Answer

Estate planning · Trust

Discretionary Trust for minor children

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  1. Facts

    A Discretionary Trust lets trustees decide how much income/corpus to give each beneficiary and when. Ideal for protecting children's inheritance, a 20-year-old cannot mismanage assets if a trustee controls distribution until 30. Also protects against spendthrift children, future divorces, or business failures.

  2. Provisions and law

    • Indian Trusts Act 1882, Sec 8 | IT Act Sec 164

  3. Analysis

    Tax: income taxable at maximum marginal rate in trustee's hands (Sec 164). This is a cost, weigh against the protection benefit.

  4. Conclusion

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