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Trust Deed for Charitable, Religious and Hospitality & Rehabilitation institutions

Updated on: Oct 12th, 2021


6 min read

Charitable, Religious and Hospitality & Rehabilitation institutions can be formed by executing a Trust Deed. Trust deed is executed between the settlor and the trustees. A settlor is a person who creates the trust for some charitable or religious or hospitality & rehabilitation purposes. Whereas the trustees are the people who manage the trust. The settlor generally appoints the trustees who can effectively run and work according to the objects of the trust.

Under trust deed, the settlor transfers the identifiable property to the trustees and makes it obligatory for the trustees to work and manage the trust as per the terms and conditions specified in the trust deed.

Major elements of Trust Deed are

  • Objects: The object for which the trust is created is specified in this clause. This is very important clause as all the activities are undertaken for the fulfillment of these objectives only.
  • Acceptance of Funds: The trust can accept donations, grants, subscriptions, aids or contributions from any person, Government or any other charitable institutions, in cash or in kind including immovable property without any charge on it. But it shall not accept any such funds received with the condition which is inconsistent with the objectives of the trust.
  • Investments: It is the responsibility of the trustees to manage the funds of the trust in an efficient manner. The funds which are not required in near future for meeting current needs should be invested in securities, banks and other investments to get good returns in the same manner as a prudent man would do the same.
  • Power of the Trustees: The trustees cannot do any act which is beyond their powers mentioned in the trust deed. The trustees are generally given the following powers for the overall conduct and management of the trust:
    • Appointment of the employees
    • Sell, alter, vary, dispose or alienate the trust properties
    • cOpen the bank accounts in the name and on behalf of the trust
    • File suit on behalf of the trust
    • Accept any gift, donation or contributionInvest the funds in the trust
    • Look into the management of the trust etc.
  • Accounts and Audit: The trustees are required to maintain proper books of accounts of all the assets, liabilities, income and expenditure of the trust and also get the accounts audited by a chartered accountant.
  • Winding up: In the event of winding up of the company, the assets of the trust shall not be transferred to the trustees. They shall be transferred to some other similar trust or organization whose objects are similar to those of this trust with the permission of the charity commissioner/Court/any other law as may be applicable for the time being.
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Quick Summary

Trust Deeds can form charitable, religious, hospitality institutions; settlor appoints trustees; trust properties specified; trustees manage funds efficiently; powers and responsibilities detailed; accounts and audit requirements outlined. In case of winding up, assets are transferred to similar trust with permission.

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