Living Trust

A living trust in India is a private trust that is fully controlled by the creator or settlor. This trust’s assets are for the settlor’s exclusive use during their lifetime. This type of trust allows the settlor to manage their assets while alive and then transfer them to the beneficiaries upon their death, avoiding the probate process.

The cost to register a trust in India can vary, but typically, you will need to pay a registration fee of ₹100 and a maintenance fee of ₹1000 for a copy of the trust deed. Additional costs may include filing fees, administrative fees, trust administration fees, and legal fees. It’s recommended to consult with a legal advisor to understand the full cost implications.

Yes, a trust can acquire and hold properties in India. The properties are held by the trustee for the benefit of the beneficiaries. It’s important to note that trusts do not have a separate legal personality under Indian law, meaning the property is technically in the name of the trustee, but it is held for the benefit of the trust’s beneficiaries.

Private trusts in India are taxed according to the structure in which the income is received. If the trust has business income, the tax rate is typically 30%+3%. However, if certain conditions are met, the tax rate can be the slab rate applicable to individuals. It’s important to consult with a tax advisor to understand the specific tax implications for a private trust.

The Indian Trusts Act, 1882, governs private trusts in India. Public trusts, on the other hand, are usually governed by state-specific legislation. For example, public charity trusts in Maharashtra are governed by the Bombay Public Trust Act, 1950. It’s important to note that trusts are non-governmental and non-profit organisations working for charitable purposes and the welfare of society.

There are three types of trusts in India:

1. Public Trust: These are created for the benefit of the general public or a class of people.
2. Private Trust: These are created for the benefit of one or more specific individuals who are clearly defined and ascertained.
3. Public Cum-Private Trust: These are a combination of public and private trusts.

Family trusts are typically taxed on the income they generate. The trust itself may pay the tax, or the tax liability may be passed on to the beneficiaries, depending on the terms of the trust. The tax rates can vary, so it’s important to consult with a tax advisor to understand the specific tax implications for a family trust.

The beneficiary of a family trust is the person or group of people who receive the benefits from the trust’s assets or property. These benefits can be distributed outright or held in trust for their benefit. The beneficiaries are typically family members named by the person who sets up the trust.

Private trusts offer several benefits, including:

1. Protecting and preserving your assets.
2. Customising and controlling how your wealth is distributed.
3. Minimising federal or state taxes.
4. Addressing family dynamics; for example, divorce or blended families.
5. Helping a parent or other relative manage their financial affairs.

Yes, a private trust can sell its property in India, but it has certain restrictions. The Delhi High Court has stated that trust property can only be sold, mortgaged, or exchanged with obtaining prior permission from the court.

Starting a living trust in India involves the following steps:

1. Consultation Call with a Lawyer: Discuss your requirements, wishes, assets, and finalize your succession plan.
2. Decide Trustees/Rules of the Trust: Determine who will manage the trust and the rules they will follow.
3. Register Trust Deed & Get PAN Card, Bank Account: The trust needs to be officially registered, and it will need its own PAN card and bank account.

4. Transfer Assets to the Trust: The assets you want to be managed by the trust need to be transferred into the trust’s control.

Yes, registered trusts in India are taxed under various sections of the Income Tax Act, 1961, depending on the nature and purpose of the trust’s activities. The tax can be levied on the trust itself or, in some cases, the beneficiaries, depending on the structure of the trust and its income.

The eligibility for a trust depends on the type of trust being created. For instance, in the case of a Special Needs Trust, the beneficiary must be a person with a disability as defined by Social Security. For a trust to be qualified, it must meet certain requirements, such as being irrevocable and having identifiable beneficiaries. It’s recommended to consult with a legal advisor to understand the specific eligibility requirements for different types of trusts.

Trusts in India can earn money through various modes:

1. Donations: Public donations or private donations made to the trust.
2. Investments: Trusts can invest their funds in various investment avenues and earn returns.
3. Services: Trusts can provide services in line with their objectives and charge for them.
4. Rent and Sale of Property: If the trust owns the property, it can earn income through rent or sale of the property.
   

It’s important to note that the income earned by the trust should be used for the objectives of the trust as stated in the trust deed.

Yes, a private trust can sell its property in India, but it comes with certain restrictions. The Delhi High Court has stated that no trust property can be sold, mortgaged, or exchanged without obtaining prior permission from the court.

Yes, a single person who is competent to contract can start a trust in India. The trust is created through a trust deed, which outlines the terms and conditions of the trust. The person starting the trust can also serve as the trustee. It’s recommended to consult with a legal advisor to understand the specific requirements and process for starting a trust.

Yes, a trust can open a bank account in India. The trustee must be appointed under the laws applicable in the state. The bank account is opened in the name of the trust and is used for the trust’s transactions. The required documents for opening a trust bank account usually include a copy of the trust deed, registration certificate of the trust, and other relevant documents.

According to Section 50 of the Indian Trusts Act, 1882, trustees cannot be paid remuneration. However, if a trustee is providing professional services for the trust, such as legal advice or accountancy, they may draw a reasonable salary for those services. It’s important to note that these rules can vary depending on the specific terms of the trust deed.

Trusts in India provide several benefits, including efficient management of assets, flexibility in asset distribution, potential tax advantages, and the ability to provide for beneficiaries who may not be capable of managing assets themselves.

Both trusts and funds have their own advantages in India. Trusts offer more control and flexibility over asset management and distribution, while funds, particularly mutual funds, can offer diversification and professional management. The choice between a trust and a fund depends on individual financial goals and circumstances.

Trusts in India often provide more flexibility than societies, especially regarding management and control over assets. Trusts can also offer more privacy, as they are not required to disclose as much information publicly as societies.

While most types of assets can be placed in a trust in India, some exceptions exist. For instance, assets that require legal ownership to be in the name of the beneficiary, such as certain types of retirement accounts, cannot be placed in a trust.

In India, a trust is not considered a person or a separate legal entity. Instead, it is a legal arrangement where the trustee holds and manages the trust assets for the benefit of the beneficiaries.

Several banks in India offer services for trusts, including Axis Bank, HDFC Bank, and Punjab and Sind Bank. The choice of the bank would depend on the specific needs and circumstances of the trust, such as the services offered, fees, and customer service.