{"id":11475,"date":"2022-07-30T10:20:13","date_gmt":"2022-07-30T10:20:13","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=11475"},"modified":"2022-09-14T06:14:31","modified_gmt":"2022-09-14T06:14:31","slug":"private-trust-registration-in-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/","title":{"rendered":"Private Trust Registration in India: Requirements and Procedure"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Trust is an instrument used to secure the interest of a settlor so that the future of his beneficiaries regarding the property remains secure. These beneficiaries are usually minors who can&#8217;t look after and protect their interests. in this blog we discuss Private Trust Registration.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b755974d00\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b755974d00\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Constituents_of_a_Trust\" title=\"Constituents of a Trust:\">Constituents of a Trust:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#What_is_a_private_trust\" title=\"What is a private trust?\">What is a private trust?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Who_can_create_a_private_trust\" title=\"Who can create a private trust?\">Who can create a private trust?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Benefits_of_Private_trust_registration\" title=\"Benefits of Private trust registration \">Benefits of Private trust registration <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Types_of_Private_Trusts\" title=\"Types of Private Trusts:\">Types of Private Trusts:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Requirements_for_Private_Trust_Registration\" title=\"Requirements for Private Trust Registration\">Requirements for Private Trust Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Points_to_be_kept_in_mind_while_drafting_a_Private_trust_deed\" title=\"Points to be kept in mind while drafting a Private trust\ndeed:\">Points to be kept in mind while drafting a Private trust\ndeed:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Process_of_Registration\" title=\"Process of Registration:\">Process of Registration:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/private-trust-registration-in-india\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Constituents_of_a_Trust\"><\/span>Constituents of a Trust:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are four parts of a trust these are:<\/p>\n\n\n\n<ul><li><strong>The settlor:<\/strong> A settlor is a person who is responsible for the creation of the trust<\/li><li><strong>Trustee:<\/strong>&nbsp; is a person who is appointed to look after the property for other&#8217;s benefit,<\/li><li><strong>Beneficiary:<\/strong> Is the person for whose welfare the trust is established<\/li><li><strong>Trust Property:<\/strong> The property on which the entire transaction is based on.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_private_trust\"><\/span>What is a private trust?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before we begin with what is a Private\nTrust Registration lets learn what a private trust is.<\/p>\n\n\n\n<p>The private trust is created for the benefit of one\/many individuals who shall be within a given time may be definitely ascertained. If the trust is created for the welfare of relatives, friends or family members etc., such trusts are called Private trusts. <\/p>\n\n\n\n<p>When a trust is created, it ensures that\nthe money\/property is used only for the purpose stated i.e the wellbeing of the\nsettlor&#8217;s family and in the manner trustee deems it fit to be handled.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_create_a_private_trust\"><\/span>Who can create a private trust?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A trust can be created by:<\/p>\n\n\n\n<ul><li>A person who is competent to enter into a contract as specified under the<strong> Indian Contracts Act<\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/acts\/indian-contract-act.aspx\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup><strong>.<\/strong><\/li><li>The Authorization of a competent court with respect to the transfer of property, usually on behalf of a minor.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_Private_trust_registration\"><\/span>Benefits of Private trust registration <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are many reasons why people prefer Private trust registration; a few are enlisted below:<\/p>\n\n\n\n<p><strong>Protection of assets:<\/strong> Creditors cannot claim a property that falls under Private trust ownership. If a property falls under the purview of &#8220;Private trust ownership, &#8221; creditors cannot lay a claim over it. However, if the trust is deliberately created to evade creditors, the courts can intervene and attach the disputed property in question. In case a person wants to create a trust to safeguard the interest of his wife and children, then he can purchase an insurance policy under the Married Women Property Act (MWPA) scheme. <\/p>\n\n\n\n<p><strong>Assists\nin the management of Assets:<\/strong> Assets involved in the\nprivate trust shall be regulated as per the directions mentioned in the trust\ndeed. The asset management aspect of the private trust is beneficial when\ncircumstances like age, health and mental wellbeing of the person can hamper\nthe maintenance of the asset in question. Nowadays, these services are rendered\nby companies, corporates, banks and other trusteeship services.<\/p>\n\n\n\n<p><strong>Helps\nprevent family disputes:<\/strong> When the assets are handed\nover to the trusts, they are governed by the objectives mentioned in the trust\ndeed. These objectives dictate issues like- how the property must be divided,\namongst whom it must be divided and in what portion. Once the deeds are clearly\ndefined, it streamlines the process, thereby preventing any possible family\ndisputes.<\/p>\n\n\n\n<p><strong>Doesn&#8217;t require Courts intervention:<\/strong> The creation of trusts helps the trustee define how the property is to be utilized easily, which can be done without any intervention from the courts. However, courts tend to oversee the developments in situations where a will is involved.