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Express Trust

Trusts are widely regarded as important catalysts to push sustainable development in India. A settler creates an express trust over his assets, to be operational either in his lifetime or after his death.

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Trust Registration requires important documents like trust deed and rental agreement. Our service experts help you with the complete procedure for the formation of trust while taking care of all the legal intricacies


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What is Express trust?

The term “express trust” refers to an agreement that is created in precise character and typically takes the form of a written document. Express trusts are often used in common law jurisdictions as methods of preservation of wealth or enhancement. An express trust is an agreement that is derived from the wishes of the donor, or settlor in a well-documented format. This type of trust is the opposite of an unexpressed trust, which is concluded from the law or a pattern of dealings with other parties.

Generally, law requires only a simple formality to create an express trust. In certain jurisdictions, an express trust may even be stated orally. Typically, a settler would record the temperament, where the real property is to be held in trust or the value of property in the trust is large. Where legally the title to the property is being transferred to a trustee, a 'settlement deed' or 'Trust Instrument' may be used. Where the property is to be continuously held by the person making the trust, a 'declaration of trust' will be appropriate.

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Elements of Express trust:

An express trust will have the following elements:

Any trust that has the above elements are classified as an express trust. Types of express trusts include revocable trusts, irrevocable trusts, discretionary trusts, and charitable trusts.

Irrevocable express trust:

A trust is an agreement between the settlor and trustee, established for the benefit of a third party. In this contractual arrangement wherein the trustee of the trust holds the property or asset of the settler, for the benefit of the one or more beneficiary.

An irrevocable trust is a trust that the grantor cannot change/modify/alter/terminate after the trust deed is signed and comes into effect. This cannot be changed once the asset is transferred to the trust. The Grantor, therefore, cannot exercise control over the asset.

The major idea behind forming an irrevocable trust is that it offers ultimate asset protection from the creditors, as the asset does not become the property of the trust owner anymore.

The second reason for forming an irrevocable trust is to prevent the property from being added to the assets of the trust owner. In this way, on the occurrence of the death of the grantor, it provides full protection to the assets within the trust from estate tax.

Benefits of Express Trust

  • The express trust can be formed easily by the form of declaration, by transfer of property on trust, and by the direction of the beneficiary to the trustee.
  • The trust can be private, charitable, fixed, and discretionary trust.
  • Similarly, the character of the express trust can be either revocable or irrevocable.
  • An express trust under the revocable trust is a kind of trust which can be canceled at any time until the survival of the author.
  • Similarly, the express trust under the irrevocable trust is a kind of trust which cannot be canceled once it comes to force. I.e after the asset is transferred to the trustee.
  • If the character of an express trust is a discretionary one, the trustee has the exclusive powers to make distributions of the trust property to the beneficiaries. No beneficiary enjoys any earmarked interest in the trust property, whereas the interest of a beneficiary in the trust property is already determined and specified.
  • A trust can not be easily dissolved, although a new provision has been implemented allowing dissolution, it needs fair reasons to be submitted to the charity commissioner's office and it has large income tax obligations such as a tax on deferred income under section 115TD of the Income TaxAct, 1961.
  • Checklist for the creation of the trust

    The following features have to be present.

  • The certainty of the author’s intention,
  • The certainty of an object,
  • The certainty of the beneficiary
  • The certainty of trust property.
  • The law of trust allows the subject matter to be property & to be transferable to the beneficiary.
  • A trust shall be formed for a lawful purpose. Where the object of trust law is unlawful, the trust is void.
  • In India, Trust Law requires that the intent of trust should be lawful.
  • Unless;
    • a. It is prohibited by the law,
    • b. It is fraudulent,
    • c. The court content that trust as immoral or opposed to public policy.
  • According to sec-7 of India's trust law says, that each person competent to contract can create a trust. But when the trust is established on behalf of a minor, permission should be sought first from civil court jurisdiction.
  • How to register for Private Express Trust

    The following steps have to be taken to register as a private express trust in India,

  • Initially, there must be a written document present for expressing the asset or property to be transferred from the settlor/donor.
  • A Trust Deed must be drafted on stamp paper of the stipulated value.
  • The Trust Deed must disclose the name of the trust, trust address, the character of the trust (i.e charitable or religious), the settlor name, and two trustees of the trust as well as the property type, i.e., either movable or immovable property.
  • Documents required for the registration of private express trust

    The stamp paper value will be a certain percentage of the total value of the Trust’s property. Further, this percentage value varies from state to state.

  • Trust Deed
  • Self-certified copy of the identity proof of the settler (passport, voter ID, Aadhaar card, driving license or any such photo ID)
  • Self-certified copy of the identity proof of each trustee (passport, voter ID, driving license, Aadhaar card, or any such photo ID)
  • Address proof of the registered office of the trust( registration certificate or electricity/water bill)
  • PAN card
  • A non-Objection certificate signed by the landowner
  • Preparation of Trust Deed on a Stamp Paper
  • After submitting the required documents, you can obtain a certified copy of the Trust Deed within one week from the registrar’s office.

    FAQs on Express Trust

    Can foreigners be included as ex-officio or nominated trustees?

    There will not be an issue in having foreigners as ex-officio or nominated trustees. The trust deed must be suitably drafted in the way to have Ex-Officio directors or nominated trustees.

    How long can a trust can exist after its registration?

    The trust after registering provides perpetual existence. A trust will cease to operate if the subject matter of the trust is liquidated. A trust cannot be dissolved once it is legitimately created.

    Can an Indian Public Charitable Trust execute activities outside India?

    The different acts in which an NGO can be registered do not prohibit activities outside India. In this regard, the FEMA and FCRA are silent, and, under the liberalized RBI system, current account transactions are allowed without prior authorization. There would also be no issue in foreign exchange transactions, according to FEMA guidelines.

    Under section 11(1)(c) of the income tax act, it bans the operations of Indian NGOs outside India without CBDT's clear authorization. An Indian NGO spending money outside India on activities would be subject to income tax on that portion of its income.

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