Q.1 How to form a Trust’? 

Ans: a) A trust can be formed as per Section 4 of Indian Trust Act 1982 for a lawful purpose;

b) A trust should have a document written (Trust Deed) and signed by trustees or a sole trustee;

c) A trust can be formed through a will also; There is no definite form to create a trust. Objectives of the trust should be clear and unambiguous;

Q.2 Who can form a Trust?

Ans: a) A person capable of making contract can form a trust;

b) Trust can be formed on behalf of minor with permission of Civil Court

  • Minimum and Maximum number of Trustees

Minimum 2 Trustees are necessary. There is no limit on the maximum number.

  • Educational qualification of Trustees

No educational qualification needed to become a Trustee.

  • Age limit

Minimum age to become a trustee is 18 years in the case of female and 19 in the case of male. However, an average of 19.5 years is considered in general.

  • Residential status of Trustees

A trustee must be a resident of India. Foriegners, OCI card holders and NRIs residing abroad for more than 6 months cannot become member of a trust.

  • Trust Deed

The trust deed is the Memorandum of Association and Rules & Regulation of the Trust. Trust deed is the legal evidence of the trust. 

  • Clauses in Memorandum & Regulation
  • Name Clause
  • Settler and Trustee
  • Object Clause and beneficiaries
  • General Body
  • Membership clause
  • Subscription clause
  • Meeting Clause
  • Committee/Governing Body Clause
  • Auditor
  • Appointment, removal and replacement of Trustees
  • Right, duties and powers of trustees
  • Intention to divest the trust property upon the trustees
  • Property that shall devolve upon the trustees under the trust
  • Contents of a Trust Deed
  • Name and address of the settler/author
  • Name and address of trustees
  • Name of the trust
  • Minimum and maximum number of trustees
  • Address of the registered office of the trust
  • Purpose of formation of trust
  • Objectives of trust
  • Rules and regulation of trust
  • Information about opening bank account
  • Tenure of the trustees
  • Designation of trustees if any, responsibilities with compensation for the professional services they are intended to render. Board of trustees are not entitled to draw remuneration. They can only take compensation for the professional services they are rendering to the trust.
  • Date of execution of the trust deed.
  • Details of the trust fund set up by the settler and the movable and immovable property divested in the trust fund.
  • Details of sources and activities through which income is earned and deposited in the trust fund.
  • Utilization of trust fund for the benefit of beneficiaries of trust.
  • Right, duties and limitations of trustees
  • Details regarding number and manner of holding meeting in a year
  • Procedure to modify or alter any clause in the trust deed
  • Conditions under which a trustee shall ceases to exist

Q.3 What is the stamp duty to be paid for a Trust Deed?

1. Rs.500/- if only money is contributed by the author of trust or if immovable property is convyed where in the author remains as the sole trustee.

2. Same duty as conveyance if the immovable property is conveyed and the author is not a trustee or a sole trustee

Q.4 What is the fee for registration of trust deed?

Ans: As per Article III of table of fees under Karnataka Registration Rules 1965, fee shall be paid at 1 percent on the total of value shown by the trustee or value of movable or immovable property shown in the trust deed.

Cancellation of trust

A trust can be cancelled on the following grounds as per Sec. 78 of The Indian Trust Act 1882:

a) Trust can be cancelled at the will of the trustees;

b) Trust can be cancelled if there is provision for cancellation in the deed.

c) If author of a trust creates trust for the purpose of repayment of his debt and if this is nor informed to the creditor author can cancel the trust.

Q.5 Can the defects in the trust be rectified by amendment?

Yes, amendment can be made a rectification or supplementary deed.

Documents for registration of Trust

1. Trust deed on stamp paper

2. Two passport size photograph

3. Self attested copy of PAN and ID proof

4. Signature of settler on all pages of trust deed

5. Proof of registered office address (Electricity Bill/Water bill etc)

6. NOC from land owner with his identity proof

7. Proof of property registered in the trust name

Tags:

Author Bio

Qualification: CA in Job / Business
Company: Finmatrix Strategic Consulting Private Limited
Location: Bangalore, Karnataka, IN
Member Since: 31 Jul 2019 | Total Posts: 1
A passionate professional who likes to contribute to the fraternity View Full Profile

More Under Corporate Law

4 Comments

  1. B S Krishna says:

    What is the Registration charges to be paid for revocation or cancellation of a private trust with author as the sole trustee having only an immovable property in Karnataka

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

May 2021
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930
31