Differences between Trust and Society
Trust is primarily a legal arrangement that allows a trustee to manage the beneficiary’s assets as directed. The trustee is liable to align with the beneficiary’s asset management or investment goals. The trust is more popular among families inherited with sizeable fortunes, have issues in managing their properties and lack investment ideas.
The Indian Trust Act of 1882 regulates registered trusts and has provisions to make the trust a legally viable and worthwhile construct. On the contrary, society refers to a group of individuals with common interests, cultures, or goals. Society is a social construct governed by the Societies Registration Act 1882. Societies are primarily formed to serve specific purposes such as fueling financial growth, ensuring the availability of resources, etc. Knowing the differences between trust and society is pertinent for those who think both constructs are similar.
Table representing 20 key differences between trust and society
| Aspect | Society | Trust |
| Definition | An association of individuals united by mutual consent to deliberate, determine, and act jointly for a common purpose. | A fiduciary arrangement in which a trustee holds property or assets for the benefit of beneficiaries. |
| Governing Law | Societies Registration Act, 1860 or similar state acts. | Indian Trusts Act, 1882 (or relevant trust laws). |
| Formation | Requires a minimum of seven members. | Can be formed by a single individual or multiple trustees. |
| Registration Authority | Registrar of Societies. | Sub-Registrar or Charity Commissioner. |
| Legal Status | Separate legal entity. | May or may not be a separate legal entity. |
| Membership | Open to the public; new members can join. | Trustees are appointed and not open for general membership. |
| Governance | Managed by a governing body or executive committee elected by members. | Managed by trustees as per the trust deed. |
| Meetings | Regular general body and executive committee meetings. | Not mandatory to hold regular meetings unless specified in the deed. |
| Decision-Making | Decisions made by majority vote in meetings. | Decisions made by trustees as per the trust deed. |
| Flexibility | More democratic and flexible in operation. | More rigid and less democratic. |
| Objective | Can be formed for any scientific, literary, or charitable purpose. | Primarily for charitable purposes or private benefits. |
| Management Transparency | Higher due to regular meetings and elections. | Lower, as it operates more privately. |
| Audit and Accountability | Annual filing and audit reports are mandatory. | Varies; depends on the trust deed and applicable laws. |
| Amendments | Constitution or bylaws can be amended by member vote. | Amendments to trust deed require legal procedures. |
| Perpetuity | Exists until dissolved by the members. | Can be perpetual, until the trust purpose is fulfilled. |
| Property Ownership | Held in the name of the society. | Held in the name of the trustees for the trust. |
| Dissolution | Can be dissolved by members’ decision or by legal process. | Dissolved as per trust deed terms or court orders. |
| Regulatory Compliance | Stricter compliance with various laws and regulations. | Less stringent, based on the nature of the trust. |
| Tax Exemption | Can obtain tax-exempt status under specific conditions. | Eligible for tax exemptions if fulfilling charitable purposes. |
| Example Uses | Educational institutions, cultural associations, social welfare organizations. | Charitable trusts, family trusts, religious trusts. |
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Notable points that set trust and society apart
- Trust helps resolve gaps and disputes among beneficiaries raised over the assets. It helps safeguard everyone’s interests. By entering a legal contract, a trust can be formed wherein the trustee takes care of the beneficiaries’ assets as directed for a predetermined time.
- Society is a limited group of individuals having common interests or goals. The establishment of society ensures the well-being of the onboard members and the availability of funds accumulated for their mutual endeavours. Society falls under the Societies Registration Act, of 1860. It provides comprehensive legal fencing, definite management, and penalties to curb illicit activities.
- Trust’s utility transcends beyond asset management. Trustees can invest in stocks, properties, and other instruments to thrive portfolios.
- The registered societies have definite operational frameworks and rules to ensure the safe running of the institution while fulfilling members’ goals.
- Trust does not necessarily be a third party. The trust can be enacted among family members, friends, relatives, etc. Regardless of who the trust is, the gravity of its legal implications would remain the same.
- Trust excels on rules that keep it transparent and operational. Its legislation protects it from involuntary actions, misconduct, and activities leading to loss of money.
Conclusion
Knowing the differences between trust and society can boost your understanding concerning their legal implications, pros, and cons. Either construct is legal and abides by a distinct set of legalities, ensuring safe and robust operation.
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