Definition
Trust (Estate Planning)
A trust is a legal arrangement in which a person (the settlor) transfers assets to a trustee to hold and manage for the benefit of named beneficiaries.
Trusts are used in estate planning to control how and when assets pass to beneficiaries, provide for minors or dependants with special needs, ensure continuity, and sometimes for tax or asset-protection purposes. The trustee has a legal duty to manage the assets in the beneficiaries' interest according to the trust deed.
In India, private family trusts can offer more control and smoother succession than a will alone, avoiding the delays of probate for the trust assets, but they involve setup costs, ongoing administration and specific tax treatment. They are generally suited to larger or more complex estates and are best structured with professional legal and tax advice.
Related terms
- Will (Testament)A will is a legal document in which a person states how their assets should be distributed after death and who should carry out those wishes.
- HUF (Hindu Undivided Family)A Hindu Undivided Family (HUF) is a separate entity under Indian tax law, consisting of family members descended from a common ancestor, that can own assets and be taxed in its own right.
- Estate PlanningEstate planning is the process of arranging how your assets will be managed and distributed during your lifetime and after death, to carry out your wishes and ease the path for heirs.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.