While a trust can be established with minimal initial capital, correct initial structuring is critical to avoiding legal and tax complications. For those seeking to plan estates or protect family wealth, trusts offer flexibility but demand clear intent, precise structuring, and proper execution from the outset.
How to form a trust
For individuals, creating a trust is a structured process that begins with clarity of purpose and ends with financial and legal compliance.
A trust is formed when a settlor transfers assets to trustees for the benefit of beneficiaries through a deed. The process involves these steps:
Define the objective: Family wealth planning, protection of minors, or specific needs
Appoint trustees and beneficiaries
Draft the trust deed clearly outlining powers, duties, and distribution rules
Execute and register the deed (mandatory if immovable property is involved)
Operationalise the trust by obtaining PAN, opening a bank account, and completing compliances
“Setting up a trust is a structured exercise. It begins with defining the objectives… followed by drafting the trust deed, which forms its foundation,” said Shaishavi Kadakia, partner, Cyril Amarchand Mangaldas.
The process must meet conditions under the Indian Trusts Act, 1882, including lawful purpose, identifiable beneficiaries, and clearly defined property, said B. Shravanth Shanker, managing partner, B. Shanker Advocates LLP.
Individuals typically select two or more reliable trustees, prepare the deed on stamp paper, and register it with a sub-registrar in the presence of witnesses, said Alay Razvi, managing partner, Accord Juris.
Documents required
The trust deed is the core document and must clearly set out the terms of the trust.
Other documents include:
Identity and address proofs of settlor, trustees, and witnesses
Proof of registered office (ownership papers or rent agreement)
No-objection certificate if the premises are rented
Photographs and basic KYC details
“The registration process requires identification details of the settlor, trustee and two independent witnesses,” said Keshav Singhania, head, private client, Singhania & Co.
Cost and where to register
No minimum investment is required to set up a trust. Many are created with a symbolic initial contribution.
Trusts involving immovable property must be registered with the local Sub-Registrar under the Registration Act, 1908
Costs include stamp duty and registration fees, which vary by state
Professional fees depend on complexity
“A nominal settlement amount is sufficient, and the initial contribution is often symbolic,” Singhania said.
Things to keep in mind
Experts stress that clarity and execution determine how effective a trust will be over time.
Clear intent: An unclear purpose or beneficiaries can make the trust invalid
Right trustees: This is a fiduciary role requiring reliability and competence
Transfer of assets: Legal ownership must genuinely pass to the trust
Loss of control: The settlor cannot directly control assets once transferred
Tax implications: Especially for non-relatives or cross-border structures
Future readiness: The deed should cover succession and changing scenarios
“A trust is only as good as its intent and execution… the objectives must be clearly defined at the outset,” Kadakia said.
Shanker added that ambiguity in beneficiaries, purpose, or property can expose the trust to legal challenge, while Razvi emphasised the need for clear drafting, proper registration, and practical structuring to avoid disputes later.
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