Minor Co Trustee with or without Funds

How to appoint Trustee for Minor Special Child?

Minor Trust How does it work?

The trust administration functions post death by Trustee

Objective of the trust – to establish a basis for security of minor child(ren) in case of an unfortunate event of the child(ren) losing either or both parent/s. Very often, the wealth/assets left behind by the parent(s) for the minor child(ren) are misused/mismanaged by the relatives/guardian. This happens inadvertently at times and sometimes deliberately too! To ensure accountability and avoid pitfalls of mismanagement, a robust trust structure is sought to be put into place. This is to ensure peace of mind for the parents.

If you want to take advantage of a corporate trustee’s investment and legal experience but still be involved, you could have a corporate trustee work with you as co-trustee.

1. The parents (the “Settlor”) of a minor may decide to set aside a sum of money and/or other financial assets for the minor child. This would be achieved by setting up trust with an initial corpus of Rs 15,000/- (Rs Fifteen Thousand only) where the child(ren) would be the beneficiary(ies)
2. The ‘Will’ of one of the parents would have a clause whereby on occurrence of the trigger event, all or the specified financial assets will flow into the trust. For this purpose, ‘trigger event’ would mean the death of either or both parents as may be specified by the parents.
3. WillEffect through Nexgen would be the co-executor of the will to ensure smooth and expeditious transfer of assets. The executor could be the family’s IFA or any other person they trust. The parents will have to ensure that the trust is made the nominee/beneficiary in all the investment/insurance documents.
4. The trust will be managed by minimum of two trustees and maximum of five trustees. One/two could be nominated by the parents themselves (one of these could be the financial advisor of the family). One of the other trustees would be CCC WillEffect P. Ltd. (the “professional trustee”)
5. If the trigger event does not happen during the minority of the child(ren), then the trust would be wound up as per the provisions of the trust deed.
6. Post the occurrence of the trigger event, the corpus of the trust would be actively managed by the trustees as per the investment guidelines specified therein
7. The income generated from the corpus would be given to the guardian of the child(ren) to meet the expenses of the child(ren). The settlor would define the approximate amount of annual expenses through a separate letter of wishes to the trustees and this would be appropriately adjusted every year keeping in mind inflation and other factors.
8. The balance of income will be added to the corpus or kept aside for any emergency. The corpus will not be available for use unless in the case of a predefined emergency. It will only be deployed as directed
9. The corpus will be handed over to the child(ren) on attaining majority or at a later date as specified by the settlor.
The trust administration functions (post the trigger event) would cover
• Holding titles to trust assets and investments.
• Ensuring compliance with terms of the Trust Deed and desires of the Settlor with regard
to:
1. Assistance in framing investment policies.
2. Administration of Investment of Trust Funds.
3. Oversight of Investment Portfolios of the Trust.
4. Distribution of Income and Corpus.
5. Opening and operating the trust’s bank, demat, Investment and Trading Account.
6. Maintaining accounting records as per Indian GAAP standards and liaising with auditors.
7. Providing secretarial services.
8. Review of Financial Information and Audit Reports.
9. Filing of tax returns and filing of reports with regulatory authorities, where required.
10. Review of ongoing processes and systems.
11. Providing reports to other Co-Trustees as may be mutually agreed.
12. Organising Trustee Meetings and meetings with beneficiary’s guardian (if required).
13. Safe Custody of trust related documents.
14. Assist in implementation of Trustees’ board decisions.
15. Highlighting legal and tax issues relating to trust property and taking appropriate actions to protect and preserve trust property.
10. In case the parents want to transfer non-financial assets too to such a trust eg a residential house, etc, or want significant customisation of the trust deed or want us to only draft the will and the trust deed, we would be happy to provide a customized solution after understanding their objectives and circumstances.