1. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
TRUSTS
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
VALLI.A
info@altacit.com
WEBSITE
www.altacit.com
2. INTRODUCTION
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
• A Trust is a relationship whereby Property (real or
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
personal, tangible or intangible) is held by one party for
BANGALORE
the benefit of another.
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road, • It arises when property is transferred by one party to be
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 held by another party for the benefit of a third party.
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
• It is also possible for a legal owner to create a trust of
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 property without transferring it to anyone else, simply by
declaring that the property will henceforth be held for
the benefit of the beneficiary
• A trust in simple terms an agreement whereby a person
EMAIL
or company agrees to hold an asset for the benefit of the
info@altacit.com others.
WEBSITE
www.altacit.com
3. PERSONS INVOLVED IN TRUST
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
• Settlor - Who transfers his property to the trust
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
• Trustee - who receives the property by the settler,
BANGALORE
Suite 920, Level 9,
Raheja Towers,
and who controls the asset is known as the ‘trustee’
26-27, M G Road,
Bangalore - 560 001. he has legal title to the trust property The trustee
Tel: +91 - 80 - 6546 2400
COIMBATORE
owes a fiduciary duty to the beneficiaries, who are
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
the "beneficial" owners of the trust property.
Tel: +91 - 422 – 6552921
• Beneficiary - who is receiving benefit out of the
trust. Beneficiaries have equitable title to the trust
property
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
4. Cntd..
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
SETTLOR PROTECTOR
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Contribution of Consent require
Tel: +91 - 80 - 6546 2400
Assets for some action
COIMBATORE
BB1, Park Avenue,
TRUST
# 48, Race Course Road,
Coimbatore - 641018.
(THE
Tel: +91 - 422 – 6552921
TRUSTEE)
Distribution
BENEFICIARIES
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
5. Creation of trust - Indian Trust Act 1882
CHENNAI
3rd Floor, ‘Creative Enclave’,
• According to sec 3 of Indian Trust Act 1882, a trust is
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
an obligation annexed to the ownership of the
Tel: +91 - 44 - 2498 4821
BANGALORE
property, and arising out of a confidence reposed in
Suite 920, Level 9,
Raheja Towers, and accepted by the owner or declared and accepted
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
by him for the benefit of another or another and
COIMBATORE owner.
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018. • Different states in India have different Trusts Acts in
Tel: +91 - 422 – 6552921
force, which govern the trusts in the state; in the
absence of a Trusts Act in any particular state or
territory the general principles of the Indian Trusts
Act 1882 are applied.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
6. Cntd..
CHENNAI
3rd Floor, ‘Creative Enclave’,
• The person who reposes or declares the confidence is
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
called the author of the trust
Tel: +91 - 44 - 2498 4821
BANGALORE
• The person who accepts the confidence is called a
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
trustee
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 • The person for whose benefit the confidence is
COIMBATORE
BB1, Park Avenue, accepted is called a beneficiary. According to sec 4 of
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
Indian Trust Act a trust may be created for any lawful
purposes
• Trustees : A trust needs a minimum of two trustees;
there is no upper limit to the number of trustees. The
Board of Management comprises the trustees
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
7. Main Instrument
CHENNAI
3rd Floor, ‘Creative Enclave’, • The main instrument of any public charitable trust is
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
the trust deed, wherein the aims and objects and
Tel: +91 - 44 - 2498 4821
mode of management should be enshrined.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
• In every trust deed, the minimum and maximum
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
number of trustees has to be specified.
COIMBATORE
BB1, Park Avenue,
• The trust deed should clearly spell out the aims and
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
objects of the trust
• It should be clearly specified about how the trust
should be managed, how other trustees may be
appointed or removed.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
8. Types of Trusts
CHENNAI
3rd Floor, ‘Creative Enclave’,
• Two types of trusts can be created and Registered as
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
per Indian Trust Act 1882
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
• a. Trust of immoveable property
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 • b. Trust of moveable property
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
The Three most common types of trusts are:
• Discretionary Family Trusts
• Unit trusts
• Hybrid Trusts
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
9. TRUST OF MOVEABLE & IMMOVEABLE
PROPERTY
CHENNAI
3rd Floor, ‘Creative Enclave’,
• A trust of immoveable & moveable property may be
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
created upon satisfying following conditions:
Tel: +91 - 44 - 2498 4821
BANGALORE
• Declared by a non-testamentary instrument in
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
writing signed by the author of the trust
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 • Indicating with reasonable certainty to create a trust
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
• Purpose of the trust
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
• The beneficiary and the trust property and transfers
the trust-property to the trustee
• The instrument should also signed by the trustee,
and registered.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
10. Difference in creation of trust
of Immoveable and moveable.
