Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tools for Estate Planning

A client wants his trusted friend to manage assets for his minor daughter until she turns 25, with the trustee holding legal title and the daughter receiving the benefit. Which structure under the Indian Trusts Act, 1882 does this describe?

This is a private trust: the settlor transfers assets to a trustee, who holds legal title and manages them for the beneficiary. The friend is the trustee and the daughter the beneficiary, with benefits deferred until 25. A power of attorney lapses on death and a gift is immediate.

  1. AA private trust with the friend as trustee and the daughter as beneficiaryCorrect
  2. BA power of attorney that continues after the client's death
  3. CA joint holding with survivorship rights for the friend
  4. DA gift deed with immediate absolute transfer to the daughter

Explanation

In a private trust the settlor transfers property to a trustee who holds legal title for the benefit of a beneficiary. Here the friend is trustee and the daughter beneficiary, with distribution deferred to age 25. A power of attorney ends on the principal's death, and an absolute gift would not allow deferral.

Did you get it right without looking?

One question tells you little. A timed set on Tools for Estate Planning shows your real accuracy, how long you take and where you lose marks.

Practise Tools for Estate PlanningFree diagnostic mock

More Tools for Estate Planning questions