A private Trust is not for ever—it should specify when the Trust will terminate
Under the Transfer of Property Act, 1882 and also the Indian Succession Act, 1925, a private Trust cannot continue indefinitely
I am unable to continue my medical store business (running in rented premises) due to my advanced age. So I want to continue the medical store through a Trust for the benefits of both of my daughter’s sons (the only Trust for them). The trustee will be my daughter, her husband and the trustworthy manager of my medical store (who is running my medical store business for the last 9 years). The Trust will be revocable and discretionary and will be the only Trust created by me. How can I create it through my Will? My daughter and her husband both are in government jobs. What will be the format of the Will and the Trust deed in this case?
—Kalawati Sinha
I understand that you intend to create a private Trust for the benefit of your grandchildren through your Will, which would take effect after your demise. For the purpose of creating the Trust, your Will should clearly set out (i) your intention of creating the Trust, (ii) the purpose or object of creating the Trust, (iii) the beneficiaries of the Trust and (iv) the assets/Trust (that is, your business of the medical store) that will be settled in the Trust.
Also, you would need to appoint your daughter, son-in-law and your manager as the trustees of your Trust (since you intend for them to be the first trustees) and also state the manner in which vacancies would be filled. On your death, your executor will have to ensure the transmission of your business (which I understand will be transmitted as a going concern to the extent possible under applicable laws, since some licences relating to the business may not be transferable without the consent of concerned authorities), to your trustees who will then run the business in Trust for your beneficiaries.
Also, please consider providing for the duties, powers, functions of the trustees, including the manner in which the trustees would take decisions and also how their discretion will be exercised with regard to distribution of the income and corpus of the Trust. The objects of the Trust should include the carrying on of the business for the benefit of the beneficiaries.
You must note that under the Transfer of Property Act, 1882 and also the Indian Succession Act, 1925, a private Trust cannot continue indefinitely and is liable to terminate after the maximum period specified therein. Therefore, please state the period of the Trust and how the assets will be distributed on the termination/expiry of the trust.
Please note that since the trust is being created under your Will, your Will should be duly executed as per the provisions of the Indian Succession Act, 1925. The trust will take effect from the date of your death.
We understand that it is your intention that the trust be discretionary and revocable. Since this would have tax implications, we recommend that you seek independent tax advice to ensure that the structure adopted is the most tax efficient.
My father had registered his Will in January 2016. Later he wrote another Will on plain paper but it is not registered. Please tell me which Will is valid; the earlier registered one or the latest unregistered one?
—Rishi Saluja
I understand from your query above that while the earlier Will executed by your father in January 2016 was registered, the Will which he executed later (post January 2016) has not been registered.
In the event that the second/later Will executed by your father has been duly executed in accordance with the provisions of the Indian Succession Act, 1925, and your father clearly revoked his previous Will made in January 2016 (which is usually the case), then the later Will will override the earlier one, even if it is not registered. Registration of a Will is optional and accordingly if the second Will has been duly executed in the manner set out in the Indian Succession Act, then the second Will, even though it may have not been registered should be given effect to. Please also refer to Amara Venkata Subbaiah & Sons vs Shaik Hussain Bi, 2008 SCC OnLine AP 324, Sunil Anand & Rajiv Anand (2008[103] DRJ165), Sh. Rajesh Sharma vs State & others and Rajeev Kumar vs State of Uttar Pradesh [1979 (5)ALR 15].
Marylou Bilawala is partner, Wadia Ghandy & Co. Advocates, Solicitors and Notaries.
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Business NewsMoneyCalculatorsA private Trust is not for ever—it should specify when the Trust will terminate
First Published:31 Oct 2017, 04:43 PM IST
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