Business trust is a form of business organization which is similar to a corporation, in which investors receive transferable certificates of beneficial interest. The trustees are administered it for the advantage of its beneficiaries who hold equitable title to it. They administer the trust based on the terms set forth in the declaration of trust. The beneficiaries receive certificates of beneficial interest as evidence of their interest in the trust, which is freely transferable. Profits and losses resulting from the use and investment of the trust property are shared proportionally by the beneficiaries according to their interests in the trusts.
In some states, a business trust is subject to the laws of trusts whereas in other states the laws of corporations or partnerships govern its existence. For purposes of federal Income Tax laws and state income tax laws a business trust is considered as a corporation.
Business trusts are also known as Massachusetts trusts or common-law trusts.
Every trust has the following basic characteristics
Documents Required for Trust Registration
Step 1: Selection of Name
First thing is to select a unique name of your trust, the name should not violate or infringes someone else name or trademark.
Step 2: Drafting of Trust Deed
The trust deed needs to be drafted wherein the parties to the deed shall be settler (author of the trust deed), the trustee and the beneficiary.
Step 3: Registration of Trust
A trust deed is a document which requires mandatory registration before the registrar of the trusts having jurisdiction.
Step 4: PAN, TAN and Bank A/C
After registration of the trust, the next step is to apply for allotment of PAN number and TAN and thereafter opening of a bank A/C.
Advantages of a trust
The purpose for which a public trust can be created is the benefit of general public, and the same must be clearly prescribed in the trust deed, as it guides it functioning in the course of time. Generally, a public trust is created for setting up a school, colleges, other educational initiatives, hospital, old age homes, orphanage, for promotion of child health and their empowerment, welfare of weaker section of society, and for fulfillment of Corporate Social Responsibilities (CSR) by companies under section 135 of the Companies Act, 2013.
The registration of Trust or Trust Deed Registration is a one and same thing and each state have prescribed a distinct profess for trust registration. As such, there is no uniform trust registration form to register a trust. The basic documents to register a trust is the trust deed and KYC documents of its author, trustee and witness of the trust deed.
For trust registration the trust deed does not require any specific certification from any professional consultants for trust registration, however, you may need our services for proper drafting of the trust deed, in obtaining the appointment with the registrar of trusts and operational assistance while being present in the registrar office for registration of trust deed.
A trust without a corporate trustee will have a person that legally owns the property on trust for the beneficiaries. A corporate trustee is a company that is established to hold legal title to the property in trust for the beneficiaries.
Yes, but you should be aware that if a trustee distributes income to someone under the age of 18, they will be subject to a substantial amount of tax.
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