Should I write a will or form a trust to distribute my assets
Source: Livemint.com

The following article was first published in the Mint newspaper on 1st November, 2022. The same was written by our Private Client team at Cyril Amarchand Mangaldas, who frequently publish their comments and opinions in the Mint. The online version of the article can be found here.

I am 76 years old and hence want to write a will. I have two houses worth 2 crore. We are living in one of the houses and the other is rented for 75,000 per month. We also booked a shop having a resale value of 1 crore. I have 1.6 crore in mutual funds and 65 lakh in shares. 

I have a wife and a daughter. I want all my assets to be given to my wife and thereafter to a trust that should decide on monthly distribution  of income from the assets to my daughter and grandson. Thereby, I want to ensure that the assets generate wealth without being misused by anyone. Please guide me on how I should go about setting up a trust.

—Name withheld on request

Continue Reading Should I write a will or form a trust to distribute my assets?

Vanaprastha

Essentially the idea was to withdraw from a place that has four walls. You do not want to live in four walls, because four walls create a false sense of immortality. If you are already in a box, it gives you a coffin-like feeling. When you live in a coffin, you think you are going to be here forever.”

Sadhguru

Continue Reading A Promoter’s Vanaprastha: Trust the Process!

 TO TRUST OR NOT TRUST - MUMBAI ITAT AFFIRMS EXCLUSION OF CORPUS FUND OF OFFSHORE TRUST FROM INDIAN WEALTH TAX

Background:

Creation of private trusts have been considered as a popular method by rich families for succession planning. Trusts are a legal arrangement whereby assets are placed into the care of an individual who manages them for the benefit of someone else. Trust can be further classified into specific or discretionary based on the scheme of distribution of the trust fund. However, in recent times, offshore trust structures are suspected to be more commonly used as a means of money laundering than lawful tax planning. Consequently, the Income-tax Department has been unveiling various private offshore trusts and imposing tax liability on the beneficiary owners. This has led to an increase in reassessment proceedings and dissatisfaction among the residents for being subjected to wrongful tax liability. Recently, the Mumbai Income-tax Appellate Tribunal (“ITAT”) provided relief to Mr. Yashovardhan Birla and held that offshore trusts are considered to be acceptable form of tax planning and a beneficiary of an offshore discretionary trust cannot be taxed on the entire corpus fund merely because he has been provided with the power to appoint/ reappoint trustee. The case is discussed in detail below:
Continue Reading To Trust Or Not Trust: Mumbai ITAT affirms exclusion of corpus fund of Offshore Trust From Indian Wealth Tax

Covid -19 and succession planning

 Lawyers are generally very conservative – so it may sound a bit alarmist to hear us say “the world is ending!” At the time of writing, India is coming to grips with the terrifying ‘Severe Acute Respiratory Syndrome Coronavirus-2 (“COVID-19”)’ virus. There is something primal and scary about an airborne threat that can kill you – from something as simple as coming close to an infected person, or touching a door handle, etc. It makes us think about the fragility of life, and the need to protect our loved ones. Some people may believe the steps being taken at present are an overreaction – but are they?

As per the WHO, COVID-19 appears to target the elderly and individuals having underlying illnesses. The WHO mission to China found that 78% of the cases reported as of February 20, 2020 were in individuals between ages 30 and 69. In a matter of barely three months, COVID-19 has infected over 185,000 individuals, resulting in nearly 7,200 deaths, covering 157 countries and territories around the world. The Diamond Princess cruise ship harbored in Yokohama, Japan— was among the lone case involving an international vessel. In India, at the time of writing, 110+ individuals tested positive for the virus, with three fatalities. The virus knows no boundaries, gender or net worth, targeting poor and rich alike. Pandemics are an equalizer in society.

Continue Reading Estate & Succession Planning during the Coronavirus Pandemic