Wills and Trust practice in Nepal

What is the land of Guthi and Trust?

Guthi land is considered an old form of land tenure in Nepal. It is a process in which land is divided for religious or philanthropy purposes. It is the distinct traditions of the country, where the trust (usually temples for religious purposes, etc.) owns the land and the numerous tenants cultivate the land. Guthi Sansthan Act 2033, governs the arrangement of Guthi.

The Government of Nepal has introduced the Guthi Bill 2076. Due to national protests over the dissatisfaction with the newly introduced bill, the house did not pass the bill.

Distinction between the Guti Land and the Trust

The Government of Nepal has established the Guthi Sansthan Act 2033 to protect and preserve the land allocated to the establishment of temples and to operate and manage it. The Guthi Sansthan has been established in accordance with the Guthi Act.

The National Civil Code 2077 governs the social welfare work of any individual or the establishment of the Guthi. The provisions of the National Civil Code 2077 shall not apply to Raj Guthi or to land that is under the ownership of a temple or to matters relating to Raj Guthi.

Pursuant to Section 314 of the National Civil Code 2017, “Guthi or Trust” is an arrangement for the operation and management of the beneficiary and has the right of ownership and possession to the benefit of the beneficiary.

The term “beneficiary” means a person, a group, a general public, an entity whether incorporated or unincorporated, or a community benefiting from trust assets.

Type of Trust and land of Guthi

Trust or Guthi is divided into 3 areas:

A. Raaj (Royal) Guthi

B. The Public Guthi

C. Private Guthi

Raaj Guthi (Royal Guthi)

The place of worship or the land of the temple under the ownership or in possession of the temple is considered the Royal Guthi.

In the event that the individual works a royal land, he/she creates a tacit right over the land. The tenant shall have the right to build a house or to sell the property.

Public Trust

Where a trust is established for the purpose of achieving the following purposes, it shall be referred to as public trust:

(a) The establishment, operation and use of an economic development infrastructure or other development works fund;

(b) The creation and operation of a fund necessary for the development of skills, the creation of employment opportunities.

(c) Operation of social welfare programs,

(d) To establish and operate such educational and academic institutions as may be of use to the general public, such as schools, colleges and universities;

(e) To establish and operate clinics, such as hospitals and health services, for public purposes;

(f) Protecting or promoting natural, historical or cultural heritage;

(g) To operate programs for the protection of wildlife, aquatic animals or the environment;

(h) To implement programs for the protection of the interests, welfare or advancement of different classes, groups or communities;

(i) To operate sports programmes,

(j)Carrying out service-oriented welfare programs,

(k) To carry out rescue operations,

(l) To establish shrines, temples, monasteries, domes, mosques, churches or other similar religious activities;

(m) To operate other public programs in the public interest.

Private Trust

Private trust is an institution established with the aim of providing benefits, advantages or facilities to any particular person or group.

Procedures for establishing private and public trust:

1. Application:

A person willing to establish a trust shall make an application to the Registrar, setting out the following matters:

(a) value and details of the assets that trust holds. 

(b) The beneficiary and the beneficiary’s benefit and facility, the terms and limitations thereof;

(c) If the trust is to be established for any specific period of time, the matter concerned;

(d) Other details that are required.

Documents that are necessary to make an application.

(a) A memorandum of incorporation of the trust;

(b) The name of the trustee and the photocopy of the document relating to his consent,

(c) A photocopy of the deed, if any, executed for the purposes of establishing the trust;

e) Receipt of payment of the fees to be paid in accordance with the law on the registration of trusts.