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 2 Trustees are necessary. There is no limit on the maximum number.
No educational qualification needed to become a Trustee.
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.
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.
The trust deed is the Memorandum of Association and Rules & Regulation of the Trust. Trust deed is the legal evidence of the trust.
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