PRIVATE TRUST: NOT A TAX TRICK, BUT A LEGACY STRUCTURE

A private trust may sound like a billionaire's trick to stash wealth in offshore havens, but it's a simple, legitimate tool for Indians managing succession, asset protection, or care for vulnerable dependents.

- VIJAYKUMAR PURI

Think of it as a rulebook for your wealth—not a secret vault. Trusts often offer more clarity than joint ownership or Hindu Undivided Families (HUFs), though they aren't for everyone and shouldn't be seen as tax-saving tools. So, when does it make sense to set one up? Let's break it down.

What is a private trust?

A private trust is a legal arrangement governed by the Trusts Act, 1882. In simple terms, you (the settlor) hand over assets to someone you trust (the trustee) to manage for someone else (the beneficiary). You can wear all three hats—settlor, trustee and beneficiary. The trust deed is the operating manual, spelling out who gets what, when and how. There are two main types of trusts:

When should you create a trust?

Not all families need trusts, but it can solve problems that aren't just about money. These pertain to:

Minor children or dependent parents: If you're gone, who manages your assets for them? A trust lets you decide who handles the money, how it's used, and when the beneficiaries get it, avoiding probate or succession fights.