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What is the procedure to form a family trust and what tax implications
24-Aug-2023 (In Wills / Trusts Law)
Old lady with non-property assets in excess of 70 lakh wishes to know costs associated with formation / registration of family trust and subsequent operating costs and associated bureaucracy every year eg accounts, tax returns, bookkeeping, succession of trustees. Any income tax implications to trustees and beneficiary also need to be addressed. Beneficiary is minor.
The trust has to be registered under Indian trust act, 1882 by the settlor appointing 2 trustees or more with power to administer the trust to be wound up when the purpose is accomplished that is the minor becomes major by transfer of all assets to the beneficiary. Expenses include legal, registration and stamp duty. Taxation laws will be applicable in respect of filling returns as well as income tax on income earned. Succession is taken care of by the provisions contained in the act mentioned above. There will be tax implications to Trustees. The trustees have to safe guard the trust property.
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