Do you find any of these your concern? Have a look.
- You take care of the family’s finances solely by yourself and your spouse does not take any interest to know how to handle those assets. The children are physically away from you and you do not like to burden them with the hassles of managing finance, but you are concerned about transferring the assets to them after your and your spouse’s life.
- You are single (or may become single at any point in life). You have enough money, but it concerns you, who may take care of you if you may become sick. Or you may not want to burden the next generation with your lifelong care needs.
- You have a child or a person in the family who needs special care.
- You are a single parent of dependable or minor children. Your spouse is not present as backup support.
- You have dedicated some assets to philanthropy and you want to continue it under whatever may be the circumstances.
- You are unsure about a child’s (say daughter’s) future post-marriage and you want to dedicate some assets to her. You also want that those assets should not be mishandled by any other person (say from the in-laws).
- You are uncertain of the future of your business liabilities and you need to freeze the child’s education needs, whatever may be the situation.
- Your personal assets are of high value and you are finding it complex to manage them due to investment planning, tax planning, and estate planning concerns.
If your situation is similar to any of the above cases, a Trust can solve your concerns efficiently. There are various types of Trust those can be created and managed according to your situation and need. For example:
a) A Living Trust – This type of Trust will work during your lifetime and will work as per the defined lines and following instructions. This is applicable in case a special child or assets are beyond manageable limits or philanthropy needs.
b) A Testamentary Trust – This type of trust takes up the assets following the Will, as per conditions. The duties and responsibilities are defined during the author’s lifetime and single or multiple trustees are appointed when the trust deed is written. These types of Trust are needed if a single parent dies before the children attain financial independence.
c) A Determinate Trust – The author determines exactly how the Trust will take care of the property and distribute the income. This type of trust may be necessary to take care of a married daughter’s uncertain future.
d) A Discretionary Trust – A minor child’s future education fund can be transferred to this type of Trust and the trustees may need to take a call about the future fund flow depending on the need of the beneficiary.
e) A Revocable Trust – This type of trust gives the right to the author of the Trust to revoke the Trust if it does not function effectively during the author’s lifetime or its purpose has ended. For example – a trust built to serve a specific purpose like a child’s education or marriage will need to be revoked once the purpose is served, or the child does not marry at all for whatever the situation may be.
f) An Irrevocable Trust – This type of Trust can not be revoked. A Charitable Trust, built with funds transferred with income tax benefits, will always be irrevocable.
The Trust can be a great tool to manage the future, or handle financial uncertainties, provided it is created in the right manner with the right concerns. A trust does not fulfill only the estate planning needs, it serves various other needs right from proper investment planning to a disciplined execution. But at the very beginning of planning for a trust, one needs to identify some trusted persons who will work for the Trust. Professional help can be sought to address such concerns.
If you too have a question, share it in the comments below or DM us or call us – +91 9051052222. We’ll be happy to answer it.
– Aditi Nundy
