Private Trusts v. Wills

Date : 2021-06-11

Private Trusts:

What is Private Trust?

A private trust is a kind of trust formed or created for the benefit of one or more individuals other than a public or charitable purpose. The sole purpose of the trust is for financial benefit of one or more beneficiaries instead of public benefit.
The creation of private trust shall ensure that the assets are used for the benefit of the beneficiaries or his/her family members and in the way the trustee wishes it to be handled.

Who can be Parties to the Trust?

In total, there are three parties while forming a  trust - 
(i) A settlor, refers to a person who creates the trust; 
(ii) The beneficiary, refers to a person for whose benefit the trust has been formed and 
(iii)The trustee, refers to a person who is appointed by the settlor to manage the trust.

Does a private trust need to be registered?

As per section 5 of the Indian Trusts Act, 1882 states that it depends on the nature of the property and they are discussed below:
Immovable Property: 
One shall create a private trust by a non-testamentary instrument in writing. Also, it should be signed by the trustee and registered. However, if the non-testamentary instrument is formed through a will, then it is not necessary to register it.
Movable Property: 
In case of a moveable property, a trust can be created as in the case of an immovable property or by transferring the ownership of the property to the trustee. Therefore, it is mandatory to register a trust.

How to Create a Private Trust in India?

A private trust can be created and registered by following the give steps below:
* One shall draft a Trust deed on stamp paper of the stipulated value.
The deed shall disclose the name of the trust , the address of trust, the settlor name, the nature of trust (charitable or religious), trustees of the trust and the property type (movable or immovable property). 

Wills:

What is a Will?

The word “will” refers to a legal document by which a person (“the testator”) can distribute his/her assets as per his wishes among one or people after his/her death. Any person who is an adult, is of a sound mind is capable of making a will.

Pros of Will Registration In India:

*  Nobody can tamper, destroy, lose or steal the will.
*  The will is in safe custody of the registrar.
*  No individual has an access to the will without a written permission from the testator until his/her death.
*  In case, a registered will is uncontested it might be possible to mutate a leasehold property in the favor of the legal heirs without obtaining a probate of the will.

Cons of Registration Will:

*  Revocation of a registered will is cumbersome when compared to the revocation of an unregistered will.
*  If a registered will is revoked, the subsequent will made by the person should also be registered.

What is the procedure for registering a will?

A will registration takes place at the Sub-registrar’s office. One must submit address proof, photographs and the witnesses to sign the will. The witnesses have to bring their photographs and address proofs as well.
* After the will is drafted, two witnesses shall accompany the testator to the registrar’s office for will registration.
* After the registration process is over, the will can be kept with the lawyer or in a bank locker. Also, the Sub-registrar has the authority to deposit registered will.
* In case one wants to withdraw the will from the registrar’s office, the testator shall personally send a request or through an authorized agent.
* If the testator wants to alter his/her will, it can be done through “a Codicil”, it refers to a document stating the altered causes of the will. The next step, attest the “codicil” by the testator in the presence of two witnesses and keep it with the will.
* In case, the testator dies whose will is with the registrar’s office, any person may apply to the registrar’s office for uncovering the will. However, the registrar will open the cover only after verifying the testator's death.

 

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