A Trust Is:
- Legal arrangement
- Assets held by one party (trustee)
- For benefit of another (beneficiary)
- Per instructions of creator (settlor)
- Governed by trust deed

Key Relationship:
Settlor → Creates Trust
         ↓
      Trustee → Manages Assets
         ↓
    Beneficiary → Benefits from Trust

Governing Laws:
- Indian Trusts Act, 1882 (Private Trusts)
- Religious/Charitable Trusts: State laws
- Tax: Income Tax Act provisions
- Registration: Indian Registration Act

Purpose:
- Family benefit
- Wealth transfer
- Asset protection

Features:
- Specific beneficiaries
- Private purpose
- Family-oriented
- No tax exemptions

Purpose:
- Charitable activities
- Religious purposes
- Public benefit

Features:
- Public beneficiaries
- Tax exemptions (80G, 12A)
- Government oversight
- Transparent operations

Revocable Trust:
- Settlor can modify/cancel
- Retains control
- Assets included in estate
- Less asset protection
- Flexible

Irrevocable Trust:
- Cannot be changed
- Assets removed from estate
- Better protection
- Tax implications different
- Permanent

Family Trust:
- Managing family wealth
- Succession planning
- Business interests

Education Trust:
- Children's education
- Grandchildren funding
- Scholarship purposes

Discretionary Trust:
- Trustee decides distributions
- Beneficiaries' shares not fixed
- Flexibility in management

Fixed Trust:
- Beneficiary shares predetermined
- Clear entitlements
- Less trustee discretion

Without Trust:
- Inheritance at one go
- No control after death
- Possible misuse
- Unprepared heirs

With Trust:
- Gradual distribution
- Conditions attached
- Age-based release
- Protection from misuse

Assets in Trust Protected From:
- Beneficiary's creditors
- Divorce claims
- Business failures
- Lawsuits

How:
- Beneficiary doesn't "own" assets
- Trust owns them
- Trustee controls

If Settlor Becomes Incapacitated:
- Trust continues functioning
- Trustees manage assets
- No court involvement
- Seamless transition
- Beneficiaries protected

Trust vs. Will:
- Will becomes public after probate
- Trust deed is private
- Asset details confidential
- Family matters protected

Probate:
- Court validation of will
- Time-consuming
- Public record
- Legal costs

Trust:
- No probate needed
- Faster distribution
- Private process
- Lower costs

Family Business Through Trust:
- Professional management
- Family disputes reduced
- Clear succession rules
- Business continuity
- Shareholder protection

Clarify:
□ Why creating trust?
□ What assets to include?
□ Who are beneficiaries?
□ What outcomes desired?
□ How long should trust last?

Considerations:
- Individual vs. corporate trustee
- Multiple trustees (checks and balances)
- Successor trustees
- Professional trustees available

Ideal Trustee:
- Trustworthy
- Financially competent
- Available
- No conflicts of interest
- Understanding of settlor's wishes

Essential Clauses:

1. Parties:
   - Settlor details
   - Trustee details
   - Beneficiary details

2. Trust Property:
   - Initial corpus
   - Assets list
   - Future additions

3. Objects/Purpose:
   - Why trust exists
   - What it should achieve

4. Trustee Powers:
   - Investment powers
   - Distribution authority
   - Management powers

5. Beneficiary Rights:
   - Who gets what
   - When and how
   - Conditions attached

6. Duration:
   - When trust ends
   - Distribution on termination

Requirements:
- Non-judicial stamp paper
- Appropriate value per state
- Settlor's signature
- Two witnesses
- Trustee acceptance

Where:
- Sub-Registrar of Assurances

Documents:
- Trust deed (original + copies)
- ID proof of parties
- Address proof
- PAN cards
- Photographs
- Registration fee

After Registration:
- Certified copy provided
- Trust deed officially recorded

Transfer Assets:
- Bank account in trust name
- Property transfer deed
- Share transfer
- Mutual fund transfer
- Other asset transfers

PAN for Trust:
- Apply for trust PAN
- Required for tax filing
- Bank account opening

