Private family trust

ks (Querist) 22 October 2022 This query is : Resolved
My widow mother wants to open a Private Family Trust and wants to transfer her Shares into it. Future plan is that trustees will operate Share trading as well as Derivative Trading in that account to generate business.

1) Can Private Family Trust trade in Derivatives ?

2) How many minimum trustees are required ? Can Single Trustee operate Private Family Trust ?

3) What if out of 2, one trustee is NRI ?

4) What are the documents required to get the PAN of this Private Family Trust ?

5) What are the documents required to get the trust registered ? Where to get registered in Ahmedabad ?

Follow Query

Report Abuse

Quick Summary

This discussion addresses setting up a Private Family Trust for share and derivative trading. It clarifies whether a private trust can trade derivatives, the minimum number of trustees required (including single trustee operation), and implications of having an NRI trustee. It also details the documentation needed for the trust's PAN and registration, including specific requirements for both registered and unregistered trusts and where to register in Ahmedabad.

T. Kalaiselvan, Advocate (Expert) 24 October 2022
A trust may be a private or public trust. Under the Indian Trust Act of 1908, the registration of trust is mandatory in many cases. Thus, some trusts in India are registered whereas some are not. In both cases, a trust can open a Demat account.
A private family trust is used for succession planning. It saves the interest of legal heirs. The trustee of the private family trust can be relative, family member, or a professional team depending on the choice of the author. The author can also be one of the trustees or the managing trustee of the trust.
For an unregistered trust, a Demat account may be opened in the name of managing trustees as an individual account. If the trust has up to three managing trustees, then each managing trustee is a joint owner of the Demat account. But in cases where the trust has more than three managing trustees, then the trust will have to decide on a whose name to open the Demat account.

The procedure to open a Demat account for a trust is similar to that of a partnership firm. The following documents are required to open a Demat account for a trust –

Based on the segments which are to be activated, the trust is required to submit trading, Demat, and commodity forms.
Annexures, as required for account opening, are to be appended.
Annexure A is specifically required for each trustee holding more than 15% of the sharing ratio.
In the case of registered trusts, PAN card and address proof of the trust is to be submitted along with the authorized trust seal and signature.
In the case of unregistered trusts, a self-attested PAN card, and address proof of the trustees should be provided.
The Trust deed should be furnished along with the investment clause (if any).
Duly filled and signed KYC forms of each trustee. Trustees are required to sign the form without the stamp on individual KYC and supporting documents.
In the case of a registered trust, a canceled cheque of the trust. In the case of an unregistered trust, a canceled cheque of individual trustees is to be submitted.
If the trust is newly incorporated, then a Certificate of Net Worth from a practicing Chartered Account is required.
For an existing trust, a copy of the balance sheet for the last two financial years is to be submitted every year along with the annexure of the ITR declaration. The balance sheet should have the seal and signature of the authorized managing trustee on all pages.
Income proof including bank statements for the last six months of the trust account. Alternatively, a passbook of the trust account for the last six months may be submitted. The latest, audited profit and loss statement is also required to be submitted.
FATCA refers to Foreign Account Tax Compliance Act. FATCA facilitates the automated exchange of financial information between India and the United States. As per the agreement between both countries, investors are required to submit a FATCA declaration. The trust is also required to submit a FATCA Declaration.

R.K Nanda (Expert) 26 October 2022
for so many questions contact local lawyer.

Dr J C Vashista (Expert) 27 October 2022
Consult and engage a local prudent lawyer or chartered accountant for better appreciation of facts, professional advise and necessary proceeding.

Previous

Next

You need to be the querist or approved LAWyersclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

Ask Query
Unanswered Queries