FORMATION OF TRUST


No clear statutes are available for the formation of a Charitable Trust. The only Central Legislation available is the Charitable and Religious Trust Act, 1920. This Act is very limited in its application, and does not provide any effective control over Public Charitable Trusts.

Preparation of trust deed

To form a valid Public Charitable Trust it is always desirable to prepare a Trust Deed. Such Trust Deed should clearly specify and satisfy the certainties of a Trust. For the sample format of trust deed, click here.

A trust deed, generally, incorporates the following:

(i)
the name(s) of the author(s)/ settlor(s) of the trust
(ii)
The name(s) of the trustee(s)
(iii)
the name(s) if any, of the beneficiary/ies or whether it shall be the public at large;
(iv)
the name by which the trust shall be known;
(v)
the place where its principal and/or other offices shall be situate;
(vi)
the property that shall devolve upon the trustee(s) under the trust for the benefit of the beneficiary/ies;
(vii)
an intention to divest the trust property upon the trustee(s);
(viii)
the objects of the trust;
(ix)
the procedure for appointment, removal or replacement of a trustee, their rights, duties and powers, etc;
(x)
the rights and duties of the beneficiary/ies;
(xi)
the mode and method of determination of the trust

Registration of trust deed

Registration is to be made as per the provisions of the Registration Act, 1908. It may be noted that the trust deed and not the trust is registered. The deed has to be registered with the Sub-Registrar of the registration department of the respective State Governments. For Public Charitable Trusts in the State of Maharastra and Gujarat, registration is to be made under The Bombay Public Trust Act, 1950.