Unlike a Will, a Private Trust works during one’s lifetime and can be easily structured to meet specific requirements.
The world over there are two preferred modes for succession planning – writing a Will or creating a Private Trust. Both are used in India, but with increasing entrepreneurship and complicated asset holding patterns even within families, Trusts are gaining popularity.
A Private Trust’s ability to ring fence assets against third-party claims, especially with the Bankruptcy Law being active since 2016, further explains the heightened interest among wealthy Indians for setting up Private Trust.
Will Versus Trust
Private Trusts also have an edge in some areas over traditional modes of succession planning like a Will.
When asset-mix and family structure is straight forward, a Will can be a simple and effective tool for an individual to use. But, if there are many branches in a family tree and assets are spread out across geographies, it makes sense to set up a Private Trust. A Will needs a probate (a court certificate confirming that the Will is genuine) after the death of the Will maker. The process to get one may be tedious and expensive. A probate is a public document, which means it exposes the family to public glare should there be a dispute over the assets. In such a scenario, a Trust offers privacy.
A Will can be challenged in the Court by any heir who is unhappy with the asset distribution. Unfortunately, the Will drawer will not be there to clarify his choice. This can result in bitterness among family members and lead to protracted legal disputes. On the other hand, grounds on which a well executed Trust can be challenged are fewer. A Will becomes active only on a Will-drawer’s death, but a Trust can be created when the person is alive.
Setting Up a Trust
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ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
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