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Creating Trusts under Indian Trusts Act 1882


Last Updated on February 9, 2024 by Kanakkupillai

In the Indian Trust Act of 1882, a trust is considered an arrangement where one person appoints another individual to look after his/her property or assets on behalf of a final party. Such an asset or property is vested to a trustee upon registration of the trust for beneficiaries in regard to structural, financial circumstances and operational needs.

Settlor and beneficiary

The settlor is the individual who creates the trust by giving another person (the trustee) ownership of a specific item with the clear direction that the asset be kept for the benefit of a third party. A person or a legal entity could be the settlor.

What is the settlor’s functional role?

The agreed-upon cash should be given by the settlor to the trustee and kept on the trust’s books for the benefit of the beneficiaries. The trustee must print a receipt to document what has happened. The trust is created at this moment as a result of the trust deed and the application of the agreed-upon sum:

  • The settlor has invested the control of assets under trust to a person called the Trustee.
  • The settlor has indicated beneficiaries for the trust deed, and the relevant consent of these people has been obtained by a trustee.

The trustee holds and administers the property in a fiduciary relationship on behalf of, for the benefit of, a third party known as –the beneficiary. In the “trust deed,” a specially named beneficiary or number of them can either be available or a suitably specific faction may choose. The settlor can also be declared as a beneficiary.

Types of trusts

Generally, there are two types of trusts in India: private trusts and public trusts.

When a trust is established for the benefit of one or more people who are firmly ascertained now or in the near future, it is referred to as a private trust. The Indian Trusts Act of 1882 governs privately held trusts. You can make a will or an inter vivos to establish a private trust.

Religious and benevolent trusts are two categories of public trusts. The necessary laws governing the recognition and enforceability of public trusts include the Charitable and Religious Trusts Act, 1920; the Religious Endowments Act, 1863; the Charitable Endowments Act, 1890; the Societies Registration Act, 1860; and the Bombay Public Trust Act, 1950.

Trust creation process

Requirement for registration of a trust deed with the local registrar under the Indian Trusts Act, 1882

    1. Trust deed on stamp paper with the necessary value
    2. A passport-size photo and a copy of the settler’s identification document
    3. One passport-size photo and a duplicate of each trustee’s identity document
    4. One passport-size photo and a duplicate of each witness’s identity documentation
    5. The settler’s signature appears on every page of the trust deed
    6. Two witnesses on the trust deed
  • Visit your neighbourhood registrar to register the trust deed and one photocopy. The settler’s signature on each page of the photocopy of the deed is also required. The settler, two witnesses, and their original identity documents must all be present in person at the moment of registration.
  • The original registered copy of the trust deed is returned, and the registrar keeps the photocopy.

Trust deed

A deed of trust, commonly referred to as a trust deed, is a legal document that is occasionally used in funded real estate transactions in place of a mortgage. A bank, escrow business, or title company, for example, may get the legal title to a property through a deed of trust and retain it until the borrower pays the lender’s loan.

Contents of a deed of trust

Below is a sample deed of trust with its contents:

This DEED OF DECLARATION OF TRUST was signed on this day ____ by the person who will be referred to as the AUTHOR OF THE TRUST; wherever the context so permits, this term shall mean and include the successors-in-office of the ONE PART; and

Whereas the Trust’s Author decided to create and establish a trust to conduct research in advanced medicine and acupuncture for the well-being of the community at large without caste, creed, etc. discrimination with objects and constitution as herein;

Whereas the Author of Trust has chosen to endow the said Trust with a nucleus of Rs. ____ (Rupees ____ only) in cash in order to achieve the aforementioned goals,

Whereas it is necessary and advisable to proclaim the said trust, establish it, and document its purposes and legal structure,

Appointment of trustees

The remaining trust members will choose a qualified individual to fill any openings on the Board of Trustees.

The trust is under the direction and management of the Board of Trustees, which also has the following powers:

(a) to establish and carry out the purposes and goals for which the trust’s funds will be used from time to time, and to allocate and distribute a portion of the trust’s funds to each of the purposes and goals as they see proper;

(b) to acquire any type of immovable property, whether it is for the trust’s purpose or as a source of revenue;

(c) to sell, mortgage, or otherwise dispose of any real estate owned by the trust;

(d) to incur whatever costs are deemed necessary and useful for carrying out the trust’s goals and administering the trust;

(e) to dispose of any real estate, personal property, or trust-owned assets by selling, leasing, mortgaging, or otherwise;

(f) to open one or more trust bank accounts with whatever bank or banks the trustees deem appropriate and to deposit trust funds in the accounts;

(g) To borrow money for and on behalf of the trust from banks, governments, universities, or other central and state government organizations with or without security;

(h) to hire staff of any kind that is required and useful for achieving the trust’s goals;

(i) to spend money on additional expenses that are incidental and necessary to achieve the trust’s goals;

(j) To begin, carry out, defend, compound, withdraw, compromise, adjust, refer to arbitration, or do other incidental and required activities regarding the trust’s business, as well as to sign and verify affidavits, pleadings, vakalats, and other documents;

(k) To assign all or all of the trustees’ powers to anybody; to establish any committee; and to create rules, bylaws, and other guidelines for how the trust’s business is conducted;

(l) Accepting gifts in kind or in cash to add to the trust funds generally or for any one or more of the trust’s outlined objects; and

(m) to create as many ad hoc committees as necessary for whatever purpose.

Mechanisms for appointing and removing trustees


In an express trust, the trustees will be chosen through a deed and may even be signatories.

There will be a precise list of trustees for a trust created by a will.

There is no cap on the number of personal property trustees; however, having more than four is uncommon, and it is inconvenient to have too many.


The trust’s trustees may resign or retire. However, a trustee may lose their position if they meet one of the following criteria: mental illness, bankruptcy, or staying abroad for more than a year.

Removal by a court

  • When the current trustee refuses to act or when the trustees are in disagreement, the court may step in.
  • For trust violations or “improper” behaviour, a court may also order the removal of a trustee; however, the rules under which it will exercise this authority are “somewhat vague.”

A conflict of interest with the trustee could lead to their dismissal. A conflict of interest does not necessarily necessitate the removal of the trustee, though.

Trust dissolution

A trust is terminated in the following circumstances:

  • The objective was accomplished.
  • The objective is now unlawful.
  • The objective cannot be accomplished, for example, when trust property is destroyed.
  • Revocable trusts can be revoked.
  • The trust’s intention may be changed with the consent of all beneficiaries who are able to sign contracts.


In conclusion, we can say that the beneficiary is equally liable for any infractions and has a variety of rights under the wording of the Trusts Act. Equal rights and obligations are granted to the beneficiary. According to research, the beneficiary must have a positive working relationship with the trust’s trustees in order to safeguard themselves against any trust abuses.

To establish trusts in accordance with the Indian Trusts Act of 1882, one can also contact the Chennai-based Kanakkupillai website. They provide reasonable and knowledgeable assistance to ensure compliance with the law, including help with registration and tax compliance. In this sense, they assist you in navigating the intricate legal and regulatory requirements.

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Kanakkupillai is your reliable partner for every step of your business journey in India. We offer reasonable and expert assistance to ensure legal compliance, covering business registration, tax compliance, accounting and bookkeeping, and intellectual property protection. Let us help you navigate the complex legal and regulatory requirements so you can focus on growing your business. Contact us today to learn more.