17 May 2009
The creation of family trust makes sense. It is a novel way of tax planning as also planning for dependents marriage, education expenses, etc. After the abolition of Gift Tax Act, a lot of tax planning can be done by creation of such trusts. However, sad to say, many people are yet to appreciate the value of a trust as a powerful financial planning tool and that is understandable, as the layman doesn’t quite understand the concept of the term ‘Trust’ and the tax implications thereof. However, setting up and managing a trust is surprisingly easy, specially, if the trust doesn’t hold any immovable property.A registered document is necessary to set up a trust if immovable property is being transferred to it. However, if only moveable property is settled upon the trust, no formal document or agreement in writing is necessary. It is always advisable to prepare a trust deed on a stamp paper, and have it signed by the settlor and the trustees in presence of a witness, to avoid any subsequent disputes.
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