Meaning of Trust
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, of another and the owner. Trusts in India are governed under the provisions of the Indian Trusts Act, 1882.
The person who creates the trust is known as the “Author of the trust” / “Settlor”. The person to whom the property is transferred on trust is called the “Trustee”. The person for whose benefit the property is transferred is called the “Beneficiary”. The subject matter of the trust is called “Trust Property”. The “Beneficial Interest” or “Interest” of the beneficiary is the right against the trustee as owner of the trust property.
Types of Trust in India
Trust can be registered either as a Private Trust or a Public Trust under Indian Trusts Act 1880.
In India, majority of the Trusts are registered as Public Charitable Trust, a form of not-for-profit entity. Public Charitable Trusts can be established for a number of purposes, including social service, education, healthcare, provision of facilities for recreation, and any other object of general public welfare.
A Trust is regulated by respective State Trust Acts. In case the State in which a Trust is planned does not have a separate Trust Act then it will be regulated by Central Indian Trusts Act, 1882. In order to register a trust, minimum 2 trustees and 1 settler is required.
Private Trust: A private trust governed by Indian Trusts Act, 1882, is created for specific individual(s) / beneficiary(ies) who are identified under the instrument of trust. A private trust is created for a specific purpose and terminates on expiry of the purpose of the trust or happening of any event identified under the instrument of trust or after the death of the beneficiary(ies).
Public Trust: A public trust is set up for the benefit of general public at large. In case of a public trust, the beneficiaries are incapable of being ascertained. In case of dedication of a trust property to a public trust, it is essential that there be an unambiguous and definite intention to part with the trust property for charity for the benefit of the beneficiaries.
Trust Incorporation Document : Trust Deed
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This information is in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Mind Sync does not accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any information provided herein. On any specific matter, reference should be made to the appropriate advisor.