How To Form A Charitable Trust? – A Step By Step Guide

Two Hands Holding A Text Called Charity.

What is meant by charitable trust?

A charitable trust is developed to perform charitable activities and remain unsuitable for commercial activities. It may earn profits by trading activities however the profits should be used only for charitable purposes and should not be distributed to members. If you have plans to start a charitable trust, you should know the process involved in society registration. It differs from state to state or country to country. Ensure to check your country- NGO society registration website to get complete details.

A charitable trust can function exactly like an individual person. It can raise mortgages, hold bank accounts, raise mortgages and hold all kinds of investments and assets until it functions as per the powers finalized in the trust deed.

If you are thinking of society registration, you need to register as per the 1957 Charitable Trust Act. The trust should exclusively or principally exist for:

· A charitable reason as per the law of the country or
· Any purpose which is educational or religious whether or not the purpose is charitable as per the country law.

What is the purpose of society registration or charitable trust registration?

Image of Society Registration Written In A White Background.

The charitable purpose would be an objective of the trust or the reason for the society is developed. Some of the purposes that remain as the foundation of charitable trust registration or society registration are as follows:

· The help of poverty
· The advancement of education
· The advancement of religion
· Other purposes that aids to the community

It is also generous to develop facilities for leisure time activities and recreation if the facilities are offered for public benefit or interest of social happiness.

What is the registration process involved in public charitable trust?

A trust is established when the trust’s author mentions with reasonable certainty in the form of acts or words. It is necessary for the society or public charitable trust to register with the Charity Commissioner officer who has complete rights over the trust. If you are thinking to do society registration, you have to follow the below-mentioned steps.

Step 1: Select the right name for your charitable trust. It is an important step involved in registering the trust. When selecting the name, ensure to see that the planned name does not interfere with any type of patronage by any state government or the Indian government. There is no constraint in utilizing names which are previously recorded as a Charitable trust in the Registration office. If the registrar refuses to accept the name in the registration office, you can lodge a complaint with higher officials and necessary action will be taken.

Step 2: Find the author or settler and executors of the planned trust. In most cases, there should be a single author or Image That Represents The Charitable Trust Quotes In A White Background.settler. It is possible for even an illiterate to become a trustee. The minimum age limit to be a trustee is 19 years for male and 18 years for females. But still, in a certain case, the average age of both male and female that is 19.5 years is considered.

Step 3: Develop regulations and rules and MOA (memorandum of association) for the trust. It is referred to as trust deed. It is extremely important and serves as the lawful evidence of the Trust’s existence. There are various clauses in the trust deed. It includes name clause, overall body member clause, object clause with beneficiaries, registered office clause and trustee and settler clause.

Step 4: Arrange all the necessary documents that are necessary at the submission time. It is also necessary to have a trust deed. Trusts are irrevocable except if it is stated in the charitable trust deed. It means it cannot be closed or wound up.

Step 5: Collect all the necessary documents, trust deed, properly attested photocopies and submit to the local registrar. The settler has to sign each of every page of trust deed’s photocopy. During registration, two witnesses and settler should physically be with their ID proofs.

Step 6: Once you submit the documents and complete the formalities, you will receive the registration certification within 7 working days. It is not easy to follow each and every procedure. Certain registrar will verify the address by sending an official letter as part of verification.

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