As per Indian Trusts Act, 1882
A “trust” is 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: “author of the trust”: “trustee”: “beneficiary”: “trust-property”: “beneficial interest”: “instrument of trust”:—the person who reposes or declares the confidence is called the “author of the trust”: the person who accepts the confidence is called the “trustee”: the person for whose benefit the confidence is accepted is called the “beneficiary”: the subject-matter of the trust is called “trust-property” or “trust-money”: the “beneficial interest” or “interest” of the beneficiary is his right against the trustee as owner of the trust-property; and the instrument, if any, by which the trust is declared is called the “instrument of trust”.
OF THE CREATION OF TRUSTS : Lawful purposes—A trust may be created for any lawful purpose. The purpose of a trust is lawful unless it is (a) forbidden by law, or (b) is of such a nature that, if permitted, it would defeat the provisions of any law, or (c) is fraudulent, or (d) involves or implies injury to the person or property of another, or (e) the Court regards it as immoral or opposed to public policy. Every trust of which the purpose is unlawful is void. And where a trust is created for two purposes, of which one is lawful and the other unlawful, and the two purposes cannot be separated, the whole trust is void. Explanation.—In this section, the expression “law” includes, where the trust-property is immoveable and situate in a foreign country, the law of such country.
The following elements are essential for the formation of a Charitable Trust:
1. An Author or Settlor of the Trust
2. The Trustee
3. The Beneficiary
4. The Trust Property or the Subject Matter of the Trust
5. The objects of the Trust
As per Section 6 of the The Indian Trusts Act, 1882 a Trust is created when the Author of the Trust indicates with reasonable certainty by any words or acts the following:
• An intention on his part to created a Trust
• The purpose of the Trust
• The Beneficiary
• The Trust Property
• And transfers the Trust Property to the Trustee.
Reasons for forming a Charitable Trust
Charitable Trusts are formed in India for one or more of the following reasons:
• Discharge of the Charitable an/or religious sentiments of the Author, in a way that ensures public benefit.
• For claiming exemption from Income Tax, as the case may be, in respect of incomes applied to charitable or religious purposes.
• For the welfare of the members of the family and/or other relatives, who are dependent on the settlor of the Trust
• For the proper management and preservation of property.
• For regulating the affairs of a provident fund, superannuation fund or gratuity fund or any other fund constituted by a person for the welfare of its employees.
Registration Process for Public Charitable Trust
• Choose an Appropriate Name for the Trust
This is the first step in registering the Trust. Additionally, the name so suggested should not come under the restricted list of names as per the provisions of the Emblems and Names Act, 1950.
• Decide the Settlers or Authors and Trustees of the Trust
There is no defined provision with regards to the number of settlers/authors. However, in most of the cases there is typically one author.
Further, there is no limit on the maximum number of trustees. But a minimum of two trustees are necessary to form a Trust. Also, the author generally cannot be the trustee. And he needs to be a resident of India.
• Formulate Memorandum of Association (MOA) and Trust Deed of your Trust
A Trust Deed is legal evidence of your Trust’s existence and it contains the rules and regulations of your Trust. This document also contains the bylaws regarding the changes, removal or addition of the Trustees.
Memorandum of Association (MOA)on the other hand represents the charter of the Trust. It defines the relationship of the Trustor with the Trustees and specifies the objectives for which such a Trust is formed. Such a document should contain the names, addresses and occupations of all the members along with their signatures.
• Documents Required to be Submitted at the Time of Registration
• Trust Deed
• Self attested copy of the proof of identity of the settler (Aadhaar card, passport, voter ID, driving license or any other photo ID)
• Self attested copy of the proof of identity of each trustee (Aadhaar card, passport, voter ID, driving license or any other photo ID)
• PAN card
• Proof of the registered office address of the Trust (electricity/water bill or registration certificate)
• Non Objection letter signed by the landowner