that outlines the purpose, trustees, beneficiaries, and rules of operation.

Next, we assist in collecting and verifying all necessary documents like ID proofs, address proof, photographs, and NOC for the registered address. Our team ensures that all paperwork is complete and error-free to avoid delays.

Once the documents are ready, we help you submit the trust deed at the sub-registrar office, coordinate with officials, and ensure successful registration. We also assist in applying for PAN and tax exemptions (12A & 80G), if needed.

With The Legal Team, you get expert legal support, transparent pricing, and timely updates throughout the process. Whether you’re an individual or a group, we help you register your trust with confidence and peace of mind.