{"id":11556,"date":"2022-08-06T06:58:00","date_gmt":"2022-08-06T06:58:00","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=11556"},"modified":"2022-08-06T06:59:38","modified_gmt":"2022-08-06T06:59:38","slug":"formation-of-a-trust-under-the-indian-trust-act","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/formation-of-a-trust-under-the-indian-trust-act\/","title":{"rendered":"Formation of a trust under the Indian Trust Act"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Indian Trust Act, 1882, governs the\ncreation and maintenance of private trust in India. A trust is created when a\nperson gives out his property to someone for the benefit of a third party.\nThere are three parties involved in the transaction these are i) Author- the\nperson who shall hand over the property, ii) Trustee- The person who shall look\nafter the property, iii) Beneficiary- he is the person who shall get the\nbenefits generated from the trusts. In this blog, we shall have an in-depth\nstudy of the formation of a trust under the Indian Trust Act.<\/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-6a3b75b3b76ff\" 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-6a3b75b3b76ff\"  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\/formation-of-a-trust-under-the-indian-trust-act\/#i\" title=\"&nbsp;\">&nbsp;<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#What_are_the_various_reasons_for_the_formation_of_a_trust\" title=\"What are the various reasons for the formation of a trust?\">What are the various reasons for the formation of a 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\/formation-of-a-trust-under-the-indian-trust-act\/#i-2\" title=\"&nbsp;\">&nbsp;<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#People_eligible_for_the_formation_of_a_trust\" title=\"People eligible for the formation of a trust\">People eligible for the formation of a trust<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#Perquisites_for_the_formation_of_a_trust\" title=\"Perquisites for the formation of a trust\">Perquisites for the formation of a trust<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#Procedure_for_the_formation_of_a_trust\" title=\"Procedure for the formation of a trust\">Procedure for the formation of a trust<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#Documents_required_for_formation_of_trust\" title=\"Documents required for formation of trust\">Documents required for formation of trust<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#How_can_trust_be_extinguished\" title=\"How can trust be extinguished?\">How can trust be extinguished?<\/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\/formation-of-a-trust-under-the-indian-trust-act\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"i\"><\/span>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_various_reasons_for_the_formation_of_a_trust\"><\/span>What are the various reasons for the formation of a trust?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A person can create a private trust for the\nfollowing reasons:<\/p>\n\n\n\n<ul><li>To Secure the assets from the claims of the creditors, in many cases it happens when an individual faces losses in business, the property that falls under the  trust cannot be used to settle claims<\/li><li>Keep the property aside for a specific purpose. For example, a grandfather may create a trust for the benefit of his grandchild.<\/li><li>Some people create trusts to ensure that the property is used for the welfare of their children and not their partners.<\/li><li>To ward off unwanted claims that might arise on the estate when a person dies.<\/li><li>To ensure that the property is preserved and managed after the author&#8217;s death.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"i-2\"><\/span>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"People_eligible_for_the_formation_of_a_trust\"><\/span>People eligible for the formation of a trust<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any person who is eligible to contract and in the case of minors, if permitted by a court with appropriate jurisdiction, shall be eligible to form a trust as per <strong>section 7 of the Indian trust act<\/strong><sup><a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/2327?sam_handle=123456789\/1362\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>. This shall include trusts created by Hindu undivided families, minors, women, association of persons and companies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Perquisites_for_the_formation_of_a_trust\"><\/span>Perquisites for the formation of a trust<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following things must be kept in mind\nbefore the formation of a trust;<\/p>\n\n\n\n<ul><li>The author must be sure that the declaration will be binding on him.<\/li><li>The items for which the trust is created must be clearly specified.<\/li><li>The beneficiaries for whom the trust is being made for should be mentioned in the deed.<\/li><li>The author should transfer the asset mentioned in the deed through an immovable order and distance himself from the ownership\/ enjoyment of the revenue from the said asset.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_the_formation_of_a_trust\"><\/span>Procedure for the formation of a trust<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>STEP 1<\/strong>&#8211; Creation of a  trust deed: An author must create a trust deed. The trust deed must clearly specify what the author wants to do with his property. It should state the trustees who shall be in charge of the estate, and finally, it should also mention the name of the beneficiaries as well. All of this must be created on a stamp paper of appropriate value.<\/li><li><strong>STEP 2<\/strong>&#8211; <strong>Registration of trust:<\/strong> The trust deed is registered with the registrar. The author needs to register this document with the local registrar and submit relevant photocopies wherever applicable.<\/li><li><strong>STEP 3<\/strong>&#8211;<strong> Witnesses:<\/strong> A  minimum of two witnesses must be present and their original identity proof to sign the document while registering the trust deed.<\/li><li><strong>STEP 4<\/strong>&#8211; Once all the formalities are completed, the registrar shall keep the certified copy of the deed and return the original registered copy to the concerned parties.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_required_for_formation_of_trust\"><\/span>Documents required for formation of trust<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong><a href=\"https:\/\/swaritadvisors.com\/trust-registration\" class=\"text-primary\">Trust<\/a><\/strong> deed to be prepared on a stamp paper of requisite value.<\/li><li>Id proof and a passport photo of the author.<\/li><li>If the property is self-occupied, a copy of the water and electricity bills must be attached. And if the property is taken on rent, then the rent agreement must be attached.<\/li><li>ID proof and a passport photo of the two witnesses.<\/li><li>Author&#8217;s signature on all the pages of a trust deed.<\/li><li>Signature of the two witnesses on the trust deed.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_can_trust_be_extinguished\"><\/span>How can trust be extinguished?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The law can end the trust in the following circumstances:<\/li><li>When the purpose of the trust has been fulfilled.<\/li><li>If the purpose for which the trust was created has been deemed unlawful.<\/li><li>For any reason, fulfilling the trust&#8217;s purpose has now become impossible. For example, the property of the trust has been destroyed.<\/li><li>If the trust has been revoked<\/li><li>If the purpose of the trust is modified by all the competent beneficiaries.<\/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>The author creates trust for the welfare of the beneficiaries. Indian Trusts Act 1882 lays down the regulations for creating trusts in India. A person who wants to create a trust deed must be in accordance with the act.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/differences-between-public-vs-private-trust\/\">Top Differences between Public vs Private Trust<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian Trust Act, 1882, governs the creation and maintenance of private trust in India. A trust is created when a person gives out his property to someone for the benefit of a third party. There are three parties involved in the transaction these are i) Author- the person who shall hand over the property, [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":11557,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[73],"tags":[1064],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11556"}],"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=11556"}],"version-history":[{"count":4,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11556\/revisions"}],"predecessor-version":[{"id":11561,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11556\/revisions\/11561"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/11557"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=11556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=11556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=11556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}