• Family Trust

I inherited a family trust from my late father. As part of the family settlement, all other beneficiaries of the trust were retired/released with release deed(S). The trust has now my family as the sole beneficiaries. 
The trust was formed originally in 1981, but was not registered. There was no income made by the trust.
Now, I would like to register the trust with new beneficiaries and apply for a PANCARD.

Please advise..
Asked 3 months ago in Family Law from United States
Religion: Muslim
Trust Deed is registered with the Local Registrar under the Indian Trusts Act, 1882 with the following requirements to be fulfilled:-
Trust deed on stamp paper
One passport size photograph and copy of the identity proof of all the trustees
One passport size photograph and copy of the identity proof of the settler
One passport size photograph and copy of the identity proof of the witnesses (at least two)
Settler’s signature on all the pages of the deed
A copy of income-tax registration is also needed.
Ajay Sethi
Advocate, Mumbai
23383 Answers
1228 Consultations
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Section 12AA of income tax act provides that  person in receipt of the income should make an application in Form No. 10A for registration of the trust or institution to the Commissioner before the expiry of a period of one year from the date of the creation of the trust or the establishment of institution, whichever is later.

2) Along with Form no. 10A (in duplicate), file the original (or certified copy of) Trust Deed, together with one copy thereof, under which the trust is set up (original copy of the deed if filed shall be returned).

3) copies of accounts of the trust since its inception or during the last three years, whichever is less, are required to be filled.





4)you can contact a local CA in this regard 

5)  you are at Liberty to form a new trust with new trustees  and settlor and beneficiaries 
Ajay Sethi
Advocate, Mumbai
23383 Answers
1228 Consultations
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The rate of stamp duty for  trust varies from state to state 

2) you can contact a local lawyer to draft trust deed 

3) Signature of settler on all the pages of the Trust Deed

4)  Witness by two persons on the Trust Deed

5) personal presence of settlor and 2 witnesses is required for registration of trust deed .

6) yiu cannot do the paper work and registration from USA as your personal presence is required 
Ajay Sethi
Advocate, Mumbai
23383 Answers
1228 Consultations
5.0 on 5.0
The rate of stamp duty for  trust varies from state to state 

2) you can contact a local lawyer to draft trust deed 

3) Signature of settler on all the pages of the Trust Deed

4)  Witness by two persons on the Trust Deed

5) personal presence of settlor and 2 witnesses is required for registration of trust deed .

6) you cannot do the paper work and registration from USA as your personal presence would be  requiredfor registration 
Ajay Sethi
Advocate, Mumbai
23383 Answers
1228 Consultations
5.0 on 5.0
1) i meant lawyer in mumbai as registration has to be done in Mumbai 

2) you can forward trust deed to me for review 


3) i can help you in this regard

4)since you are settlor of trust your presence is required in Mumbai for registration 
Ajay Sethi
Advocate, Mumbai
23383 Answers
1228 Consultations
5.0 on 5.0
1. The trust deed had to be compulsorily registered. A fresh trust deed can be executed now.  A private trust may be created inter vivos or by will. If a trust is created by will it shall be subject to the provisions of Indian Succession Act, 1925.

2. There must be a divesting of the ownership by the author of the trust in favour of the trustee for the beneficial enjoyment by the beneficiary. The objects of the trust must be precise and clearly specified. It is essential that the transferor of the property viz the settlor or the author of the trust must be competent to contract. Similarly, the trustees should also be persons who are competent to contract. It is also very essential that the trustees should signify their assent for acting as trustees to make the trust a valid one.

Ashish Davessar
Advocate, Jaipur
18256 Answers
450 Consultations
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1. When once a valid trust is created and the property is transferred to the trust, it cannot be revoked, If the trust deed contains any provision for revocation of the trust, provisions of sections 60 to 63 of the Income-tax Act will come into play and the income of the trust will be taxed in the hands of the settlor as his personal income

2. In a private trust the beneficiaries are one or more ascertainable individuals. Generally, a private trust is not a permanent one.
Ashish Davessar
Advocate, Jaipur
18256 Answers
450 Consultations
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1. Engage a lawyer in India to draft the trust deed.
2. Your personal presence can be dispensed with if you execute a POA in favour of someone to authorize him to register the trust deed on your behalf.
3. It cannot be registered before the Indian Embassy, albeit the POA may be attested by it.
Ashish Davessar
Advocate, Jaipur
18256 Answers
450 Consultations
5.0 on 5.0
1. Understand that the Trust was not registered. 

2. In whose name the trust properties stood originally?

3. If all other beneficiaries of the trust or the legal heirs of the deceased person in whose name the said properties are still standing agree, then a new trust can be formed and registered wherein you and your family members will be the beneficiaries,

4. You are required to get I.Tax registration for the said Trust and submit I.T.R regularly.

 
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
1. You shall have to form the trust the way you require now and get the same registered,

2. Your next step will be to apply for and obtain the I.Tax registration number and also the PAN CARD in the name of the Trust and keep on filing IT Return even if the amount of tax to be paid is NIL.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
1. You can get your Trust registered before the appropriate authority of your local Indian Consulate as per law,

2. However, most of the Consulates refuse to entertain directing the applicants to visit India and get it registered,

3. In the above event, you shall have to visit India and get the trust deed drafted by a local lawyer having expertise in this field and get the same registered.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
1. The lawyers of USA may not be of any use for drafting your trust deed for want of the required knowledge about Indian Trust Act,

2. You shall have to engage a lawyer in India from the place where you reside in India,

3. The Settlor and the Witnesses shall have to be physically present before the Registrar to register the Trust Deed,

4. It will be prudent on your part to engage an India lawyer to get your Trust Deed drafted and registered.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
The group of trustees may be incorporated as a board under the Charitable Trusts Act 1957 if the objects are charitable.
 Private trusts are governed by the Indian Trusts Act (1882) and are used for private purposes, such as running a private estate or institution. Private trusts are not given any tax benefits by the Government of India.
For registering a trust you need minimum two trustees (i.e. one settler and another person). You can decide the maximum number of trustees and this number must be mentioned in the trust deed. All the trustees together are called Board of Trustees.

