Private Trust Formation
Structuring a private trust for family succession, asset protection or estate planning, with a deed that names specific beneficiaries and defines exactly how the trust property is managed and distributed.
A private trust is created under the Indian Trusts Act, 1882, for the benefit of one or more specific, identifiable beneficiaries, most commonly family members, and is a widely used tool for succession and estate planning in India. Income of a private trust is generally taxed either in the hands of the trustee on behalf of the beneficiaries, or directly in the hands of the beneficiaries, depending on whether the beneficiaries' shares are determinate or discretionary under the trust deed.
What our private trust formation service covers
Structuring around who the beneficiaries are and how much discretion the trustee should have.
- Advising on the choice between a determinate trust with fixed beneficiary shares and a discretionary trust
- Drafting the trust deed naming the settlor, trustees, and beneficiaries with clearly defined shares or discretion
- Structuring the transfer of assets such as property, shares or investments into the trust corpus
- Advising on the tax treatment applicable to the trust and its beneficiaries under the Income Tax Act
- Registering the trust deed where the trust holds immovable property
- Setting up trustee succession provisions so the trust continues smoothly across generations
What shapes a private trust's tax and control outcomes
The choices that decide how the trust actually functions.
Determinate vs Discretionary
A determinate trust fixes each beneficiary's share in the deed itself, while a discretionary trust leaves the trustee to decide distribution among beneficiaries, each carrying different tax treatment.
Trust Corpus
The assets transferred into the trust, whether cash, property, or securities, form the corpus that the trustee manages for the beneficiaries' benefit.
Trustee Powers
The deed defines how much discretion the trustee has over investment, distribution timing, and admission of new beneficiaries.
Succession Planning
Clear provisions for appointing successor trustees ensure the trust continues to function even after the original trustees are no longer involved.
Our process
From initial consultation to completion.
Planning the Structure
Deciding on determinate or discretionary beneficiary shares based on the family's succession goals.
Deed Drafting
Drafting the trust deed with beneficiary details, trustee powers, and asset transfer provisions.
Asset Transfer
Transferring the intended corpus into the trust, with registration where immovable property is involved.
Ongoing Governance
Setting up trustee meeting practices, record-keeping, and tax filing for the trust.
Why private trusts need careful tax planning
What sets our approach apart.
Discretionary trusts can attract a different tax rate
Where beneficiary shares are indeterminate, the trust's income can be taxed at the maximum marginal rate, which changes the overall tax outcome significantly.
Poorly defined beneficiary classes cause disputes
Vague descriptions of beneficiaries, especially across generations, lead to disagreements about who actually qualifies for distributions.
Asset transfer into the trust has its own tax and stamp duty consequences
Transferring property or shares into a trust can trigger capital gains, stamp duty, or gift tax considerations that need to be planned before the transfer, not after.
Private Trust Formation questions answered
What people ask before engaging us.
Planning a family or succession trust?
We will structure the beneficiary terms and tax treatment before the deed is drafted.
