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Estate Planning

1. Purpose

Efficient management of assets in India
Smooth transfer to current generation/future generation

2. Proposition

Estate Planning through Private Family Trust
Settlor to set up appropriate Trust to hold his/her assets

3. Will in India - Issues/concerns

In most cases, passing of the estate by Indian residents to their legal heirs is by making a WILL. Administration and distribution of an estate under the WILL has several issues:

Normally, a WILL requires legal process of obtaining Probate or Succession Certificate from a Court in India.
Such process may take between 12 to 36 months and until then distribution of the estate to the beneficiaries shall remain pending.
All legal heirs may be required to join the legal process of the Court which is complex and time consuming.
Sometimes distribution under the WILL is legally challenged in the Court due by the legal heirs.
Invariably, Will once made, needs amendments which needs legal process and may create issues for legal heirs.
In India, there is no strong legally backed services for management of Estate of the deceased.

4. Advantages of Trust

It takes care of above stated deficiencies of having Will as a mode of Estate Planning.

Legal

Trust Deed is an open and regular legal document and generally cannot be challenged in a Court of Law.
It is very convenient to revise the provisions of a Trust.

Administration

Trust document shall be known to the beneficiary (ies) (as it is an open document) and shall have power to make investments/manage assets in the best interest of beneficiary(ies).
Trust has flexibility to distribute funds to beneficiary(ies).
Trustee is empowered to distribute the assets to the beneficiary on the demise of the Settlors of the Trust. Such distribution does not require any legal process or compliance including that of the Court.

Planning distribution of the assets

The Settlors have power to make distribution to current or future generations.
The Settlors may retain flexibility of control over assets and/or income of the Trust till their life (He/She does not part with his/her assets till life).

Taxation of the Trust

Income of the Trust shall be very tax efficient under Indian Tax Laws
In most cases, taxes shall be the same as what the Indian Resident (Settlors) are liable to pay in their personal capacity

Trustee Services

In India, reputed financial institutions do provide Trustee Services to protect the interest of beneficiaries. - by Accounting Square

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