Private Trust

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Marie (Querist)
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23 March 2011 Kindly answer the following queries:

What is a private trust?

Can a person owning an immovable property with flats given out on leave and license basis form a private trust?

If such a trust is formed and the rent is divided among multiple beneficiaries will the beneficiaries or previous owner bear the burden of tax?

Is the formation of a private trust advisable in the above case?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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24 March 2011 In common law legal systems, a trust is a relationship whereby property (including real, tangible and intangible) is managed by one person (or persons, or organizations) for the benefit of another. A trust is created by a settlor (or feoffor to uses), who entrusts some or all of their property to people of their choice (the trustees or feoffee to uses). The trustees hold legal title to the trust property (or trust corpus), but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary, cestui que use, or cestui que trust), usually specified by the settlor, who hold equitable title. The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.

The trust is governed by the terms of the trust document, which is usually written and occasionally set out in deed form. It is also governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law.

In the United States, the settlor is also called the trustor, grantor, donor or creator. In some other jurisdictions, the settlor may also be known as the founder.

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