1. I WANT TO FORM A
TRUST. WHAT ARE THE 7
MOST IMPORTANT
THINGS THAT I SHOULD
KNOW?

2. 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’.

3. 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.

4. 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

5. Who can create a trust? who can
be 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.

6. How do I differentiate between a
public 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

7. What are an express trust and a
constructive 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.

8. 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.