I WANT TO FORM ATRUST. WHAT ARE THE 7MOST IMPORTANTTHINGS THAT I SHOULDKNOW?
What is a Trust? It is a legal tool by which property is transferred by one party to another party for the benefit of a third party. The party who transfers the property is called a ‘settlor’ and to whom the property is transferred and is responsible for holding and managing it is called a ‘trustee’. The third party for whose benefit the property is being transferred is called a ‘beneficiary’.
Why do I need a trust? Because trusts help people like minors or the mentally unsound, who are incapable of taking care of their assets, manage their property. It helps in the effective management of estates. A trust is a legal way to avoid taxes.
How do I create a trust? A trust of immovable property is created by a written document such as a will but cannot be created orally A trust of movable property can either be created by a written document or by transferring the property to the trustee with necessary oral directions
Who can create a trust? who canbe a trustee? Any person who is competent to contract or owns a property which he has the power to transfer can create a trust. Any person or organization who is competent to contract and capable of holding a property is fit to be a trustee.
How do I differentiate between apublic and a private trust? A private trust has one or more particular individuals as its beneficiary a public trust has a charitable body or organization as the beneficiary
What are an express trust and aconstructive trust? An express trust is created when the settlor wants to transfer his property after his or her death. It is mainly created by a will or a trust deed. The most important thing to be shown when creating this kind of a trust is the ‘intention’ to transfer the property by the language or their conduct. A constructive trust is imposed by the law as a remedy to a person whose property has been wrongfully acquired by another individual.
Can a trust protect my assets? Yes, assets can be protected by the creation of a ‘discretionary trust’. The idea is to get rid of the ‘personal ownership’ of the property by transferring it through the trust. In that way, the settlor himself will be the beneficiary and no creditor can bankrupt him personally. In a similar way, he can avoid taxes too.