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Trust and Will

Trust and Will – Planning with purpose

When it comes to securing the future of loved ones, especially individuals with special needs/PwMIs, the right legal and financial frameworks can make all the difference. Trusts serve as powerful instruments that allow families to plan thoughtfully—ensuring continuity, care, and protection of wealth beyond one’s lifetime.

Two primary types of trusts commonly used in India are Private Family Trusts and Public Charitable Trusts. While both are structured through a trust deed and governed by a trustee, they differ in scope, purpose, and who they serve.

Explore the nuances of each to understand which path aligns with your family’s vision and values.

What is a Private Family Trust?

 

A Private Family Trust is a legal arrangement created by a settlor, who transfers assets into the trust for the benefit of specific family members or individuals. Once the assets are transferred, they are no longer owned by the settlor, though the settlor can still control how they are distributed as a trustee.

The trust serves two key purposes:

  1. Protecting assets for the beneficiary—ensuring they are insulated from outside claims or disputes.

  2. Ensuring steady, unencumbered income for the beneficiary’s welfare, without transferring ownership or control to them.

Notably, the beneficiary has no say in the creation of the trust or its operations. They may choose to accept or decline the benefits. The trust typically concludes with the beneficiary’s lifetime and is treated as an individual or partnership entity for income tax purposes.

Why Set Up a Private Family Trust?

Private trusts are especially useful when long-term security, control, and clarity are key. Here’s why families opt for them:

  • Asset Protection
    Assets in the trust are not considered personal holdings and are protected from legal claims, creditors, or family disputes.

  • Life-long Support for Special Needs
    Ideal for families wanting to ensure ongoing financial care for loved ones with special needs—without the risks of direct inheritance.

  • Smooth Wealth Transfer
    Trusts allow structured, conflict-free distribution of assets across generations—according to the settlor’s clear intent.

  • Avoids Probate
    Trust-held assets bypass court procedures, enabling quicker, private transfers without delays or litigation.

  • Tax Planning
    Trusts help reduce estate and capital gains taxes. They’re also favored by NRIs to avoid inheritance tax and global income clubbing abroad.

  • Preserving Family Intent & Values
    Trusts can reflect personal values and goals—supporting education, healthcare, or specific causes over time.

  • Reduces Family Conflict
    With rules clearly defined, the trust acts as a neutral guide, minimizing disputes and ensuring peace of mind.

What is a Public Charitable Trust?

A Public Charitable Trust is formed with the aim of benefiting the larger community, not specific individuals. These trusts are ideal vehicles for pooling resources to address social issues such as education, healthcare, poverty alleviation, and—in the case of Sumana Trust—ensuring continuity of care for persons with mental illness.

They are

  • Structured for philanthropic goals

  • Governed by transparency and accountability

  • Rooted in inclusive development principles

Public Charitable Trusts are guided by a trust deed, with clear objectives and operational guidelines. They play a transformative role by serving vulnerable communities and bridging the gap between government welfare and real-world needs.

What is a Will?


A will, also known as a “last will and testament,” is a legal document that outlines how a person wishes their assets and property to be distributed after their death. It essentially serves as a roadmap for transferring assets and can also include provisions for managing the estate, naming executors, and appointing guardians for minor children or children with disability.

Key Aspects of a Will:
  • Distribution of Assets:
    The will specifies how the testator (the person making the will) wants their property and other assets to be distributed among their beneficiaries.
  • Executor:
    The will can name an executor, who is responsible for carrying out the testator’s wishes and administering the estate after death.
  • Guardianship:
    A will can also name guardians for minor children of adult children who may have certain disabilities, ensuring they have proper care and supervision if both parents are deceased.
  • Trusts:
    Wills can be used to create trusts for the benefit of beneficiaries, particularly minors, providing for their financial security and well-being.
  • Avoiding Disputes:
    A will helps prevent disputes among family members regarding the distribution of assets, as it clearly outlines the testator’s intentions.
  • Legally Binding:
    Wills are legally binding documents, meaning the court will ensure that the testator’s wishes are followed.
  • Types of Wills:
    There are different types of wills, including testamentary, joint, conditional, privileged, and unprivileged wills, each with specific characteristics and requirements.
Importance of a Will:
  • Testamentary Succession:
    A will facilitates “testamentary succession,” where the testator’s wishes determine the distribution of their assets, rather than the default rules of “intestate succession” (where assets are distributed according to inheritance laws).
  • Protecting Beneficiaries:
    A will helps protect the interests of beneficiaries, ensuring they receive their inheritance as intended by the testator.
  • Minimizing Disputes:
    A well-drafted will can minimize disputes and legal battles among family members by clearly outlining the testator’s wishes.
  • Ensuring Desired Outcomes:
    It allows individuals to ensure their assets are distributed according to their wishes, rather than as dictated by the law in the absence of a will.

In essence, a will is a crucial tool for estate planning , allowing individuals to control the distribution of their assets and ensure their wishes are honored after their passing.