# Private Family Trust Setup

> A private family trust is created under the Indian Trusts Act when a settlor transfers assets to trustees to hold for named beneficiaries. In a specific (determinate) trust, each beneficiary's share is fixed and income is taxed as if they earned it; in a discretionary trust, trustees decide distributions and income is generally taxed at the maximum marginal rate. Transfers of assets into the trust by the settlor are not taxed as gifts where beneficiaries are relatives, but stamp duty applies to property.

Practice: Tax Planning & Business Advisory — https://www.industax.com/services/advisory/

Family trusts are used to keep assets together across generations, protect beneficiaries with special needs, plan for business succession, and avoid probate. They require proper governance — trustee meetings, accounts and tax returns — to remain effective.

We design the trust with partner advocates, structure it for tax, and handle its PAN, bank account, accounting and annual ITR.

## Key facts

| Item | Detail |
| --- | --- |
| Law | Indian Trusts Act 1882 |
| Specific trust | Income taxed per beneficiary's share |
| Discretionary trust | Generally maximum marginal rate |
| Settlement | Gift-tax exemption where beneficiaries are relatives |
| Property | Registered deed; stamp duty |

## Who needs this

- HNI families
- Promoters planning business succession
- Parents providing for dependants with special needs

## What's included

- Trust design
- Deed drafting with advocates
- Asset settlement plan
- Annual compliance

## Documents

- Family and beneficiary details
- Asset list
- Objectives of the trust

## Process

1. **Design** — Type, trustees and beneficiaries.
2. **Settle** — Deed executed; assets transferred.
3. **Administer** — Accounts and returns each year.

Work that legally requires a advocate is signed by a partner professional; Indus Tax coordinates it.

## FAQs

### Does a family trust save income tax?

Not usually by itself; discretionary trusts are taxed at the highest rate. Its main benefits are control, protection and succession, with tax neutral or managed through careful design.

### Can NRIs be beneficiaries?

Yes, but distributions and the trust's investments may involve FEMA and foreign tax rules that must be planned for.

### Is a family trust's deed public?

Deeds involving immovable property are registered and therefore on public record; other trust deeds needn't be.

## Official sources

- India Code — Indian Trusts Act, Succession Act: https://www.indiacode.nic.in/
- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Canonical page: https://www.industax.com/services/advisory/private-family-trust
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.