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Estate planning · Trust

Private Trust vs Public Charitable Trust: which to create

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Private Trust: Created for a specific group of beneficiaries (family members). Governed by Indian Trusts Act 1882. No tax benefit, income taxed at maximum marginal rate (30%) in trustee's hands unless specific structures. Used for: protecting minor children's inheritance, family wealth management, disabled beneficiary care.

Provisions

Indian Trusts Act 1882 | Income Tax Act, Sec 11, 12A/Sec 332 (old 12AB)

Analysis

Public Charitable Trust: Created for public benefit, education, health, poverty relief. Registered under state laws. Applies for 12A/Sec 332, Income-tax Act 2025 (old Sec 12AB) registration with income tax → 100% of income exempt from tax. Donations qualify for Sec 133 (old Sec 80G) deduction to donors.

Close

  1. Name and objects of the trust
  2. Trustees, minimum 2 (for charitable trust, 3+ recommended)
  3. Settlor, the person creating the trust
  4. Beneficiaries, specifically named or described class
  5. Trust corpus, the initial property/funds settled
  6. Powers and duties of trustees

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