This news report was authored by Bindisha Sarang and featured in Business Standard on 5 May 2021. It features opinion from AnantLaw.
With stories of loss of life due to the pandemic coming in every day, those who have not given any thought to estate planning should do so at the earliest to secure their family’s future.
A Will works well for smaller families with simpler inheritance objectives. It is also cost-effective. However, in many instances, the authenticity of the Will gets challenged, resulting in lengthy court cases. This can be avoided by setting up a trust.
Moiz Rafique, managing partner, Privy Legal Service LLP, said, “There is no court involvement in a trust, which is why I would recommend creating one for your family’s security."
A trust is a legal arrangement where the owner, known as the settlor, entrusts another party, called the trustee, to take care of his/her assets for the benefit of the beneficiaries, whom he/she selects via a document called the trust deed.
There’s a trust for each need
A trust can be private or public. One that is created and made operational during the settlor’s lifetime, it is called a living trust. A trust that is created through a Will is called a testamentary trust and comes into force after the settlor’s demise. Then, there is the minor beneficiary trust, which is set up for a child’s benefit. A life insurance trust is irrevocable and is set up to invest the proceeds of a life insurance policy for the beneficiaries after the policy owner’s demise.
While a trust is generally created to manage and preserve property for the benefit of one or more persons, special purpose trusts can be created to meet the specific needs of the settlor and the beneficiaries.
For instance, a trust can be set up to meet children’s educational goals, family’s maintenance, and even to meet the needs of future generations. "A trust can be created for the benefit of immediate family members, relatives or even friends,” says Sunil Jain, partner, Anantlaw.