<\/p>\n\n\n\n<p><strong>Fulfils\nsettlor&#8217;s wishes:<\/strong> Trust allows the settlor to add\nin terms and conditions that he seems necessary. By doing so, the settlor can\nmake sure his wishes relating to the property can be carried out even after his\ndeath.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Private_Trusts\"><\/span>Types of Private Trusts:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Private Trust can be divided into two\ncategories; these are<strong>:<\/strong><\/p>\n\n\n\n<ul><li><strong>Revocable trusts:<\/strong><\/li><\/ul>\n\n\n\n<p>Revocable trusts\nare private trusts that give the settlor authority to alter the terms or\nterminate the trust once it has been created. These kinds of trust cannot\nsafeguard a property as the properties under this trust can be taken away from\nthem. It is like an alternative to will as properties in these trusts are not\ngiven away, and later they can be taxed on the settler&#8217;s behalf. <\/p>\n\n\n\n<ul><li><strong>Irrevocable Trusts:<\/strong><\/li><\/ul>\n\n\n\n<p>Irrevocable\ntrusts can be classified into two categories; these are:<\/p>\n\n\n\n<p><strong>Non-Discretionary Trust: <\/strong><\/p>\n\n\n\n<p>In this kind of\ntrust, the settlor has total control over the terms\/ norms of the trust. He has\nthe power to decide which beneficiary gets the benefit and the quantum of this\nbenefit. If the settlor himself turns out to be the primary beneficiary, then\nthe settlor will be the one who is taxed.<\/p>\n\n\n\n<p>\u00a0<strong>Discretionary Trust: <\/strong><\/p>\n\n\n\n<p>A discretionary\ntrust is a type of private trust that is the opposite of a non-discretionary\none. In such trusts, the trustee has the authority to decide on asset size and\nproportion that shall be given out to the beneficiary. In this case, the\nsettlor shall provide the trustee with the list of beneficiaries only, i.e. He\nshall not be involved in the distribution of property.<\/p>\n\n\n\n<p>Before the\nprivate trust registration, the settlor must specify the type of trust in the\ndeed. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirements_for_Private_Trust_Registration\"><\/span>Requirements for Private Trust Registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following things are necessary for the\nregistration of Private Trust Registration;<\/p>\n\n\n\n<ul><li>One must have the trust deed\ndrafted on stamp paper.<\/li><li>A copy of identity proof and a\npassport photo of all the trustees involved.<\/li><li>A copy of identity proof and a\npassport photo of the settlor.<\/li><li>Signature of two witnesses and\ntheir photo and id-proof.<\/li><li>The settlor must sign all the\npages of the deed.<\/li><li>A copy of income tax\nregistration is also required.<\/li><li>Audit reports of Income and\nexpenditure and balance sheet for the past three years.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Points_to_be_kept_in_mind_while_drafting_a_Private_trust_deed\"><\/span>Points to be kept in mind while drafting a Private trust\ndeed:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For Private Trust Registration, a person\nmust create a trust deed. Certain points need to be kept in mind these are:<\/p>\n\n\n\n<ul><li>The trust deed must specify the\nIntention and objective to create the trust.<\/li><li>The beneficiaries of the trusts\nshould also be listed in the deed.<\/li><li>The deed must define the trust\nproperty to be transferred by the settlor unless it is stated under the will.<\/li><li>If trust is created during the\nsettlor&#8217;s lifetime, more properties can be added to it.<\/li><li>The trust should also mention\nwhether the trust in question is to be made Revocable\/ irrevocable or\ndiscretionary (a system where the trustee&#8217;s decision is final), Non-discretionary\n(where the settlor decides who the property is devolved to).<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_Registration\"><\/span>Process of Registration:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following is the procedure for Private\nTrust Registration:<\/p>\n\n\n\n<ul><li>Once the <strong><a href=\"https:\/\/swaritadvisors.com\/trust-registration\" class=\"text-primary\">trust<\/a><\/strong> deed is drafted, it must be executed on a stamp paper of appropriate value.<\/li><li>The settlor and the witnesses must sign the trust deed.<\/li><li>When the trust deed is finally executed, it must be registered with a Local Registrar.<\/li><li>After registration, the registrar will keep a photocopy of the deed and hand the original trust deed back to the settlor.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To sum up, a person creates a private trust\nto devolve his property amongst his beneficiaries, including friends, family\nand relatives during or after his lifetime. It helps manage and distribute the\nsettlor&#8217;s property in a simple and conflict-less manner. The process of Private\ntrust registration is relatively straightforward and can be done easily\nthroughout the country.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trust is an instrument used to secure the interest of a settlor so that the future of his beneficiaries regarding the property remains secure. These beneficiaries are usually minors who can&#8217;t look after and protect their interests. in this blog we discuss Private Trust Registration. Constituents of a Trust: There are four parts of a [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":11478,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[73],"tags":[1056],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11475"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=11475"}],"version-history":[{"count":5,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11475\/revisions"}],"predecessor-version":[{"id":11940,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11475\/revisions\/11940"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/11478"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=11475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=11475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=11475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}