The Trust Act, 1882 defines a Trust 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”.
The Trust is divided into two categories: Public and Private. To determine whether a Trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public.
The trust can be incorporated by Hindu Undivided Family, Company, Association of individuals and all the people who are capable to enter into a contract. The trustee can be the person who is the owner of the property or any person who is eligible for the contract.
In general, Trusts may be established for the purpose like, relief of Poverty or Distress, Education, Medical Relief, and other activities in the interest of Social Welfare and Public Benefit excluding purposes that relate exclusively to religious teaching or worship.
Registration of Trust in India
A Trust can be incorporated by any person in India who shall be competent to enter into a contract, having in his/her title on any property which is transferable. The person incorporating the Trust is called the “SETTLOR” and the person to whom the property is transferred on trust is called a “TRUSTEE”. The person or group of person for whose benefit the property is transferred is called the “BENEFICIARY”.
If the property to be transferred to the Trust is immovable, then the Trust must be created by the execution of a Trust Deed that is duly registered. In case the Trust is created by the transfer of movable property, then the Trust can be created by the property owner himself orally or in writing declaring that he would hold the property, not as owner, but as a Trustee for the benefit of some other person(s).
Under the Trust deed, the settlor transfers the title of the identifiable property to the trustees and makes it obligatory for the trustees to work and manage the trust as per the terms and conditions specified in the TRUST DEED.
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