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

Mr. Raghunath Iyer, a widower, wants his two minor grandchildren to receive funds for education only after they turn 21, with a family friend managing the money until then. Which tool best serves this aim?

A testamentary trust created through his Will, with a named trustee, best suits the aim. It allows him to set conditions such as release at age 21 and appoint a manager, which a mere nomination or oral instruction cannot enforce.

  1. AA testamentary trust created through his Will with a named trusteeCorrect
  2. BA joint holding with one grandchild's guardian
  3. CA simple bank nomination in favour of the friend
  4. DAn oral statement made to the family friend

Explanation

A testamentary trust created under the Will lets the testator specify the trustee, the beneficiaries and the age of distribution. A nominee is generally only a person who receives assets and may not be the ultimate owner, so nomination cannot enforce conditions. An oral statement has no enforceable force for this purpose.

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