How To Form A Trust

Sponsored links

Definition of Trust

Creation of a trust, particularly relating to an immoveable property is also a species of transfer of property. Trust is defined in section 3 of the Trust Act, 1882 as ” 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. In simple words it is a transfer of property by the owner to another for the benefit of a third person along with or without himself or a declaration by the owner, to hold the property not for himself and another.

Requirements of a Trust

A trust is not a contract of agency to hold the property, as in that case there would be no transfer of the property. In trust there is a transfer from the owner to the trustee subject to certain terms and conditions. Bailment is also a kind of trust, but in bailment also there is no transfer of any interest in the property, but only a transfer of possession without ownership. Thereof, a trust is essentially a transfer of property by one to the other to be held by the other for the benefit of some person or for carrying out some object. It is no also a sale because a sale cannot be conditional and in sale there is consideration which is absent in a trust. The purpose of a trust must be lawful, that is,

It should not be forbidden by law.
It should not be of such nature that, if permitted it could defeat the provisions of any law.
It should not be fraudulent.
It should not involve or imply injury to the person or property of another or
It should not be such as would be regarded by a court as immoral or opposed to the public policy.

Where a trust is created for two purposes one of which is lawful and the other is not and the two purposes cannot be separated, the whole trust is void.

Creation of Trust

A trust of immoveable property can be created by two ways. One by a non-testamentary document and another by a testamentary document such as a will. In other words, a trust regarding a immoveable property cannot be created orally but it must be by a document duly registered. A trust of a moveable property can be created either by a document or delivering the property to the trustee with necessary oral directions. If the directions are given in writing it would amount to a trust by a non-testamentary document which may or may not be registered.

A person who creates a trust is called the settlor, the person to whom the the property is transferred on trust is called a trustee and the person for whose benefit the property is transferred is called the beneficiary or “cestuique trust” .

Deed of Trust

A trust relating relating to an immoveable property is required to be created by a document and such document must state and contain five essential things with reasonable certainty namely :

the intention on the part of the author of the trust or settlor to create a trust.
the purpose of the trust.
the beneficiary.
the trust property, and
transfer of the property to the trustee.

Declaration of Trust

A trust can also be created by the author himself declaring that he would hold the property, not as owner, but as a trustee for the benefit of some person or persons including himself and in that case the transfer of property is not necessary as one need not transfer his property but in such a case the declaration of trust is by the owner and he alone should be the trustee. Such a declaration would, however, require registration under the Registration Act.

Testamentary Trust

A trust can also be created by a testamentary document that is by Will and the same conditions as mentioned in Section 6 of the Trust Act are required to be fulfilled. such a Will also does not require registration

A trust is also created :

by application of employed trust or
as a constructive trust or
as derivative trust.
But they are created by fiction by of law and cannot be subject matter of conveyancing

Who can Create a Trust

A Trust can be created by any person competent to contract or even by a manner with the authority of a competent court and respect of any property which is transferable and over which the author of the trust has dispossessing power.

Trust, Private and Public

A Trust may be Private and Public.

When the purpose of the trust is to benefit an individual or a group of individuals or his or their descendants for any legal person and who is capable of holding property, it is a private trust.

When the purpose of the trust is to the benefit the public or any section of the public, it is public trust.

Who can be a trustee

A trustee can be any person that is, an individual or a corporate body or a corporate sole, capable of holding property and competent to contract. and he must accept the trust.

Ads. by Google

About the Author

- Vakilno1 is a group of Law Enthusiasts and Legal Experts in India with a passion to provide the latest info and articles on Indian Legal System

Displaying 29 Comments
Have Your Say
  1. manohar malkani says:

    how do we complain in case a registered trust is not following proper rules

  2. tjjohn says:

    This is an informative article. However it is not very clear whether a major beneficiary ( Or other beneficiaries )of a private trust be the trustees of the Trust.

    As a case example. I would like to create a private trust of all my properties and be the trustee myself during my life time. Can I appoint one of my sons as a trustee after my death.

    Thanks

    tjjohn

  3. praveen says:

    i want to open a unit of my trust with other name ,is it possible ?

  4. MIR NUR ALAM says:

    Please send the guide line to provide the better opertunately of skill development for the young boys & girls in the rural areas.

  5. A executed a will for wife and son for her/his life time and thereafter creat a trust for public charity. Will not execute so fat. Meanwhile the property was sold by successor of author to third person by regd.saledeed. What happen reg. property and trust deed.

  6. Jastej S (Team Vakilno1) says:

    The executor of the Will or the beneficiary can file a case for the recovery of property.