TRUST DEED

Date: [Date]
Place: [City]

PARTIES:
1. Settlor: [Name, Address]
2. Trustee: [Name, Address]

WHEREAS:
[Background and intention]

NOW THIS DEED WITNESSES:

1. Name of Trust: [Trust Name]
2. Registered Office: [Address]
3. Objects: [Purposes]
4. Beneficiaries: [Details]
5. Initial Corpus: [Amount/Assets]
6. Trustee Powers: [List]
7. Distribution: [Terms]
8. Duration: [Period]
9. Amendment: [Provisions]
10. Termination: [Conditions]

[Signatures]
[Witnesses]

Distribution Clause:
"The Trustee shall distribute income/corpus
to beneficiaries as follows:
- [Beneficiary A]: [X%] at [Condition]
- [Beneficiary B]: [Y%] at [Condition]"

Spendthrift Clause:
"No beneficiary shall have the power to
assign, transfer, or encumber their interest
in the Trust."

Termination Clause:
"This Trust shall terminate on [date/event]
and remaining assets distributed to..."

Three Scenarios:

1. Specific Beneficiaries, Shares Known:
   - Each beneficiary taxed at own slab
   - Trust is conduit
   - Income attributed to beneficiaries

2. Shares Not Known/Discretionary:
   - Trust taxed at maximum marginal rate
   - Currently 30% + surcharge + cess
   - Less favorable

3. Charitable Trust (Registered):
   - Exempt if conditions met
   - 85% must be applied to objects
   - Filing required

Requirements:
- PAN for trust
- ITR-5 or ITR-7 (charitable)
- Due date: July 31 (unless audit)
- Audit if income > ₹2.5 lakhs (certain cases)

Trust May Need to Deduct TDS:
- On payments to contractors
- Rent payments
- Professional fees
- Salary (if any employees)

Registrations Needed:
1. Trust deed registration
2. 12A registration (IT exemption)
3. 80G registration (donor deduction)
4. FCRA (for foreign funds)
5. State charity commissioner

12A Registration:
- Trust's income exempt from tax
- Must apply 85% to charitable purposes
- Accumulation allowed with conditions

80G Registration:
- Donors get deduction
- 50% or 100% depending on purpose
- Trust becomes more attractive

Required:
□ Annual return to charity commissioner
□ Income tax return
□ Audit (if applicable)
□ FCRA returns (if applicable)
□ Maintain accounts per standards

Purpose:
- Fund children's/grandchildren's education

Structure:
- Fund initially with ₹X
- Income for tuition, books, etc.
- Corpus for higher education
- Balance to child at age 25

Purpose:
- Preserve and grow family wealth
- Provide for multiple generations

Structure:
- All family assets in trust
- Income distributed annually
- Corpus preserved
- Professional management
- Family governance council

Purpose:
- Manage family properties

Structure:
- Properties transferred to trust
- Rent income distributed
- Maintenance from trust
- Clear succession plan
- Avoid property disputes

Potential Issues:
- High taxation if discretionary
- Trustee disputes
- Complex documentation
- Professional costs
- Ongoing administration
- Beneficiary conflicts

Avoid Trust If:
- Simple family situation
- Small estate
- All heirs capable adults
- No special protection needed
- Cost outweighs benefit

Common Disputes:
- Trustee misconduct
- Beneficiary disagreements
- Interpretation of deed
- Amendment attempts
- Termination conflicts

Resolution:
- Civil court
- Charity commissioner (public trust)
- Mediation

Get Legal Help For:
- Drafting trust deed
- Complex family structures
- Large assets
- Business succession
- Charitable trusts
- Tax planning

Get Financial Advisor For:
- Asset structuring
- Tax efficiency
- Investment strategy
- Corporate trustee selection

One-Time Costs:
- Legal drafting: ₹25,000-2,00,000+
- Stamp duty: Varies by state
- Registration: ₹5,000-25,000
- PAN application: ₹500-1,000

Ongoing Costs:
- Trustee fees (if professional)
- Accounting: ₹15,000-50,000/year
- Tax filing: ₹5,000-25,000/year
- Audit (if required)