Trust Deeds had introduction by the Scottish Government to people struggling with debt, and so far Trust Deeds Scotland; more than 25,000 Scottish residents use Trust Deeds to help them become debt free. A trust deed is a voluntary but legally binding agreement between you and your creditors; where you agree to return an affordable portion of what you pay when you protect your home and car.
This debt repayment model allows you to pay off your debt, usually over 4 years. Trust Deeds can only have arrangement and administered by a Licensed Insolvency Practitioner (IP) who will act as a ‘trustee’.
It is the job of the IP to manage the trust deed and deal with your debtors for a period of consent; you will move on with your life, without worrying about your debts. When you enter into a trust deed, you will make an affordable monthly payment in favor of all your unsecured debts; your creditors legally have no permission to contact you for further payments.
Once the trust deed has its completion, the outstanding, due, unsecured debt will be legally sealed. Your creditors will no longer be able to chase you for the outstanding amount to free you from debt.
Trust deed benefits
Benefits of trust deeds include:
You can freeze your interest charges
Your payments are based on what you can reasonably afford
You can protect your property such as your home and car
You will not have direct contact with your creditors
Once had its completion, your non-performing debt will be written off and you will be debt free
Trust deed disadvantages
Risks of trust functions include:
Your credit rating will be affected
Trust deeds may not be an option with certain types
Creditors can vote against a trust deed being ‘protected’.
Debenture trust deed
A debenture trust deed is a debt instrument that is accompanied by a contract for payment from the issuing company. The company receives cash to fund its capital expenditures, and the investor receives guaranteed interest and principal payments. Because payment is guaranteed, the risk for investors is low. This allows companies to raise capital at a lower interest rate than other types of debt instruments.
Debenture Trust Deed Contracts
The contract must specify the interest rate and the date of interest and the principal payment. Some debenture agreements also include the requirements of the issuing company, such as a minimum liquidity ratio and profit margin, an acceptable level of financial risk, and an announcement of the company’s credit rating.
Trustee requirements
Only banks, insurance companies and other public financial institutions can serve as debenture trustees. The organization will not be named as a trustee if it holds a stake in the company, receives financial compensation from the company or guarantees some other type of debt instrument. The duties of the trustee include requesting periodic reports from the company and enforcing security interests to the debenture holders as per the provisions of the trust deed.
Object of charitable Trust
The expression ‘charitable purpose’ is defined under Act 2 (15) of the Income-tax Act, 1961, which includes:
Relief to the poor.
Education
Yoga
Medical relief.
Maintaining the environment including water sheds, forests and wildlife.
Preservation of monuments or places of historical interest and
Progress of any other of public utility budget.
Numbers 1 to 6 are referred to as the organs of the second 2 (15). This will be referred to later. There have been many changes in the definition of charitable purposes including two provisions and an amendment to such provisions.
Pursuant to the first provision of this section 2, (1) states that “the promotion of any other of the general public utility budget shall have no charitable purpose. If it involves conducting an activity in the nature of trade, commerce, or business regardless of the nature of use or application, or maintenance. “
The main reason for bringing this first provision is as follows:
“Service-oriented objectives” include relief to the poor, education, yoga, medical relief, and any other object of general public utility. These activities are tax exempt as they should be. However some organizations that run regular trade, fuss or run a business or provide services in relation to any trade, commerce or business and revenue income also claim to donate their intentions that would come under “charitable purposes”. Naturally, this was not the intention of Parliament and so I propose to amend the law to exclude the above cases. However genuine service-oriented organizations will not be affected in any way. ” Please note that the newly introduced provisions in Sec.2 (1) will not apply to the following three organs of Sec.2 (1)), i.e. relief to the poor, education or medical relief. Any business activities in relation to these three activities will come under ‘Service Activities’.
Latest News
Finance Minister Nirmala Sitharaman has proposed exemptions for small trusts while announcing the 2021-22 budget. The government has proposed the exemption with the aim of reducing the compliance burden. It is for small charitable trusts running educational institutions and hospitals. Currently small charitable trusts are exempt in a blanket, with annual receipts not exceeding Rs 1 crore. However, in the budget of 2021-22, it has proposal to increase this amount from Rs 1 crore to Rs 5 crore. “We hope to reduce the burden of compliance on small charitable trusts that run educational institutions and hospitals. So far, such institutions have permission to have blanket with an annual receipt of not more than Rs 1 crore. Now I am proposing to increase this amount to Rs 5 crore, ”the finance minister said.
Benefits of giving
When you donate, you can make an impact on the world around you; and a charitable trust will help you continue to give for a long time to come. This is one way to put your plans into action. The establishment of a charitable trust can have many tax wages and economic benefits; to those who want to set aside high-value assets that do not require them to support themselves in retirement. By transferring these assets to a charitable trust, you can avoid paying capital gains on real estate; or shares when the estate has sold at a spot value.