  7. Sir, I like to start a Public Charitable Trust For My Home Towm, if possible pls mail me Sample Trust Deed.

    Thank you,
    Ranjan Agrahari

  8. Sirs
    I came across an instance.
    The Deed of Trust did not have any express Clause that it could create ,float or declare a Trust.
    But this Trust , taking refuge under the rights of dispossession/alienation/disposal/demising, by a deed of declaration floated a Trust

    Is this New Trust valid .Whether its corpus fund and assets woould be subject to its Management, OR THE MANAGEMENT of the original Mother-Trust ?
    Kindly help us design our further course pending for more than almost a year

  9. Sir, I like to start a Public Charitable Trust in My Home Town[in public place(Dewalay)], if possible please mail me Sample of Trust Deed and required other docoments.

    Thank you,
    Abhisek Anand

  10. Basntkumar says:

    Where private Trust are Registered?

  11. sir,

    I want to create a trust for the purpose to run a school.

    pls if possible mail me the format for trust deed

    Thanks

    with regards

  12. Shakeel says:

    Sir, I would like to start a religious Trust in my city to comunity services to my comunities but i don’t have any place to start. I am thinking to form a trust and ask my comunities to donate so that land can be buy and other facilities can be create to offer to my communities free of cost. Please mail me Sample of Trust Deed and required other docoments so that deed can be made registered the same.

    Thank you,
    Shakeel

  13. asokan.L says:

    hi,

    i need model of trust deed in tamil. pls send me to my mail id.

    thanks

    regards

    asokan

  14. Can a foreigner be a trustee for the Indian Trust

  15. shylaja says:

    SIR,
    i need model of succession op in english, please sent to my email id

  16. hi,
    i need model of trust deed in hindi/english. pls send me to my mail id.
    thanks
    regards

  17. amit says:

    I AMIT CHANDNA START A TRUST IN THE PUBLIC INTEREST. PL SEND ME PAPER FORMALITIES

  18. Sagar Patil, says:

    I would like to start trust for public interest at my village. I request you to guide me in following ares:
    1)Can trust be formed by contribution of my own money and without any immovable property?
    2)Can trust raise donation?
    3)Sample of trust deed in English
    4)Legal formalities in Karnataka

    With Regards
    SAGAR PATIL

  19. raghub says:

    Dear sir, can I start public trust with out immovable property.. Is private charitable trust also need property ?

  20. i have been searching for the text for trust it very good it contained all the short points which helps easy to understand and ready material for forming of a trust.

  21. sayeed says:

    Sir. My friends would like to start trust for the people those need money for medical expenditure. Suggest me the requirments to start the trust

  22. what is difference btw religious and normal trust how can we open a religious trust and how many people r involved in it and how many trustees can take part to form a big religious trust

  23. Ammad Feroze says:

    Sir, I like to start a Charitable Trust School For My Home Town, if possible pleas mail me Sample Trust Deed & guide me regarding all the formalities regarding this matter

  24. Aruna Mittal says:

    Sir,In my father’s own house a trust for Art development is going to be operational shortly. I want to know whether there is any risk regarding the house property in future. is my father has to take any preventive step to protect his property, If yes please guide me

  25. RAJESH says:

    where i can contact to making own trust . can u give me the some office no- who is the best in Delhi?

    thanks

  26. ARUN P T says:

    Sir,

    We are a group of people who studied in a school. We would like to form a public trust to do lot of activities which can be benefited for the society. Please advice.
    1)Does the trust requires an office?
    2)Can trust raise donation?
    3)Sample of trust deed in English
    4)What other advices can be given on this thought.

    Thank You
    Arun P T

  27. can u pls tell us the procedure for the formation of private trust in bihar? we run a institute for tailoring, painting,beautician etc. in patna. Do we need to have a property for the formation of private trust? Who can be a trustee? we want to form the trust for getting our institute regd with NCVT. thanks

  28. m.sudhakar says:

    i want to build a one sai baba temple in my own land, which want to be trust is it possible, if its what is the procedure to create a trust kindly guide me. thanks

  29. r c lalwani says:

    Sir,I am holding title on piece of land situated on Khasra No 775/1 ad measuring 1121 sq ft at Bilaspur.Another gentleman who is holding title of land situated at 766/21 has placed Board on my plot stating that my land belongs to him.Because of this Board placed on my plot, my sell agreement with THIRD party is not moving ahead.What remedy i have (I)for removal of this Board from my plot and (ii)for the cancellation of that contract as this has become time barred too but party is insisting to go ahead with the agreement as it is to their advantage.Kindly advice me how to deal these two separate and independent issues.Also please suggest me a senior Civil case expert at RAIPUR/Bilaspur

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>