List of documents required to register a  trust
1. Original Trust Deed or a certified copy.
2. Application for Incorporation of Trustees as a Board The application must be signed by the majority of trustees.
3. Statutory Declaration. The statutory declaration states: whether any Trustees hold any property as trustees for other trusts; that at a meeting of the Trust a resolution was passed approving incorporation; and that the person making the Declaration has been approved by the Trustees to make it.
Trusts are registered using a document called TRUST DEED. This document contains all the information about the Trust and is printed/written/typed
T Kalaiselvan
Advocate, Vellore
14158 Answers
128 Consultations
5.0 on 5.0
Not sure about A copy of income-tax registration is also needed. How would I get this done. I guess this must be done separately. The trust was not registered with income tax office. The trust was passive, with no income. Like to know if we can form a new trust deed with new settler and trustees and then register it with income tax office and then register it.

Instead of renewing the old unregistered trust which has no meaning at his stage, it would be better to register a newly formed trust by observing the formalities afresh.
Trust income is exempted from income tax. To avail this facility, after registration, you need to acquire a certificate from the Income Tax Department. This certificate is called u/s 12A
Donations to the public charitable trusts are also exempted from tax (i.e. the donor will not have to pay tax on the amount he donates to the trust subject to Tax Exemption Letter and provisions of Income Tax Act). For this, you need to acquire 80G certificate from Income Tax Department.
Please take due care while drafting Trust Deed and appoint a professional to write your own trust deed.
T Kalaiselvan
Advocate, Vellore
14158 Answers
128 Consultations
5.0 on 5.0
Following up on "you are at Liberty to form a new trust with new trustees  and settlor and beneficiaries"
In which case, would like to do this. Please advise how I can do this from USA. We have a trust deed document prepared. Like to know if this document MUST be written on a stamp paper (of what value), if so. How would I do this from here. Or can I create the trust deed document here and have it notarized and take this to the income tax office for registration. Will you be able to assist in this and also the subsequent process to get the PANCARD.

India does not have a national level law to govern charitable trusts. However, a few of the states have enacted Public Charitable Trusts Act (Like Bombay Public Trusts Act, 1950).  Thus the stamp duty and the stamp paper value may differ from one state  another, this you may clarify from the local registrar's office. 
An elaborate details about registering the trust deed and the requirements to be complied is given once again as given below:

1. Before you register your trust you will need to decide the following:

a) Name of the trust

b) Address of the trust

c) Objects of the trust(charitable or Religious)

d) One settler of the trust

e) Two trustees of the trust

f) Property of the trust-movable or immovable property (normally a small amount of cash/cheque is given to be the initial property of the trust, in order to save on the stamp duty).

2. Prepare a Trust Deed on stamp paper of the requisite value (8% of the
value of property of the trust in Delhi. The rate varies from state to state)

3. Requirement for registration of Trust Deed with the Local Registrar under
the Indian Trusts Act, 1882:

a) Trust Deed on stamp paper of requisite value (as stated on point no.2 above)

b) One passport size photograph & copy of the proof of identity of the settler

c) One passport size photograph & copy of the proof of identity of each of the two trustees.

d) One passport size photograph & copy of the proof of identity of each of the two witnesses.

e) Signature of settler on all the pages of the Trust Deed

f) Witness by two persons on the Trust Deed.

4. Go to the local registrar & submit the Trust Deed, along with one
Photocopy, for registration. The photocopy of the Deed should also
contain the signature of settler on all the pages. At the time of registration,
the settler & two witnesses are required to be personally present,
alongwith their identity proof in the original.

5. The Registrar retains the photocopy & returns the original registered copy
of the Trust Deed.
T Kalaiselvan
Advocate, Vellore
14158 Answers
128 Consultations
5.0 on 5.0
 you can contact a local lawyer to draft trust deed ", do you mean to say a lawyer in USA.
In which case, I will have the trust deed created here in USA.

Local lawyer is a local lawyer in India.







"personal presence of settlor and 2 witnesses is required for registration of trust deed", does this mean I as settlor will have to arrive in Mumbai with the trust deed made in USA for its registration in Mumbai, India.

You have rightly understood.





Summarizing, I will have a new deed with same name created here in USA and then arrive in India for its registration. Please correct me if I am mistaken.
In case, can I register the deed through Indian Embassy here. I am also an OCI, will it make it easier.

For a trust to be formed in India, it shall be registered in India and not with the embassy at US. 
You may prepare a deed anywhere but it shall be registered in India.
T Kalaiselvan
Advocate, Vellore
14158 Answers
128 Consultations
5.0 on 5.0
a charitable trust never earns income in respect of he income defined in IT Act. you may register this trust and no need to approach income tax office. if you  are the sole beneficiary you can re construct this trust or dissolve it in favour of government. you can register it under the provision of Indian trust act. if you want to use it in favour of muslim charities you may register it under waqf act.
Shivendra Pratap Singh
Advocate, Lucknow
2792 Answers
41 Consultations
4.9 on 5.0
you may approach before charity commissioner of Maharashtra and get its registration under section 18 of Bombay public trust act. A trust is created by a Deed of trust, or by a Will or by a Scheme framed by a Court or by a written constitution. B.P.T. Act is enacted by the Maharashtra govt instead of indian trust act. 
Shivendra Pratap Singh
Advocate, Lucknow
2792 Answers
41 Consultations
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