Your Guide to Irrevocable Trusts in India
The Ultimate Tool for Asset Protection and Succession Planning, Explained Simply.
What is a Private Family Trust?
A Private Trust is a legal arrangement under the Indian Trusts Act, 1882, designed to hold and manage assets for the benefit of specific individuals. It's a cornerstone of family wealth management. Click on each player below to understand their function in creating a secure financial future for your loved ones.
The Settlor
The person who creates the trust and transfers their assets into it. They set the rules and objectives in the Trust Deed.
The Trustees
The managers of the trust. They hold and administer the assets according to the Settlor's instructions in the Trust Deed.
The Beneficiaries
The individuals who receive the benefits from the trust's assets, as defined by the Settlor.
Irrevocable Trust vs HUF: Which is Better?
While a Hindu Undivided Family (HUF) is a popular tool for tax planning, an Irrevocable Trust offers a superior level of asset protection. This interactive chart demonstrates their primary strengths for wealth management. Use the buttons to see how they compare on key objectives.
The Shield: How a Trust Protects Your Assets
The "irrevocable" nature of the trust is what makes it a powerful shield. Once assets are transferred, they are permanently moved out of your personal estate. This creates a formidable barrier against various financial and personal risks. Explore the specific protections against divorce and creditors by clicking the tabs below.
Securing Assets from Matrimonial Claims
Assets held within an Irrevocable Trust are not legally in your personal name. Therefore, in the event of a divorce, they cannot typically be classified as "marital property" subject to division. Your spouse cannot directly claim the trust's core assets (corpus), as beneficiaries only have a right to the benefits as specified in the deed, not direct ownership of the assets themselves. Smart drafting of the trust deed is key to maximizing this protection.
The Blueprint: How to Set Up a Trust in India
Creating a trust is a structured legal process. While it requires careful planning and professional guidance, the steps are straightforward. This guide outlines the trust registration process and essential phases of establishing your trust. Click each step to learn more.
1. Define the Objective
First, clarify the purpose of the trust. Is it for wealth succession across generations, asset protection from business risks, providing for a child with special needs, or philanthropic goals? A clear objective guides all subsequent decisions.
Misconception: "What is the minimum amount for a trust?"
Many believe trusts are only for billionaires. This is incorrect. There is no minimum financial limit in Indian law to create a trust. If an asset—whether it's a ₹10 lakh portfolio, a family home, or a small business—is important to your family's future, it deserves the protection a trust offers.