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
• The important difference in creation of trust of
BANGALORE
immoveable property and trust of moveable
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
property is that the former requires the instrument
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 to be registered unless it is created by the will of the
COIMBATORE
BB1, Park Avenue,
author and in the later there is no condition to be
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
registered and however proper proof for
transferring the ownership of the property to the
trustee is required.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
11. Discretionary Family Trusts
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road, • A family trust is the most common trust used by small
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 to medium size business owners, investors and medical
BANGALORE
Suite 920, Level 9,
professionals. They are generally set up to hold a
Raheja Towers,
26-27, M G Road, family’s assets and/or business for the benefit of
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 providing asset protection and tax planning for family
COIMBATORE
BB1, Park Avenue, members.
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 • From a tax perspective the main advantage is that any
income generated by the trust from business activities
and investments, including capital gains can be
distributed to beneficiaries in low tax brackets to
significantly reduce taxes.
EMAIL
info@altacit.com • Assets held in a family trust cannot be attacked by
WEBSITE
www.altacit.com creditors or lawsuits.
12. Unit Trust
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road, • A unit trust is like a company where the trusts
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 property are divided into a number of shares called
BANGALORE
Suite 920, Level 9,
units. The number of units you hold will determine
Raheja Towers,
26-27, M G Road, your entitlement to your share of income, capital
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 gains and voting power. Units in a unit trust can also
COIMBATORE
BB1, Park Avenue, be categorised. For example you can have income
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
units and capital units. Also unit holders can be
individuals, companies or discretionary trusts.
• The taxation benefits are generally not as flexible as
a discretionary trust in that any income distributions
must be distributed to unit holders as per their share
EMAIL
info@altacit.com of units.
WEBSITE
www.altacit.com
13. Hybrid trusts
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
• A hybrid trust takes the best features of a
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
discretionary trust and the best features of a unit
BANGALORE
trust and puts them into one. This means that the
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
trustee has the discretion to distribute benefits to the
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 beneficiaries of the trust – to beneficiaries who are
COIMBATORE
BB1, Park Avenue,
on low tax rates, as well as have unit holders who are
absolutely entitles to a portion of the benefits.
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
14. Formalities
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road, • Intention. There must be a clear intention to create a
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 trust
BANGALORE
Suite 920, Level 9,
• Subject Matter. The property subject to the trust must
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
be clearly identified
Tel: +91 - 80 - 6546 2400
COIMBATORE
• Objects. The beneficiaries of the trust must be clearly
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
identified, or at least be ascertainable. In the case of
Tel: +91 - 422 – 6552921
discretionary trusts, where the trustees have power to
decide who the beneficiaries will be, the settlor must have
described a clear class of beneficiaries
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
15. Purposes
CHENNAI
3rd Floor, ‘Creative Enclave’,
• Privacy. Trusts may be created purely for privacy
148-150, Luz Church Road,
Mylapore, • Spendthrift Protection. Trusts may be used to protect
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 beneficiaries (for example, one's children) against their own
BANGALORE
Suite 920, Level 9, inability to handle money.
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
• Wills and Estate Planning. Trusts frequently appear in
Tel: +91 - 80 - 6546 2400
COIMBATORE
wills
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
• Charities. In some common law jurisdictions all charities
Tel: +91 - 422 – 6552921
must take the form of trusts
• Unit Trusts. The trust has proved to be such a flexible
concept that it has proved capable of working as an
investment vehicle
EMAIL • Pension Plans. These are typically set up as a trust, with the
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employer as settlor, and the employees and their dependents
WEBSITE
www.altacit.com as beneficiaries
16. Cntd.
CHENNAI
3rd Floor, ‘Creative Enclave’, • Remuneration Trusts. Trusts for the benefit of
148-150, Luz Church Road,
Mylapore,
directors and employees or companies or their
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821 families or dependents.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
• Corporate Structures. Complex business
26-27, M G Road,
Bangalore - 560 001. arrangements, most often in the finance and insurance
Tel: +91 - 80 - 6546 2400
COIMBATORE
sectors, sometimes use trusts among various other
BB1, Park Avenue,
# 48, Race Course Road, entities in their structure.
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
• Asset Protection.
• Tax Planning. The tax consequences of doing
anything using a trust are usually different from the
tax consequences of achieving the same effect by
EMAIL another route.
info@altacit.com
WEBSITE
www.altacit.com
17. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
THANK YOU
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com