1. The author indicates with reasonable certainty, his intention to create a Trust.
2. The Trust must have a definite purpose. The aims and objectives have to be specified by the author of the Trust.
3. The Trust is made for the benefit of a specified individual or individuals who are called the beneficiary.
4. There has to be a certain amount of funds and / or property to set up a Trust i.e. Corpus.
5. Transfer of the property to the Trust. This however is not necessary when; a) The author is himself the sole trustee or, b) When the Trust has been created by a will.
6. The author (i.e. the person making the Trust) has confidence in the person whom he wants as a trustee.
7. The trustee accepts this responsibility.
So, a Trust is really a self initiative and calls for a certain amount of education and economic wherewithal.
1. Author of the Trust: The person who creates a Trust. In this case, it will be the parent of the child with mental disability.
2. Trustee: The person, the author of the Trust would appoint to operate the Trust funds and look after the needs of the child. The parents as authors of the Trust can also be the trustees.
3. Beneficiary: The person for whose benefit the Trust is formed. In this case, it would be the child. There can be more than one beneficiary. A parent can also be a co beneficiary.
4. Movable property: Includes money, jewellery and shares.
5. Immovable property: Includes property, land etc.
1. The corpus can include both movable and immovable property. There is no specified amount with which you can set up a Trust. It would depend upon how much you can or want to set aside.
2. You can build on the corpus during your lifetime and can also 'will' any property to the Trust. For example you may have a property that you are living in which you do not want to give to the Trust during your lifetime. You can transfer this property to the Trust through your 'will'.
3. A Trust can also be set up solely through a will i.e. all movable and immovable property will only become Trust property once the will is executed.
4. It is advisable to consult a chartered accountant on the question of how and when movable and immovable property can be transferred to and utilized for the Trust. The accountant will advise you on the tax implications.
1. When parent creates a Trust through a will- there is no need to transfer the property at the time of writing the will. However, at the time of execution of the will, the property will in due course be transferred to the Trust.
2. Parent as a trustee: When the parent creates a Trust and he, himself is a trustee- there is no need for transfer of property- he himself is holding the property in Trust. However, even though the property remains in the parents' name, the assets from the property will go to the Trust fund. The parent then can use them for his/her own benefit also, only if he is also a beneficiary. (i.e. a co-beneficary)
3. When parents appoint someone else as a trustee- here the parents need to transfer the property, in the name of the Trust.
1. Above 18 years
2. Is of sound mind i.e. is capable of understanding a contract and forming a rational judgment as to its effect upon his interests
3. Is not disqualified from contracting by any law to which he is subject
1. Make a Trust deed on a stamp paper
2. It is to be signed and the date affixed, by the author of the Trust and the trustee
3. You also have to get 2 witnesses to sign it. Anyone, who is a citizen of India, is of sound mind and is above the age of 18 years, can be a witness
4. You have to get a form of registration signed by the witnesses and along with the Trust deed; it is to be filed at the office of the Registrar of Trusts
5. A photograph and identification card of the author of Trust and the trustees have to be attached
• Specific Trust: There is/are a specific beneficiary or beneficiaries, whose share is naturally specified in the Trust deed. Here the trustee does not have any discretion in apportioning income of the Trust for the benefit of its beneficiaries. This means, the money or income the beneficiary is to get is fixed and is specified in the Trust deed. The trustee does not have the discretionary power to determine this.
• Discretionary Trust: Is where beneficiaries, though specific and ascertained, do not have specified shares in the income and property of the Trust. The manner of employment of Trust funds/income is left to the absolute discretion of its trustees.
1. A person who is capable to contract: is above the age of 18 years; is of sound mind i.e. can understand a contract and make a rational judgment as to its effect upon the interests of the Trust
2. Is capable of holding property
3. Is not disqualified from contracting by any law to which she/he is subject
Number of Trustees
• The number of trustees could be between one and five
• If there are more than one trustee, one of them is elected chairman
Retirement - A trustee may retire after giving a notice of x number of days. This should be specified in the Trust deed.
• To appoint employees and settle relevant terms
• Trustees can employ people for example driver, cook etc. and manage their payments out of the Trust fund
• To file suits on behalf of the Trust
• The trustee can apply to the court for opinion in management of Trust property: without instituting a suit
• To consult doctors, lawyers, chartered accountants or any other specialists
• To invest the Trust fund
• To draw upon the corpus of the Trust for recurring annuity/pension for the beneficiary
• To reimburse themselves out of Trust funds for all expenses incurred in the discharge of their duties
• To manage all assets of a Trust
• To open and maintain a bank account in any nationalized bank
• Care required from a Trustee: A trustee is to deal with the Trust property as carefully as a man would deal with such property if it were his own
• Trustee to execute Trust: The trustee is bound to fulfill the purpose of the Trust and to obey the directions of the Trust given at the time of its creation
• When a Trust is managed by a number of trustees and one of them dies/disclaims, the continuing trustees are required to take the necessary decisions
1.Trustees cannot renounce after acceptance - once accepted, the trustees cannot renounce the Trust except: If the beneficiary is competent to contract, then with his consent Or By virtue of a special power in the Trust deed Or with the permission of a principal civil court of original jurisdiction
2. Co-trustees cannot act singly, unless the Trust deed specifies otherwise
3. Trustees cannot delegate his office/duties unless: the Trust deed specifies so ; delegation is in the regular course of business ; delegation is necessary, the beneficiary, if capable to contract, consents
4. Trustees cannot use Trust property for their own profit or any other purpose unconnected with the Trust
5. He cannot buy the beneficiary's interest without the permission of a principal civil court, even after he has ceased to be a trustee