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Trust

Introduction:

A trust is a legal entity that holds assets for the benefit of specific beneficiaries. A trust is created by a grantor, also known as a settlor, who transfers ownership of assets to a trustee, who then holds and manages the assets for the benefit of the beneficiaries. Trusts can be created for a variety of purposes, such as charitable causes, family wealth management, and asset protection.

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Features:

  • A trust is a legal entity that holds assets for the benefit of specific beneficiaries.

  • A trust is created by a grantor, who transfers ownership of assets to a trustee.

  • Trusts can be created for a variety of purposes, such as charitable causes, family wealth management, and asset protection.

  • Trusts can be revocable or irrevocable, meaning that the grantor can retain the power to change or terminate the trust or not.

  • Trusts can be private or public.

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Procedure:

  • Identify the purpose of the trust and the assets to be placed in the trust.

  • Choose a trustee and any additional trustees.

  • Draft the trust document, outlining the terms of the trust and the rights and responsibilities of the trustee.

  • Transfer ownership of the assets to the trustee.

  • Register the trust with the relevant authorities, if required.

  • Fund the trust with the assets and manage the trust according to the terms of the trust document.

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Documents Required:

  • Trust deed

  • PAN card of the trust

  • Identity and address proof of the trustee

  • registration certificate (if required)

  • List of beneficiaries

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Advantages:

  • Asset protection: Trusts can be used to protect assets from creditors, lawsuits, and taxes.

  • Privacy: Trusts can be used to maintain privacy, as the assets and beneficiaries are not publicly disclosed.

  • Control over assets: Trusts can be used to retain control over the assets and ensure that they are used for the intended purpose.

  • Tax benefits: Trusts can be used to minimize taxes and maximize returns on the assets.

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Disadvantages:

  • Complexity: Trusts can be complex to set up and manage, and may require legal and financial expertise.

  • Costs: Trusts can be costly to set up and maintain, especially if professional advice is sought.

  • Limited control: Once assets are transferred to a trust, the grantor may have limited control over how the assets are used or managed.

  • Limited access to assets: Beneficiaries may not have immediate access to the assets in the trust and may have to wait until certain conditions are met or until the trust is dissolved.

  • Public trusts are subject to more regulations and compliance requirements.

Society

A Society, on the other hand, is a non-profit organization that is formed for the promotion of social welfare, cultural, educational, religious or any other similar object. It is generally formed by a group of people who come together for a common goal.

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Features:

  • A society is a non-profit organization that is formed for the promotion of social welfare, cultural, educational, religious or any other similar object.

  • A society is formed by a group of people who come together for a common goal.

  • Society registration is mandatory as per the Societies Registration Act, 1860

  • A society is managed by a governing body which is elected by the members.

  • A society's funds are used for the promotion of its objectives and its funds can't be distributed among its members.

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Procedure:

  • Choose a name for the Society and ensure it's not already in use by another organization.

  • Prepare the Memorandum of Association and Rules and Regulations of the society.

  • File the Incorporation documents with the Registrar of Societies.

  • Obtain the Certificate of Registration.

  • Appoint a governing body and register the society with the Income Tax department.

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Documents Required:

  • PAN card of the society

  • Address proof of the registered office

  • Identity proof of the members

  • Memorandum of Association and Rules and Regulations of the society

  • registration certificate

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Advantages:

  • Tax exemptions: Societies are eligible for tax exemptions under the Income Tax Act, 1961.

  • Government grants: Societies are eligible for government grants for the promotion of their objectives.

  • Low cost of registration and maintenance

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Disadvantages:

  • Stringent compliance requirements: Societies are subject to strict compliance requirements set by the Registrar of Societies and other government authorities.

  • Limited scope for generating income: Societies are non-profit organizations, and therefore have limited scope for generating income.

  • Limited scope for expansion: Societies can only carry out activities related to their objectives and have limited scope for expansion and diversification.

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In conclusion, a trust is a legal entity that holds assets for the benefit of specific beneficiaries, while a society is a non-profit organization that is formed for the promotion of social welfare, cultural, educational, religious or any other similar object. Both trusts and societies have their own unique features, advantages, and disadvantages. Trusts are generally used for asset protection, privacy, and control over assets, while societies are used for non-profit activities. It is important to weigh the pros and cons of each option and seek professional and legal advice before deciding which type of organization is best for your specific needs and goals. Both Trusts and societies have specific registration requirements, compliance and regulations that need to be met, and it's important to be aware of the same before proceeding.

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In summary, both trusts and societies have their own unique features, advantages, and disadvantages. Trusts are generally used for asset protection, privacy and control over assets, while societies are used for non-profit activities. It's always recommended to consult legal and professional advice before proceeding with the registration of a trust or a society.

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