NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tools for Estate Planning
Mr. Arvind Rao wants his estate to be managed for his minor daughter until she turns 25, with a professional handling investments and distributions as he specifies. Which tool best fits this need?
A trust is the best tool because the settlor can set conditions, such as distribution at age 25, and a trustee manages the assets for the minor. Nomination, joint holding and a power of attorney do not provide this continuing, controlled management after death.
- AA nomination in his bank account
- BA joint holding with his spouse as first holder
- CA private discretionary or specific trust with a trustee managing assets for the beneficiaryCorrect
- DA power of attorney given to a friend
Explanation
A trust lets the settlor set terms, such as age-linked distributions, and a trustee manages assets for the beneficiary. A nominee is generally only a custodian of the asset for legal heirs, and joint holding passes assets by survivorship without controls. A power of attorney ends on the principal's death.
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