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TRUST DEED

(A Brief Introduction)

1.Definition of Trust. 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 anther 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 but for another or for himself and another.

2.Creation of Trust. A person who creates a trust is called the Author of the Trust or Settler, the person to whom the property is transferred on trust is called a Trustee and the person for whose benefits the property is transferred is called the beneficiary.

3.Deed of Trust. A trust relating to an immovable property is required to be created by a document and such document must state and contain five essential things with reasonable certainty namely;

(a) The intention on the part of the author of the trust to create a trust,

(b) The purpose of the trust,

(c) The beneficiary,

(d) The trust property and

(e) The transfer of the property to the trustee.

There cannot be trust without property.

4.Who can create a trust.Any person competent to contract can create a trust.

5.Who can be trustee. A trustee can be any person that is, an individual or a corporate body or corporate sole, capable of holding property and competent to contract.

6.Duties liabilities of trustees. The Indian Trust Act, 1882 lays down the duties, liabilities and powers of a trustee in general. Section 11 to 30 of the Act, prescribes the duties and liabilities.

Format of Trust deed

Note: This is only a draft format and not a format prescribed under any law. This format can be used with modifications suiting to your requirements wherever it is necessary. In case of doubt regarding payment of Stamp duty and Registration fee etc. contact the concerned Sub-Registrar / District Registrar.

Levy of Stamp duty on Trust deed entirely depends on the intention and the wordings used in the Trust deed. A Trust deed either can be stamped as a settlement as defined in Section 2 (q) of the Karnataka Stamp Act, 1957, read with Article 48 or as per Article 54 of the Schedule to the Karnataka Stamp Act, 1957 as the case may be.

Click here for Section 2 (q) of the Karnataka Stamp Act, 1957.
Click here for Article 48 and
Article 54 of the Schedule to the Karnataka Stamp Act, 1957
[You can download this Trust deed format]

   
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