Private Trust

[vc_row][vc_column][vc_column_text]Private Trust

Trust involve transfer of property by a person in trust to another person for the benefit of certain persons. It is Private Trust since constituted for the benefit of one or more individuals who are, or within a given time may be, definitely ascertained.

A trust, which is for the benefit of an individual or class of individuals e.g. a trust for the benefit of A, B and C or for the benefit of or relative of A,B or C, is a “private trust”.

(i) Beneficiaries are limited and specified.

(ii) Governed by Indian Trusts Act, 1882. Private Trusts are created and governed by Indian Trusts Act, 1882. Through a private trust, assets or wealth are transferred by one party (settlor) to be held by another party (trustee) for the benefit of a third party (beneficiaries), under the Indian Trusts Act, 1882.

(iii) Beneficiaries are individuals or families. A private trust is established for the benefit of an individual’s spouse, children or other family members. In other words, private trust can be formed for a single member’s benefit or for a group of members’ benefit. In other words, a private trust may be defined as a trust only for the private convenience and support of individuals or families.

(iv) Can be oral or written. It is not necessary/mandatory to register it. Where a private trust has immovable property, a written trust deed is mandatory.

Benefit of Private Trust

(i) Effective and efficient mode of managing and passing of family assets.

(ii) Simple to create, does not require probate for transfer like Will.

(iii) Safeguards interest of family members including maintenance of members with special needs.

(iv) Settler can oversee the transfer and thus avoids family disputes.

(v)  Flexibility to incorporate various eventuality and wishes of Settler.

(vi) Ring fence the assets from possible attachment

(vii) Save on Estate duty if introduced vis a vis transfer under Will[/vc_column_text][/vc_column][/vc_row]