What is a Trust Deed?

A trust deed, also known as a declaration of trust, is a legal agreement that outlines how a trust will be set up and operated. It's like a blueprint for the trust, defining its key elements. The person who creates the trust is called the settlor, and they transfer their assets to the trust. The trustees are the people responsible for managing the trust's assets and ensuring that they are used according to the trust's rules. The beneficiaries are the people who will ultimately receive the benefits of the trust, whether it's money, property, or other assets. The trust deed registration certificate also includes specific instructions, or terms and conditions, on how the trust should be managed and how its assets should be distributed. These instructions can cover things like when the beneficiaries will receive their share, what the money can be used for, and any special conditions that need to be met according to the deed of trust agreement.

Why do you need a Trust Deed?

So, how does a trust deed work in your favour? Well, it's like a safety net for your assets. It can help you:

• Avoid probate: When you die, your assets go through a legal process called probate. This can be time-consuming and expensive. A trust can help you bypass this process.
• Protect your assets: If you're worried about creditors or lawsuits, a trust can shield your assets from these threats.
• Take care of loved ones: It is very handy to have a trust deed online and if you have young children or loved ones with special needs, a trust can ensure that their assets are managed responsibly and used for their benefit.
• Give back: You can use a trust to set up a charitable foundation and support causes you care about.
• Plan for business succession: If you own a business, a trust can help you plan for a smooth transition of ownership and management.

Ultimately, a trust deed can be a valuable tool to help you protect your assets, provide for your loved ones, and achieve your financial goals.

Trust Deed vs Mortgage

Most of us confuse trust deeds with mortgages. However, both of these terms are different. Trust deeds and mortgages are both used to borrow money against a property, but they work in slightly different ways. With a trust deed, there are three parties involved: the borrower, the lender, and a neutral third party called a trustee. The trustee holds the title to the property until the loan is paid off. If the borrower defaults on the loan, the trustee can foreclose on the property without going to court. In contrast, a mortgage involves only the borrower and the lender. The borrower keeps the title to the property, and if they default, the lender must go through a court process to foreclose. So, while both trust deeds and mortgages are used for real estate loans, the key differences lie in who owns the property and how the lender can take possession of it if the borrower doesn't pay back the loan.

Format of a Trust Deed

While what does a trust deed include might be a very important question to be asked but there’s no universal format for trust deeds, they generally include the following key elements:

1. Identification: It identifies the parties involved in the trust deed, particularly the settlor, trustee and beneficiaries. It is important to provide a unique name for the trust while creating a trust deed.
2. Declaration of Trust: This part of the trust deed format states the intention of the settlor to create a trust, outlining the specific goals or objectives of the trust.
3. Trust Property: The trust property is the assets being transferred to the trust which also includes the legal descriptions and ownership details.
4. Powers and Duties of the Trustee: The power and duties of the trustee refer to the trustee’s duties, such as managing assets, investing, and distributing income or principal. The concerned authority grants the trustee specific powers to carry out these duties.
5. Beneficiaries: It identifies the beneficiaries and their interests involved in the trust. It also specifies how and when trust assets will be distributed to the beneficiaries.
6. Terms and Conditions: The trust deed registration sets forth the rules governing the trust, including investment guidelines, distribution schedules, and amendment procedures.
7. Replacement: Outlines the process for replacing a trustee if necessary.
8. Amendment: Specifies how the trust can be modified or amended if needed.
9. Termination: It indicates when the trust will terminate.
10. Signatures: The acknowledgement contains signatures of the settlor, trustee(s), and witnesses, along with dates.

The specific content and level of detail in a trust deed can vary depending on the complexity of the trust and the desired outcomes. It's advisable to consult with an attorney to ensure that the trust deed is properly drafted and complies with applicable laws.

Registration in Tamil Nadu

Below is the list of documents required for a trust deed registration in Tamil Nadu for a property in Mangadu.

• Identity proofs of the settlor, trustee, and beneficiaries
• Passport size photo
• Address proof
• Property documents related to the assets transferred to the trust
• Affidavit of the settlor and trustee
• Power of attorney (if applicable)
• Any other documents required by the Sub-Registrar's office

Once verified, the Sub-Registrar will register the trust deed, and you'll receive a registration certificate. Remember, if you're looking for land for sale in Pallavaram, you'll need to consider factors like location, amenities, and budget.