To form a public charitable trust it is very important that the objects of the Trust must be of charitable nature & of general public utility. The Charitable Endowment Act, 1890 defines ‘charitable purpose’ as a purpose for the relief of the poor, education, medical relief and advancement of any other object of general public utility but does not include a purpose which relates exclusively to religious teachings or worship.
No clear statutes are available for the formation of a Charitable Trust. The only Central Legislation available is the Charitable and Religious Trust Act, 1920. This Act is very limited in its application, and does not provide any effective control over Public Charitable Trusts.
The basic Elements for the formation of trust are:
As a general rule, any person, who has power of disposition over a property, has capacity to create a trust of such property. According to section 7 of the Transfer of Property Act, 1882, a person who is competent to contract and entitled to transfer the property or authorized to dispose of transferable property not his own, either wholly or in part and either absolutely or conditionally, has ‘power of disposition of property’.
Thus, two basic things are required for being capable of forming a trust – power of disposition over property and competence to contract.
To form a valid Public Charitable Trust it is always desirable to prepare a Trust Deed. Such Trust Deed should clearly specify and satisfy the certainties of a Trust.
This is the basic step in registering your trust. While choosing name take care that the proposed name should not suggest any kind of patronage by the government of India or any state government. It should not under the restricted list of names as per the provisions of Emblems and Names Act 1950. However there is no restriction in using names that are already registered as a trust in the Registrar office. In case the Registrar refuse to register your trust under a given name in spite of it not violating any of the other rules.
Step 2: Determination of the settler/Author/Trustees: Determine the settler/Author and trustees of the intended trust. In case of the number of the settler/Authors there is no clearly defined rules. It is subject to the decision of the sub-registrar at the registrar office. However in most cases traditionally there is one settler or author. Minimum 2 trustees are necessary and there is no limit on the maximum number.
A trust deed, generally, incorporates the following:
Registration is to be made as per the provisions of the Registration Act, 1908. It may be noted that the trust deed and not the trust is registered. The deed has to be registered with the Sub-Registrar of the registration department of the respective State Governments. For Public Charitable Trusts in the State of Maharashtra and Gujarat, registration is to be made under The Bombay Public Trust Act, 1950.
2.3. Documents Required for Registration
Cost of Registration
The Trust can be registered with any settlement amount (technically known as the Trust Property) starting from Rs. 1,000/-. The registration fee depends upon the value of property of the Trust.