The trust is created by a settlor, who transfers property to a trustee. Read on to know more about the Pros and Cons of Trust!
A charitable trust is an irrevocable trust created for the purpose of achieving a charitable purpose. The trustee holds and manages the property for the benefit of the charitable beneficiaries. The settlor can be either an individual or a legal entity, such as a company or organisation. The trustee can be an individual, a group of individuals, or a legal entity. The beneficiaries can be either individuals or groups.
Charitable trusts are created for the purpose of benefiting a charitable organisation. The trust is managed by a trustee and the charity is the beneficiary. The trust creator can choose to have the trust continue indefinitely or to have it dissolve after a certain period of time. There are many pros and cons of a trust. Let’s discuss them in more detail.
Charitable Trusts In India
A trust is an arrangement whereby property (including real, tangible and intangible assets) is managed by one person (the trustee) for the benefit of another (the beneficiary). A trust is created by a Settlor, who transfers property to a Trustee. The Trustee holds that property for the benefit of the Beneficiaries.
The term “charitable” is used in a legal sense and does not necessarily mean that the trust is created for a religious or altruistic purpose. The term is used to describe any trust that has a charitable purpose as defined by law.
A trust can be used for a variety of purposes, including:
- To provide for the care of a family member with a disability
- To manage property for children or other beneficiaries who are not ready or able to manage it themselves
- To reduce the amount of taxes payable on property
- To direct how property will be distributed after the trust creator’s death
Laws Regarding Setting Up A Trust
Laws regarding trusts in India are governed by the Indian Trusts Act, 1882. The Act defines a trust as follows:
“An arrangement by which the property is transferred by one person to another for the benefit of a third person is called a trust”.
There are two types of trusts in India – private trusts and public trusts. A private trust is created for the benefit of specified persons, while a public trust is created for a public or general purpose.
Under Indian law, a trust can be created for any lawful purpose. The settlor must specify the purpose of the trust in the trust deed. The trust property must be clearly defined and must be capable of being identified. The trustee must be a natural person or a legal entity such as a company or a trust company. The beneficiaries can be either natural persons or legal entities.
The laws governing trusts in India are contained in the Indian Trusts Act, of 1882. The Act does not apply to Muslim trusts, which are governed by the Muslim Personal Law (Shariat) application.
Click here to get Trust Registration Online.
Pros and Cons Of Setting up a Trust
The trustee has no control over the assets and must act in accordance with the wishes of the beneficiary. A trust may be used as a way to pass property or money from one party to another without having a will, or it can be used as an estate plan.
There are several advantages and disadvantages of setting up a trust. The pros of a trust are:
- The trust acts as a safety net to protect the recipient from creditors who may come after the original owner’s estate. It also allows the recipient to have access, use, and disposal of the property without incurring debts of his own.
- In some cases, the original owner provides additional gifts to the trust’s beneficiaries. For example, if a parent wanted to save for his child’s college education, he could set up a trust for that purpose.
- You can also use trust to help your loved ones during difficult times. If someone in your life is having financial problems, setting up a trust can help them financially secure their future.
- It can also help with estate planning after they’re gone by protecting family members from inheritances that come with unpaid bills or estates left in debt by the original owner.
- You can also use it as an emergency fund; if someone dies suddenly, you won’t be bankrupted by unpaid medical bills or other expenses related to funeral costs.
- A trust is an excellent tool that everyone should use in some way. It can save you money and ease financial burdens during difficult times in your life- plus, it’s easy to set up and keeps your property out of debtors’ hands without any effort on your part.
Consider using a trust for any of the above purposes if you find yourself struggling financially and wanting to protect those you love best in times of need.
Disadvantages of setting up a trust are:
- The disadvantage of setting up a trust is that you will not be able to reverse the process of setting up a trust.
- The chances of losing the assets completely is very high. It can be a bit risky.
- The benefits of trust are many but if your estate is small, you might not get enough benefits.
- Setting up a trust takes a lot of time and it might be a hectic process.
The steps of setting up a trust can be complicated but using an online service might make it simpler for you. You can contact Vakilsearch to know the details of this process and get the experts help.
Conclusion
A trust is a relationship in which one person, the trustee, holds property or other assets for the benefit of another person, the beneficiary. A trust can be created during a person’s lifetime or after their death.
There are many different types of charitable trusts, each with its own advantages and disadvantages. In this article we discussed the pros and cons of a trust.
Vakilsearch is an online platform that provides you with professional help and advice regarding legal procedures, such as setting up a trust. Our legal professionals at Vakilsearch will guide you through the entire process and make it hassle free for you.
Read more,
