There are certain forms of organization which is created, with an aim of providing services to the members, rather than earning a profit. Trust and society are two such organizations. Trust is a legal arrangement in which a person holds property for the sake of some other person. Society is an association of person, who come together to fulfill any particular purpose, described under the act.
The basic distinguishing feature in the two legal persons is the purpose for which they are created, and once you know the purpose, you can easily differentiate a trust and a society.
To create a trust, there must be at least two persons required, whereas a minimum of seven members are required to set up a society. In this article excerpt, you will find all the substantial differences between trust and society, take a read.
|BASIS FOR COMPARISON||TRUST||SOCIETY|
|Meaning||A legal relationship, in which author assigns property to the trustee for the benefit of the beneficiary.||A society is an organized group of persons, who are joined together for fulfilling any purpose relating to literature, science or charity.|
|Statute||Indian Trust Act, 1882||Societies Registration Act, 1860|
|Fundamental document||Trust Deed||Memorandum of Association and Rules & Regulations|
|Minimum persons required||2||7|
|Governed by||Board of trustees||Governing Body which should be directors, governors, trustees etc.|
Definition of Trust
Trust is a legal entity, created by one party, in which the second party has the right to hold the assets of the first party for the benefit of the third party.
Here, the first party refers to the author of the trust or trustor; the second party is known as a trustee, who accepts the proposal of trust and maintains the property of the trustor on behalf of the beneficiary (third party). The subject matter of the trust is known as Trust Property, and the document in which all the terms and conditions regarding the trust are written is known as a Trust Deed.
The trust is governed by the Indian Trusts Act, 1882 which applies to all over the country except the state of Jammu & Kashmir. The following are the types of trust:
- Living Trust: The formation of confidence by the author when he is alive.
- Testamentary Trust: The trust which comes into existence, after the death of the author.
- Revocable Trust: The trust which can be revoked or modified by the author is known as Revocable Trust. Such kind of trust becomes irrevocable if the grantor dies.
- Irrevocable Trust: The trust which is irrevocable in nature is known as an irrevocable trust.
Definition of Society
Society is a group of persons who are associated together for a common purpose. The purpose may be related to promoting any literary, charitable or scientific work.
The incorporation of a society requires minimum seven members who sign the memorandum of association (MOA) and then files it to the Registrar. In this way, the society is legally formed under the Societies Registration Act, 1860.
The memorandum contains all the details related to the name and the object of the society. In addition to this, the memorandum contains the names, addresses, and profession of the governing body and its members. Committee, governors, directors, council, trustees and others, are the part of the governing body of the society.
Key Differences Between Trust and Society
The following are the differences between trust and society:
The purpose for which a trust is created is that a person will hold the property of another person for the benefit of a third person while society is set up to promote any scientific, literary, charitable and similar another objective. The purpose of the two differentiates them.