WHY NRIS SHOULD SET UP A PRIVATE FAMILY TRUST

For many Non-Resident Indians life unfolds across different countries with career, investments and family spread across the globe, but home is where the heart is - India.

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This brings about the challenge of managing your wealth over different jurisdictions and ensuring that hard-earned assets reach the people you truly care about smoothly and fairly. This is where estate planning and creation of family trusts comes into play. Family Trust helps to control your legacy, protect your assets and control how your assets are allocated and utilised. You can make arrangements to take care of your ageing parents, plan for the future of your children and spouse, ensuring that all your requirements are handled according to your wishes even if you are not around. Family trust provides peace of mind by protecting your assets and taking care of your legacy seamlessly.

What is a Family / Private Trust?

A Family / Private Trust is a private legal arrangement where a person (Settlor) transfers the legal ownership of certain assets to one or more person (Trustee), either natural or juristic, to hold and manage such assets for the benefit of certain person or persons (Beneficiary).

Unlike a Will, a Trust takes effect immediately and can be seen functioning during the Settlor's lifetime. Another advantage compared to a Will is that it does not require probate. Probate is the legal certification of a Will by a competent Court, confirming its validity and authorizing the executor to administer the estate.

In India private trusts are governed by the Indian Trusts Act, 1882 along with the Income-tax Act, 1961. Where the Trust involves cross border assets, it is guided by Foreign Exchange Management Act, 1999 (FEMA) regulations, Reserve Bank of India guidelines, and compliance with Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS).

Parties to a Private Family Trust

• Settlor - The person who creates the Trust and transfers the legal ownership of his / her assets to the Trust.

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